A few comments, somewhat biased towards people in the US:
Is there a way to transfer out individual appreciated holdings for the purpose of donating those holdings? Does that cause problems with the remainder of your holdings? i.e. Does Wealthfront rebalance the remainder of your holdings, potentially selling holdings with capital gains and reducing future opportunities to donate appreciated holdings? For an effective altruist investor, this seems like a very important consideration in the long term.
Is a highly risky portfolio (100% stock, overweighting small cap value and emerging markets) necessarily appropriate for an effective altruist? Most people don’t have the risk tolerance to endure huge losses or maintain a portfolio that underperforms more conventional asset allocations for decades at a time. Such a situation may result in selling near the bottom of a market and/or being scared off from risky investing for good. Maybe effective altruists are different, but I’d be cautious in making that assumption. It may be better to start with a more conservative asset allocation and then endure one or more downturns before deciding to substantially increase risk.
A simple allocation like a 100% allocation to Vanguard Total US Stock Market or Vanguard Total World Stock may outperform a highly aggressive robo-advisor portfolio after fees in the long term. Fees are guaranteed to reduce performance, while tilting towards small cap value and emerging markets are not guaranteed to increase performance. Since 100% stock may still be too aggressive though, it may be a good idea to dilute risk further with bonds or CD’s.
Effective altruists who want more money in retirement than social security can provide (for consumption or donation) or who want to leave behind an estate should be making use of tax advantaged retirement accounts. That means a 401(k) in many cases. Similarly, effective altruists who want to pay for their childrens’ college should be using tax advantaged college savings accounts, such as 529 accounts. That makes investing more complicated than simply signing up for a robo-advisor and forgetting about it.
An effective altruist or anyone else who wants free high quality investing advice should check out www.bogleheads.org. You can read the Wiki and/or post of the forum with your situation (including your effective altruist goals) and highly competent people will be more than happy to help.
A few comments, somewhat biased towards people in the US:
Is there a way to transfer out individual appreciated holdings for the purpose of donating those holdings? Does that cause problems with the remainder of your holdings? i.e. Does Wealthfront rebalance the remainder of your holdings, potentially selling holdings with capital gains and reducing future opportunities to donate appreciated holdings? For an effective altruist investor, this seems like a very important consideration in the long term.
Is a highly risky portfolio (100% stock, overweighting small cap value and emerging markets) necessarily appropriate for an effective altruist? Most people don’t have the risk tolerance to endure huge losses or maintain a portfolio that underperforms more conventional asset allocations for decades at a time. Such a situation may result in selling near the bottom of a market and/or being scared off from risky investing for good. Maybe effective altruists are different, but I’d be cautious in making that assumption. It may be better to start with a more conservative asset allocation and then endure one or more downturns before deciding to substantially increase risk.
A simple allocation like a 100% allocation to Vanguard Total US Stock Market or Vanguard Total World Stock may outperform a highly aggressive robo-advisor portfolio after fees in the long term. Fees are guaranteed to reduce performance, while tilting towards small cap value and emerging markets are not guaranteed to increase performance. Since 100% stock may still be too aggressive though, it may be a good idea to dilute risk further with bonds or CD’s.
Effective altruists who want more money in retirement than social security can provide (for consumption or donation) or who want to leave behind an estate should be making use of tax advantaged retirement accounts. That means a 401(k) in many cases. Similarly, effective altruists who want to pay for their childrens’ college should be using tax advantaged college savings accounts, such as 529 accounts. That makes investing more complicated than simply signing up for a robo-advisor and forgetting about it.
An effective altruist or anyone else who wants free high quality investing advice should check out www.bogleheads.org. You can read the Wiki and/or post of the forum with your situation (including your effective altruist goals) and highly competent people will be more than happy to help.
Avi