Is investing in a robo-advisor platform with stocks priced this high a bad idea?

I am considering opening an account with Wealthfront in order to force myself to invest with the proper portfolio allocation. I am 22 and have approximately $115K in a savings account earning 1% (it was in a vanguard money market) and $20K in 4 vanguard funds (mid cap growth, emerging markets, international value, and short term investment grade bond). I am scared to invest in Wealthfront where the majority of the money will probably go into S&P stocks at current high prices. I am tired of seeing how much money I have lost by not investing in the market. Should I continue looking for better values in other funds and not worry what my asset allocation looks like? I am considering adding to emerging markets, developing markets, high dividend yield, and maybe an energy or health care ETF.

Investing, Asset Allocation, Choosing an Advisor
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August 2016

Thanks for the question. Investing is dependent on future goals and time horizon for the most part. As a 22 year old, I would imagine your investing goals would be for long term appreciation. Since you have time on your side, I wouldn't be too concerned about where the market is today. We have seen time and time again markets make new highs and although this may not be true going forward, the odds are highly in your favor they will over the next 20-30 years. Obviously, there is more to that and to help you answer your question for your personal case, you would want to consult with an investment advisor. In a nutshell, I am biased as an investment advisor and would say to avoid the robo platform. The best thing may be to invest in exchange traded funds on a systematic basis. Buy 10% of your portfolio over the course of 10 months and take advantage of dips in the market. Buy ETFs in all different categories and even though you may invest in the S & P 500, we are a global economy and names like Mc Donald's, Apple, and Procter and Gamble have international diversification embedded in their company's individual markets. Income from dividends are great too. You can find many different low cost stock ETFs that have yields of 3-4%.

Good luck and I hope this was helpful!

August 2016
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August 2016