We have decades of investing experience at Ellevest (and some days it feels like even more, believe me). We’ve used this experience, and hundreds of hours spent with women like you, to hone our approach to investing:
Each of your goals has an investment portfolio, and each investment portfolio is customized for that specific goal.
The old way of investing was just one investment portfolio. But you told us you have a number of different goals, some of which you want to achieve in the short-term (think emergency fund), some in the medium-term (maybe buy a home) and some are way out there (retirement). Each of these require different investment approaches to get you there.
We customize your financial plan to YOU.
Ok, here’s where we start to get really jazzed. Because we don’t just customize each portfolio to your goals; we customize the whole investment plan to your salary, projections of how your salary will grow over time, (based on characteristics like your educational level and, you know, the fact that you’re a woman). And then we invest according to this customized plan.
We invest your money in low-cost ETFs.
Why? We believe that the research is clear that the greatest returns on investing come not from picking individual stocks (for example, buying Cisco vs IBM), but from picking combinations of asset classes (US large capitalization stocks vs emerging market equities). And ETFs keep your costs low, both your fees and your tax bill. And we don’t just look at the stated management fee when looking at costs of ETFs; we take this further and also review its total costs, including how expensive it is to buy and sell them, which can also impact your returns.
We monitor your investment portfolio daily and make changes as necessary.
That’s because market movements can shift the mix of investments, as some may increase in value and others may decline. We rebalance your investment portfolio as needed, to get it back to the right mix of investments.
We adjust your investment portfolio over time, aka the “Ellevest glidepath.”
As time passes and the time until you want to achieve your goal gets closer, we adjust your portfolio to become more conservative. That’s because, in the earlier years of your investment, if the market goes down, you have more time to make that up. In the later years, you want less risk, so that a market correction doesn’t throw you off course.
We refer to this active management of your portfolio as a “glidepath” and our research indicates that it can increase the likelihood of reaching your goal. Others don’t do this.
For your retirement, we target an annual income level for you, rather than an aggregate dollar amount.
There’s been a lot of attention to “What’s your number?” for your retirement savings; this is typically expressed in an aggregate dollar amount.
Yes, but…that money doesn’t go as far in a low-interest-rate environment such as the one many of us grew up in. So, Ellevest targets getting you to an annual spending amount during retirement, not just to an aggregate number that may or may not support your spending. (And we think it’s more intuitive, anyway, given that most of us have an idea of what an annual spending number means to us, in terms of our lifestyle.)
We believe we have more conservative market assumptions than some of our competitors.
So, this is not immediately apparent. But when we reviewed other digital advisors, they appear to have higher market assumptions built into their models. We certainly hope they are right! If they are, you will benefit from those returns either at Ellevest or at those other firms. We just prefer to be more conservative in our outlook, to give you a higher likelihood of reaching your goals.