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[Explainer] Which Wealthfront taxable investing account is right for me?
Something we’ve seen come up a few times here is folks asking about the differences between our investing accounts, and whether they should have multiple accounts. For this explainer, we’ll focus on the features and use cases for the different types of taxable investing accounts at Wealthfront: Automated Investing Accounts, standalone direct indexing portfolios, and Stock Investing Accounts.
Automated Investing Account: Expert-built and automatically managed
Wealthfront’s Automated Investing Account is designed to help you build long-term wealth with a globally diversified portfolio that, because it helps you take the right amount of market risk for your situation, outperforms a HYSA over time. It’s fully managed by us and uses index-based ETFs (exchange-traded funds) to construct a portfolio that’s optimized to your risk level and help minimize your taxes.
Our Automated Investing Account has seen an average annual return of 9.62% since its inception (as of 03/01/2026).
| Time period | Average Annual Returns |
|---|---|
| 1Y | 24.05% |
| 5Y | 9.87% |
| 10Y | 11.48% |
Average Annual Returns reflect actual pre-tax performance for client accounts invested in Wealthfront’s Classic Automated Investing Account, with a composite risk score of 9 (Ranges 0.5-10). The performance shown is the average annual rate of return, which compounds the daily returns of client accounts from the time they were initially funded until the as of date provided above, assuming compounding through annual reinvestment of returns earned over the full period, and is calculated net of advisory fees and expenses. Past performance does not guarantee future results. It represents one-, five-, and ten-year periods as well as returns since inception through the as of date provided above. Disclosure continued at bottom.
- How it works: Our Automated Investing Account uses ETFs representing 5-8 asset classes (depending on your personal risk score) to build a globally diversified portfolio of low-cost index funds.
- The benefit: It’s incredibly simple and cost-effective. You get instant diversification across thousands of US stocks, global stocks, and corporate and municipal bonds with just a few ETFs. Our automation ensures your portfolio stays balanced to your risk level, dividends are reinvested, and our Tax-Loss Harvesting software automatically looks for potential tax savings daily. Essentially, this account runs smoothly in the background so you can invest without ever having to talk to (or wait on) anyone else.
- Customization options: This portfolio is automatically managed by Wealthfront, but it’s easily customizable. By clicking “manage portfolio” you can change your risk level, add and remove investments, or edit the investment mix to meet your needs.
As the balance in your Automated Investing Account grows, we offer an enhanced form of Tax-Loss Harvesting that looks for movements in individual stocks to harvest more tax losses and help lower your tax bill even more. This feature is called US Direct Indexing – and it’s available for taxable Automated Index Investing accounts with a balance of at least $100,000.
If you’d like to use direct indexing as a strategy, but you have a smaller amount to invest, we also offer two standalone direct indexing portfolios: S&P 500 Direct and Nasdaq-100 Direct, which both have a minimum of $5,000.
S&P 500 Direct and Nasdaq-100 Direct: Direct indexing for increased tax savings
Wealthfront’s two direct indexing accounts (S&P 500 Direct and Nasdaq-100 Direct) allow you to directly own stocks that comprise an index instead of owning an index-based ETF or mutual fund. Direct indexing gives you exposure to the stocks in the index (just like you would with an ETF) with the added benefit of conducting Tax-Loss Harvesting with those individual stocks. Unlike a globally diversified Automated Investing Account, these accounts are focused on tracking a specific US stock index. They don’t include global stocks and won’t be tailored to your specific risk score, as the goal is to track the index as closely as possible.
- How it works: Instead of owning an S&P 500® ETF like SPY, you can own shares of Apple, Microsoft, Amazon, and up to 497 other companies directly in your account. Direct indexing might seem complicated, but our automation makes it incredibly simple.
- The benefit: Exposure to popular indices at a low cost while generating future tax savings. Conducting tax-loss harvesting with individual stocks means you could get opportunities to harvest losses even on days when the index as a whole is up. Additionally, Wealthfront’s S&P 500 Direct has an annual advisory fee of 0.09% (equal to the expense ratio of SPY), and the fee for Nasdaq-100 Direct is 0.12% (less than the expense ratio of any Nasdaq-100® ETF, including QQQ® or QQQM).
- Customization options: Unlike an ETF, you can opt out of any stock in the S&P 500®. Whether a stock doesn’t align with your values or you want to prevent more exposure to your employer’s stock, you can designate which stocks to exclude when you open the account.
Stock Investing Account: Choose your own adventure
The Stock Investing Account is designed to be simple and intuitive, making it easy for you to pick the individual stocks and ETFs you want to invest in.
- How it works: Invest in what you want, with thousands of stocks and ETFs to choose from.
- The benefit: The ability to purchase fractional shares, and no commissions or fees. You can start with as little as $1.
- Customization options: You have control over what you invest in–without distractions that encourage frequent trading.
