Wealthfront Launches Automated Bond Ladder to Assist Investors With Earning More

Wealthfront, a consumer Fintech and pioneer of the robo-advisor industry, announced an Automated Bond Ladder that enhnaces how investors use US Treasuries to maximize interest on their extra cash.

This addition to Wealthfront’s product suite is described as “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.”

Dave Myszewski, Vice President of Product at Wealthfront, said:

“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. 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.”

The 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 a 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.”

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