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Wealthfront 2.51% APY: BEST High Interest Yield Savings Account? (Review) - YouTube
Channel: Money Growth Academy
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The national average of interest paid on
a savings account is 0.1 0% wealthfront
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claims to be able to pay 2.5 1% but is
it real let's find out inside this video
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you'll learn the advantages and
disadvantages of a wealthfront cash
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account before you decide to move your
hard-earned dollars we'll also answer
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three questions everyone wants to know
about the wealthfront cash account like
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what's the catch behind the 2.5 1 annual
percentage yield and how exactly 10
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wealthfront offers such a high annual
percentage yield and is the company
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legit and with the legit offer hi my
name is Dee and welcome to the money
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growth Academy where we give you the
tools to master your wealth to free
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yourself and where you'll learn the
practical and tactical knowledge and
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skills to improve your EKG that's your
ability to earn keep and grow your money
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well exactly who is wealthfront
wealthfront Incorporated is an automated
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investment firm or Robo advisors what
they call them today that offers
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investment options a cash account and
financial planning
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the company based out of Redwood City
California was founded in 2008 and as of
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March 2018 had more than 10 billion
dollars of assets under management now
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let's review the advantages and
disadvantages of a wealthfront cash
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account we'll start with the advantages
first a wealthfront cash account is FDIC
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shurt up to a million dollars that's
four times the insurance coverage of
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traditional national banks well why
would they do that you ask well to
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entice more account holders to
consolidate their multiple accounts from
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other banks all into one bank and that
is wealthfront
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most people divide their investments in
their savings over multiple accounts
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because most financial institutions will
only insure up to the federal minimum of
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about two hundred and fifty thousand
dollars per account to offer you that
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$1,000,000 FDIC coverage wealthfront
uses more than one bank to hold your
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money now these banks are called program
banks which wealthfront will actually
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disclose to you on their monthly
they even tell you which program banks
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your money is being held in so that
you'll know so nothing's hidden there
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it's all out front very transparent
another advantage is you have unlimited
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withdrawals so you can move your money
in and out of an account as much as you
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want now how is this possible when other
banks only permit six withdrawals and a
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month house as possible well it's
because your cash account is not
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actually tied to a money market fund so
you're able to pull your pull out your
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money as needed your money is actually
held in cash at various unaffiliated
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banks called program banks as I just
mentioned before and it is protected by
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that $1,000,000 FDIC insurance hence the
name wealthfront
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cash account also note that when you do
want to make withdrawals it will take
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between one maybe three days for your
withdrawal to arrive in your bank so you
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want to make sure you plan accordingly
another advantage is that wealthfront
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makes it easy to transition from using
their savings account to moving into
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their investment plans from your cash
account you can set automatic monthly or
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weekly deposits there is a wealth front
app for the convenience of access to
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your account from nearly anywhere there
are no fees to open or hold your cash
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account with well front and there are no
money transfer fees charged by
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wealthfront
they have an easy and fairly simple
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online application process to open your
cash account we would ask they'll ask
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you a few questions that are personal in
nature to identify who you are so be
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prepared for that it shouldn't take more
than about five minutes to complete if
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you're transferring money from another
account make sure you have your bank
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routing numbers available so that you
can input that information now you can
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also open your account with just one
dollar deposited in the account they
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also offer some free easy-to-use
financial planning tools on their
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website you can use to help you reach
your various savings goals did I mention
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that they pay two point five one percent
annual percentage yield well how
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how is it that they could actually pay
these rates I cover this in our video
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Marcus by Goldman Sachs if you want more
detail but here's a brief explanation as
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to why online banks like wealthfront
pay a much higher rate than national
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banks and local credit unions there's
this thing called the Fed fund rate and
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I'll try not to get you know too deep in
the weeds here so hang in there with me
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but I think it's important to understand
the Fed fund rate is the interest rate
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banks and depository institutions lend
money to one another usually on an
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overnight basis you see banks must keep
a certain percentage of depositors money
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on reserve that the banks don't earn
interest on banks use these overnight
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loans to stay as close to the reserve
limits as possible without going under
