How to Invest $10,000 With a Digital Wealth Manager

Editor’s Note: This is the first part of a multi-part series examining how Hedgeable can be used by clients of different wealth levels. Here we look at a $10,000 total client size.

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Many people have the misconception that premium wealth management is only for those with two commas in their bank account, or those that have a family connection to a financial advisor. Through our digital platform and powerful technology, we aim to democratize the field and provide sophisticated asset management strategies regardless of wealth level. In fact, we have no minimum account requirements at all! From your first dollar to your millionth, and beyond, our platform is designed to add new features as the makeup of your portfolio changes. Let’s take a look at the benefits of using Hedgeable to grow and preserve your nest egg confidently, with a $10,000 starting account size.

Low Fees and Great Value

For $10,000, Hedgeable offers a low fee compared to the industry average. In contrast to the high fees for services at major wealth management firms, which can be as high as 2%, Hedgeable offers its sophisticated asset management for 0.75%. In dollar terms, the cost is $75 per year, or $6.25 per month — less than an Apple Music subscription! According to a recent InvestmentNews survey of Registered Investment Advisors (RIA), that is 50% cheaper than the 1.50% on average charged throughout. In addition, larger RIA’s may not provide the top-notch “fanatical customer service” that you deserve; instead, special treatment is given to clients with larger assets under management with the advisor. At Hedgeable, we provide white glove service to all clients regardless of account size.

Downside Protection

Every single Hedgeable account has access to the same ongoing downside protection overlay. Many of our clients take advantage of the fact that we don’t have an account minimum, to begin to grow and preserve wealth at an early stage in their life. We offer sophisticated investing techniques to investors who would otherwise not have access to things such as downside protection.

What is the benefit of downside protection? Large drawdowns (i.e. losses experienced in relation to peak portfolio value) devastate growth potential over time. Larger losses require increasingly larger returns to get back above water.

Alternatives

A pure vanilla portfolio of stocks and bonds has been the standard for portfolios in the past, but it is important to diversify with low correlation securities. That is, by adding in securities that do not move in tandem with each other, it avoids putting “all of your eggs in one basket,” thus lowering the overall risk of a portfolio. These diversifiers are known in the industry as alternatives. They can encompass things like real estate, commodities, gold, currencies, and many areas of the fixed income market. At Hedgeable, we will add liquid ETFs that track things like public REITs, Gold, Energy, and Agriculture — plus more exotic alternatives like bitcoin and private venture capital. The level of alternatives in your portfolio will vary depending on your risk appetite, risk tolerance, time horizon and income level/net worth (for securities that are limited by law to accredited investors).* Hedgeable offers alternative investments to everyone — including those who invest $10,000 with us.

Education: From “Investing for Dummies” to Portfolio Construction Methodologies

It may be daunting to take a look at the investing landscape from a lens of someone outside the financial industry. At Hedgeable, we don’t expect our clients to know all about portfolio construction, risk management, or security analysis — that’s what we’re here for! However, we offer our clients the opportunity to learn as much or as little as they want. Regardless of a client’s knowledge base, we offer educational opportunities to make sure users are comfortable with Hedgeable’s investment process and philosophy.

Through the “Heducation” section of our client platform we include the foundation for financial literacy, with topics ranging from “What is a stock?” to “What does inflation have to do with the stock market and why won’t CNBC stop talking about it!?” On top of that, our team is dedicated to providing blog posts on current events, hundreds of answers in our FAQ section, and more detailed information in our robust white papers. All of this is available to Hedgeable clients investing any amount of money — even $10,000 or less.

We feel it’s important to empower everyone with knowledge, and Hedgeable also takes pride in being your financial Ninja. We work diligently day-in and day-out to manage your affairs, so you don’t have to take time out of your busy schedule and try to do it yourself.

Over 20 Different Account Types

At Hedgeable, we accept just about every type of legal investment account. From individual accounts to corporate trusts to custodial accounts to IRAs to 401(k)s, and everything in between, we have the ability to manage a wide array of options with absolutely no minimum requirements. You can even open multiple accounts and bring your total wealth under the Hedgeable umbrella, no matter what wealth level that may be.

Are you a doctor, lawyer, entrepreneur, or other self-employed professional? Are you missing out on the higher contribution limits that 401(k)s provide, compared to IRAs? As a sole proprietor, you (and your spouse) have the option to open up a Solo 401(k) to access some of the benefits enjoyed by those who enroll in an employer plan. As of 2015, you have the option of contributing $18,000 (or $24,000 if you are 50 and older) as an employee and $35,000 as an employer.** Hedgeable is the only digital platforms to accept Solo 401(k)s, and we offer it to all investors at no extra cost. So, if you are just graduating law or medical school and starting out your practice, or are just getting up and running in your small business, you can take advantage of all the benefits of Hedgeable in a 401(k) structure, with a $10,000 account size!

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*An accredited investor is defined by the SEC as the following:

  1. Earn an individual income of more than $200,000 per year, or a joint income of $300,000, in each of the last two years and expect to reasonably maintain the same level of income.
  2. Have a net worth exceeding $1MM, outside of the primary residence, either individually or jointly with his/her spouse.
  3. An employee benefit plan or a trust with total assets in excess of $5MM.

**Employer contributions depend on the employment income you claim as an employee. Please consult with a tax professional to determine how much you should contribute.

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