You're, an investor who doesn't really want to pick stocks, try and time the market and still want to be involved in the market and actively investing. Then in this video i'm going to show you as a beginner how you can get started, investing with just a hundred dollars every single month. So what we're talking about today is wealthfront management. Wealthfront is an online banking and online investing or wealth management company.

Who is really most known for their robo advising now, if you're not sure what robo advising is robo advising is really just a computerized algorithm? That does all the investing for you now. The cool part about this is that robo advisors use something called mean variance. I know that sounds complicated, but it's really not all it really means is they use a computerized algorithm to find the lowest risk and highest potential reward within the stock market or within the indexes or etfs or stocks in which they are investing in. So the reason this is great to use as a beginner is because they do all the work for you.

So once you've created account and you've signed up and you've linked your bank account, then you can just set yourself up on an automatic monthly deposit. Now, the reason that this is a really smart approach is because you will take advantage of what's called the dollar cost average strategy. Now, there's plenty of articles on this that will talk and tell that dollar cost averaging is one of the best approaches for a beginner investor and really, the reason is, is you don't have to pick the investments you don't have to worry about timing, the market and That is really it you're, not timing, the market and you're not having to make the decisions yourself really. The main thing with dollar cost averaging is that over time as you buy high, as you buy low, and these automatic deposits keep reoccurring and you keep reinvesting automatically you're, eventually going to come up with a dollar cost average, and that is your average ownership of pretty Much your entire portfolio over the entire time that you've been investing and the main goal is that over time, you're going to invest a little a little a little and it's going to accumulate to a big amount and as your prices are above, your dollar cost.

Average. Of your portfolio account you're, going to see massive returns earlier. You heard me talking about something called mean variance, and that was what a lot of these robo-advising companies use in relation to their automated algorithm and strategy. Well, that automated algorithm and strategy mean variance is based off of standard deviation and standard.

Deviation is the same exact thing that i and many of the traders in our community and around the world use to analyze stocks, and it happens to be one of the most accurate tools or approaches to analyzing the market and i'll. Show you guys a couple examples here on my screen, so as we're looking here, this is the stock chart of tesla, and what this channel that you see is doing is really measuring the market and its volatility and giving you a projected trend for the stock. You see that white line on the chart - that is the mean so any time prices are below that white line theoretically they're on sale or a lot of big time institutions or computerized algorithms such as these ones, that these robo-advising companies are using see this as a Value buying opportunity, hence the name mean variance in standard deviation. You have a mean that is going to be the middle line, so that's kind of like the average normal statistical trend.

So, whenever we're below that, theoretically, a lot of these computerized algorithms and institutions and traders like myself - we see this as on sale and a good buying opportunity for the stock. So what wealth front and a lot of these robo-advising companies are doing is they're using a computerized algorithm based around the standard deviation, which therefore is looking for prices that are generally below the mean, so they can buy them and invest them and then, as those prices Of those securities etfs indexes stocks rise back up and above the mean, then that is seen that the prices are a little high. This is a good selling opportunity and that there, ladies and gentlemen, is pretty much the approach that a lot of these robo-advising companies are using when investing your money. Now what i want to do is i want to show you guys my wealthfront account, and this can really help you guys determine whether or not you would like to use such a service see what we can do by looking at my account is show you the Returns that i've received what sort of investments i'm invested in and what my risk tolerance is now.

What we're going to do is we're going to dive into the portfolio and actually see what wealthfront has been investing in with a risk category as 10.. So if we go to the u.s stocks, you're going to see that we're only invested in vti and schb and if you look at kind of the definition of those two, it's really just a broad based stock market etf. So those two things you're invested there, vti and schb - are really just a broad-based fund, you're buying pretty much into the entire stock market and as we move over to foreign you're, going to see vea and schf again, two broad-based etfs of pretty much the foreign stock Market european market, and so on, as we move down you'll see emerging markets. Now this is where you're starting to invest money into what people don't want to call them third world countries, because that was too politically incorrect.

So now we call them emerging markets, because that sounds cooler. So now you can see we have vwo and iemg, and really this same sort of pattern goes on no matter your risk, tolerance with wealthfront or another robo-advising company. Generally speaking, they're going to have you invested primarily into a broad based etf, which is a basket and collection of multiple different companies, stocks that way you're diversified and you don't have too much risk into one specific asset, class or stock. Now the main reason that my risk tolerance is so high is because i'm young - and i still have a lot of time left - to invest in the market and really the whole rule of thumb is the older that you get the less risky you should be, or The older that you get you shouldn't have as much money invested into stocks, but you should have more money invested into low risk bonds or at that point you might be moving into a fixed annuity.

