Understanding the Automated Bond Ladder
Wealthfront's Automated Bond Ladder is designed to help you earn more on your extra cash by offering a ladder of US Treasuries. This method allows you to lock in current yields and earn more interest than traditional savings accounts or CDs since Treasuries are exempt from state and local income taxes. By choosing your investment duration and preferences, Wealthfront takes care of the rest, making it a hassle-free and efficient way to grow your savings.
Building a Stable Investment with Treasuries
The Automated Bond Ladder provides a steady yield on your cash reserves while keeping your funds flexible. With the ability to select different investment durations ranging from three months to six years, you can secure current rates and ensure a stable return. This approach helps you to earn a consistent yield for your chosen period, even in a declining interest rate environment.
Comparison with Other Investment Options
Wealthfront's Automated Bond Ladder offers a low-risk investment opportunity with the backing of the US government's full faith and credit. Compared to savings accounts, CDs, and corporate bonds, Treasuries provide a higher yield and lower risk profile, making them an attractive option for savers looking to grow their wealth while safeguarding their principal.
Fee Structure and Additional Benefits
While Wealthfront charges a nominal 0.25% annual advisory fee, customers can enjoy six months without this fee on their first Automated Bond Ladder account. This waiver provides an excellent opportunity to start investing in a low-risk, tax-efficient strategy to maximize your earnings on surplus cash. Furthermore, the flexibility of Treasuries allows for early withdrawals without fees, making it a convenient choice for those needing access to their funds.
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