The company’s latest offering is a low-risk way to maximize interest with more tax efficiency than a savings account or CD.
Wealthfront, a leading consumer fintech and pioneer of the robo-advisor industry, announced a first-of-its-kind Automated Bond Ladder that revolutionizes how investors use US Treasuries to maximize interest on their extra cash. This new addition to Wealthfront’s product suite is a liquid, low-risk way to earn a steady yield, with more tax efficiency than a savings account or CD.
Because US Treasuries are exempt from state and local income tax, investors can keep up to 13.3% more of their earned interest from the Automated Bond Ladder when compared to a high-yield savings account or CD (depending on state of residence and tax bracket). This tax efficiency plus the product’s focus on preserving principal makes the Automated Bond Ladder an ideal way to balance out higher risk investments, protect and grow a windfall, or save for large expenses without risking loss of funds.
A ladder is an intelligent way to invest in low-risk Treasuries, but accessing the strategy previously required considerable manual work, high minimums, or expensive fees. With today’s launch, investors can open an Automated Bond Ladder with just $500, then Wealthfront’s software instantly compares rates across hundreds of state income-tax exempt US Treasury bills and notes to build a ladder that helps investors reduce interest rate risk and lock in rates for six months to six years. The Automated Bond Ladder conveniently handles researching and managing multiple maturity dates, adding more funds in increments as low as $100, and automatically reinvesting proceeds from interest and maturing bonds to keep money growing effortlessly.
Browse more about Fintech Insights: Brand Safety and Mutual Trust: The Key to Building Financial Services Partnerships
“Bonds are begging for modernization with the help of software. Today’s launch of the Automated Bond Ladder continues to redefine what is possible when it comes to saving and growing your money by bringing the same automated, set-it-and-forget-it approach to US Treasuries that we brought to ETFs when we pioneered the robo-advisor industry,” said Dave Myszewski, Vice President of Product at Wealthfront. “We’re proud to add another innovative way for investors to make the most of fixed income, and we will continue expanding our product suite to help our clients build long-term wealth.”
Excitement about US Treasuries is at an all-time high, driven by their unique combination of extremely low risk, stable yield (if held to maturity), and exemption from state and local income tax. In 2023, Treasury Bill purchases totaled $175 billion, making it the highest year on record, and the trend has continued into 2024 with purchases totaling $47 billion in Q1 alone. Interest in laddering strategies is similarly strong among Wealthfront clients: more than 50 percent of clients’ external Treasury holdings are held as part of a ladder.
Despite this growing demand, most of the current fixed income offerings are decades behind what today’s investors expect from their financial products, leaving bond ladders reserved for retirement planning or gated behind expensive financial advisors or clunky interfaces. Thanks to Wealthfront’s expertise in automating sophisticated investing strategies, the capital preserving power of a Treasury ladder is now available to the many investors eager to lock in rates before potential cuts.
As Geoff Cleary, a Wealthfront client who beta-tested the Automated Bond Ladder, said: “Faced with the spectre of falling interest rates, I wanted to use a bond ladder to grow my emergency fund, but I was immediately overwhelmed by how much work and research it would take to build and manage one myself. Wealthfront made the process so accessible with their bond ladder, and it was perfect timing for me to start taking advantage of US Treasuries to earn a higher after-tax yield.”
Today’s launch adds to Wealthfront’s growing suite of innovative saving and investing products designed to help clients build long-term wealth in all market conditions. The company also offers an award-winning Cash Account with a 5.00% APY via partner banks and free same-day transfers through the RTP network, plus automated index investing, retirement accounts, and adviser-managed, zero-commission stock investing.
Wealthfront’s focus on delivering innovation and value through software is why clients continue to adopt new products rapidly and why the business remains profitable and able to thrive in a variety of market conditions. This is evidenced by the company recently surpassing $60 billion in total client assets across all product offerings and continuing to maintain EBITDA margins over 40 percent.
 Latest Fintech Insights : Parametric Insurance: Revolutionizing Traditional Insurance Models
[To share your insights with us, please write to psen@itechseries.com ]
