Updated
Which accounts does Wealthfront assume I will use to pay for my time off to travel?
When it comes to paying for goals, we assume you will withdraw funds from your most to least liquid assets. This maximizes your compounding interest while minimizing taxes, fees, and penalties.
1. Income
Your most liquid asset, we assume you’ll start paying for your goal with any available income earned during the goal period.
2. Cash
We assume you’ll spend the cash in your checking and savings accounts -- no taxes, fees, or penalties.
3. Taxable accounts
Once cash is depleted, we assume you’ll sell your investments. We account for any taxes from capital gains. To minimize taxes, we suggest prioritizing assets held for longer than one year.
4. Retirement accounts
As a last resort, we assume you’ll withdraw from your retirement accounts. We do not advise dipping into retirement unless you’re contributing more than you’ll need. We account for the 10% penalty you may incur for early withdrawal.
This communication has been prepared solely for informational purposes only. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security or a financial product. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
Wealthfront offers a free software-based financial advice engine that delivers automated financial planning tools to help users achieve better outcomes. Investment management and advisory services are provided by Wealthfront Advisers LLC, an SEC registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC, a member of FINRA/SIPC.
Wealthfront, Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation.
© 2020 Wealthfront Corporation. All rights reserved.
Comments are moderated prior to publication