How do these compare side by side?
| Account | Automated Investing Account | S&P 500 Direct (standalone direct indexing) | Nasdaq 100 Direct (standalone direct indexing) | Stock Investing Account |
|---|---|---|---|---|
| Account Minimum | $500 | $5,000 | $5,000 | $1 |
| Tax Optimization | Tax-Loss Harvesting at the ETF level US Direct Indexing for accounts with $100,000 or more | Direct Indexing (designed to unlock more tax savings than ETF-level Tax-Loss Harvesting) | Direct Indexing (designed to unlock more tax savings than ETF-level Tax-Loss Harvesting) | N/A |
| Holdings | Globally diversified portfolio of index funds. Contains 5-8 asset classes. | 100-500 individual stocks from the S&P 500® Index | 50-100 individual stocks from the Nasdaq-100 Index® | Choose from thousands of stocks and ETFs |
| Customization | Yes. Choose from expert-built portfolios and adjust the holdings to your liking. | Highly customizable, option to exclude individual stocks within the index. | Highly customizable, option to exclude individual stocks within the index. | Pick your own investments |
| Good for | Building long-term wealth (time horizon of at least 3-5 years) | Getting index exposure plus unlocking tax savings | Getting index exposure plus unlocking tax savings | Investors who want to explore picking individual stocks and/or ETFs |
| Fractional shares | Yes | Yes | Yes | Yes |
| Annual Advisory Fee | 0.25% | 0.09% | 0.12% | None |
| Dividend sweeping | Yes, option to reinvest or withdraw your dividends | Yes, option to reinvest or withdraw your dividends | Yes, option to reinvest or withdraw your dividends | Yes, option to reinvest or withdraw your dividends |
Can I have multiple accounts?
Yes, you can have multiple investing accounts at Wealthfront. Clients use a variety of our accounts to help meet their goals across portfolio allocations, risk profiles, or levels of customization.
Some additional considerations:
- If you have multiple accounts with Tax-Loss Harvesting enabled, our software will avoid wash sales whenever possible. However, we don’t actively monitor your Stock Investing Account for wash sales, so you should be mindful of the wash sale rule if you hold the same securities in your Automated Investing Account as your Stock Investing Account (and non-Wealthfront accounts).
- Keep diversification and risk levels in mind. Our Automated Investing Account portfolios are built to include a globally diversified mix of both stocks and bonds. If you choose to open a Stock Investing Account or a standalone direct indexing account, you’ll want to be mindful about diversification across all of your investments to prevent overconcentration in a certain asset class (like US stocks), which could result in increasing your overall risk.
The approach we see most commonly: Many people start with an Automated Investing Account to get their feet wet and build a diversified foundation that can grow over time. Once their taxable account grows, or their income rises, they typically add direct indexing aiming to maximize their tax efficiency and "unlock" those extra savings that come from owning individual stocks.
Let us know if this answered your questions about the various taxable investing account options with Wealthfront. What other explainers do you want to see for us?
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Disclosures: ***AIA Annual Average Returns disclosure continued from above:***The composite includes all qualifying accounts during the covered period with at least $5,000 in assets managed under our standard methodology. Other risk scores are excluded. Accounts using enhanced features, such as Smart Beta, are also excluded as their performance may materially differ from those using our standard methodology. This is not hypothetical or model results. Past performance does not guarantee future results.
Nothing in this communication should be construed as investment or tax advice. Investing involves risk, including loss of principal. Past performance is not a guarantee of future results.
Diversification and automated investing do not guarantee profits or prevent losses. Results vary by strategy and time horizon. Index funds and ETFs provide broad diversification but can still carry market, sector, or asset-class risks.
Tax-Loss Harvesting benefits depend on your tax and investment profile. New securities may perform better or worse than those sold, and tracking errors could cause slight divergence from benchmarks. Unintended tax effects may occur. Wealthfront does not provide tax advice. Consult a tax professional.
Wealthfront Advisers and affiliates do not provide legal or tax advice and are not liable for tax consequences of client transactions. Please consult a personal tax advisor. You are responsible for reporting transactions to the IRS or other taxing authorities.
The S&P 500® index is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by Wealthfront Advisers LLC. Standard & Poor’s®, S&P®, S&P 500®, US 500 and The 500 are trademarks of Standard & Poor’s Financial Services LLC and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Wealthfront Advisers LLC. Wealthfront’s S&P 500 Direct Portfolio is not sponsored, endorsed, sold or promoted by SPDJI or its affiliates and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500®.
Nasdaq®, Nasdaq-100 Index®, NDX®, and Nasdaq-100® are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Wealthfront Advisers LLC. The Product(s) (“Wealthfront Nasdaq-100 Direct Index”, “Wealthfront Nasdaq-100 Direct”, “Nasdaq-100 Direct”) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
Our direct indexing portfolios (S&P 500 Direct and Nasdaq-100 Direct) invest in many stocks in their respective underlying index, but they may not invest in all stocks in the index. Its performance may deviate from its associated index due to tracking error, market conditions, and limitations of Tax-Loss Harvesting. Account size and customization options, such as excluding individual stocks, may affect your portfolio’s ability to track its underlying index. Since indices are not available for direct investment, their performance does not reflect the expenses associated with the management of an actual portfolio.
The Stock Investing Account is a limited-discretion investment product offered by Wealthfront Advisers.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC ("Wealthfront Brokerage"), a Member of FINRA/SIPC. © 2026 Wealthfront Corporation.