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them to maintain the proper level
reserves the feds current target rate is
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between two point two five percent and
two point five zero percent and that as
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of this video recording it's at two
point five zero percent so why is that
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important to know well if the banks can
borrow from you in a form of deposits at
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two point two five percent it's actually
cheaper than paying the Fed fund rate so
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what some of these online banks have
have done to be able to offer these
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great rates is lower operating costs by
cutting back on non-essential services
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and replacing a lot of people with
technology and they use some of that
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savings to pay out slightly higher rates
to entice more borrowers this is what
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you're seeing with many of these online
banks paying higher rates of interest
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for instance to get that two point five
one percent annual percentage yield at
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wealthfront you lose the ability to talk
to human for customer service all
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inquiries at this time are only through
email which could take day or two unless
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you have an existing investment account
in which case you must log in first and
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then give it then they'll give you
access to a phone number that you can
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call so if you want more human and
slightly more immediate communication
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this actually might not work for you so
just kind of give that some thought
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you know if you like what you're hearing
so far hit the like button and
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subscribe the disadvantages of a
wealthfront cash account let's get into
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those things so you know what those are
you cannot link payment services like
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venmo or PayPal or Square to your
wealthfront cash account and bill pay is
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not available out of your wealthfront
cash account so these are all features
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are talking about in the future but I'm
telling you right now they don't have
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them there is no debit card so you don't
have that there's no check writing
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privileges so if you need a lot of
access to your savings account and a
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single month you know you might actually
want a checking account and not a
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savings account interest is compounded
monthly rather than daily now this is
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not so much a disadvantage but I think
some people get so hung up on this I
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thought I'd listen here anyway so to
actually calculate a compounded monthly
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you simply divide the annual percentage
yield by 12 months and calculate and
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then to calculate the compounded daily
figure you just divide the annual
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percentage yield by 365 number of days
in a year the difference between the two
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is fractional unless you're talking
about hundreds of thousands of dollars
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and even then it's not that significant
when the interest rate is expressed in
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terms of annual percentage yield the
compounding effect is already taken into
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account so the annual percentage yield
is more important than the fact your
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money is compounded daily or monthly so
you say d this is great now but our
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wealthfront cash account rates
guaranteed well no they're not
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guaranteed if you want to guarantee the
annual percentage yield you'll need to
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lock up your money in a CD that's a
certificate of deposit for a period of
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time which means you lose some liquidity
but that's true really of any bank their
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cash savings account that
wealthfront scoff savings account rate
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will fluctuate along with the larger
changes made by the Fed as we speak the
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feds are preparing to make a possible
rate adjustment so we'll have to see how
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that impacts the rates for these online
banks if the rates go down
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we may see online banks adjusting kind
if the rates go up well we may see
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online banks get more aggressive with
their online savings account rates to
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attract more depositors so is
wealthfront
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legit well after digging in through
everything that I could find I
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have to tell you yes it is legit if
you're in a savings account that is
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paying closer to national average of 0.1
0% annual percentage yield I'm gonna
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tell you is definitely worth taking a
look at if you're already having account
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paying 2.25 percent versus two point
five one percent that the wealthfront
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cash account is providing well you'll
have to decide if the move is worth 0.26
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percent increase be sure to check out
our video best savings accounts in 2019
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for comparisons of several other online
banks and our recent review of markets
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by Goldman Sachs for an in-depth look
and what is really required to get their
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great online savings account rates if
you like this video give us a thumbs up
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and obviously please subscribe hit the
notification button to be notified of
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the most in-depth online reviews of the
best savings accounts in the u.s. one of
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the highest paying savings accounts in
the US and why you might consider
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switching today I'm going to summarize
the pros and cons of markers by Goldman
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Sachs one of the more popular online
banks on the list if you're not earning
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at least a minimum a 2% rate of return
on your savings account you got to ask
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yourself why not here are at least five
good reasons to save your money in a
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savings account
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