So with that being said, my risk tolerance is 10 because i'm young and i still have a lot of time to invest so i'm going for the biggest risk and the biggest reward. Currently and theoretically my risk tolerance is slightly too high, because the rule of thumb is whatever your age is subtracted by a hundred. That's how much you should have invested in stocks and the rest of that should be invested in something that is low risk. Maybe municipal bonds, government bonds and so on so forth.

So if i'm 27 theoretically i should only be invested 73 into high risk stocks and then i should be invested, the rest into municipal bonds and so on so forth. But none of that nonsense yolowet we're going for the big return. So, as you guys can see here, i've had this investment account with wealthfront for about one year now. Wealthfront does promise a seven percent return, but, as you can see, my account has returned on average about 25 slightly higher at times and slightly lower at other times.

But overall, a 25 return on a robo advising and company is very, very good. So i cannot complain there now that might sound, really good for a robo advising company to be up 26. Almost 27, yes, kudos to wealthfront awesome, but reality is the entire stock market has been on an absolute tear. So, whenever the stock market's on a tear generally, prices on everything are going up.

So, if you're having a really really good return, while the stock market is on a big run, then a lot of that return should just be contributed to the overall market. Now, one way that you can increase your return by using a robo advising company will contradict what i first told you in the beginning of this video, which is, is you don't have to pick the investments? You don't have to worry about timing, the market, and that is really it now. What you could do to maximize your returns is to make an extra deposit on top of your monthly deposits when the overall market is down. So what you're going to do is you're going to use the same strategy that the robo advising companies are doing but you're going to add an additional deposit to your account on top of your monthly deposit.

As we discuss, you want to use a dollar cost averaging strategy, so every single month or you could do it on a weekly basis, you're just going to re deposit reoccurring investments, but you, as the investor have to know when to take advantage of the market and When to take advantage of the market is when it's on a dip or it's going down and the markets are on sale and the whole process of this is to add extra money to your account more than you typically do through your regular reoccurring investments when the Market's down that way, you're throwing in an additional chunk of money when the markets are on sale more than you typically would that will help reduce your dollar cost average or your average price in the market and over the long period. That's going to help you make a bigger return because you're putting in more money at lower prices, which will generally bring down your long-term average and over the course of a long time, it's going to be a fantastic approach. But how do you know when you should be adding into these dips or when these low risk opportunities are going to be such that this robo advising system is finding now the only way? I know how to do this and the only way that i can tell you guys to do this is, unfortunately, you have to use td ameritrade, thinkorswim's trading platform. If you have the availability to the software, then fantastic, if you don't i'm sorry, i don't know what else to say, but if you can and if you could use thinkorswim's trading platfor do so immediately.

What you're going to want to do? Td, ameritrade finger swim platform. Sign up create an account. The first thing that you're going to do is you're going to add the standard deviation channel to your chart and you're usually going to want to use the standard deviation channel on a one year, one day, time frame or a 180 day. Four-Hour time frame and between those two time frames that tends to be some of the most accurate, pinpoint trend lines that you can buy in off of and what i'm really trying to explain to you is what these computerized algorithms are using to do their buying.

So if you yourself can plot out the standard deviation channel on thinkorswim using a one year, one day, chart or 180 day four hour chart you're going to be using sort of the same system that these computerized algorithms are using. So now that you know when the markets are in a dip and the computerized algorithms are looking at the same thing, it would be wise to add additional money to the market, so you can bring down your dollar cost average. I don't want to make this video too complicated, but what we have to touch on is where you're looking to buy when the markets are dipping. Now, generally speaking, whenever the market goes below the white line, which is the mean - and it goes down to the solid orange line that is called a one - deviation - move from the white line and that's generally, where you're going to want to start buying or adding in To your investment account when the markets are in a dip, so i hope that helps.

I hope you learned something new today. There will be a link in the description to go to wealthfront and sign up to create your own individual investment account. I also encourage you guys to leave any comments down below, in which you have questions on things you guys are concerned about or any videos that you guys would like me to make after this one. With that being said, i'll see you guys on the next video.

Take care.