THEO Progress 2017

Another good year and some thoughts

I've liked THEO from the start. The design, ease of use, and customer service are all best in class. We've recommended them on the blog for a couple of years now.

​Last year's update was fairly positive, but contained a number of inaccuracies and a few things have changed (mostly for the better).

First, the progress report. I continued yen cost averaging into the account at the same rate (40,000 yen a month), although instead of sending it I was able to set up automatic withdrawals (see below for details).

The US dollar balance and growth are below (THEO invests in US ETFs, so the dollar balance is in a way the 'true' balance):
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The yen balance and growth are below. Looks better than the dollar one, which I presume is due to favourable exchange rate movements over time.
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So, still pretty happy with THEO. Once the account is set up, you can pretty much just leave it to run automatically and they seem to be doing what it says on the lid.

So what has changed?

First the bad news. I was mistaken about the tax harvesting. After reaching out to THEO they confirmed that they do not do tax-loss harvesting in the account (their interpretation of Japanese law is that they are not allowed to -however competitor WealthNavi claims to provide it). This reduces the value provided by THEO considerably.

The fees are also larger than I realized. THEO charges 1% a year on the first 30m yen, and 0.5% on anything above that. This fee includes purchase fees, foreign exchange fees, and deposit/withdrawal fees. Unfortunately it does not include the annual charges of the funds themselves (which are fortunately relatively low but still push the total fee paid higher).

There have also been some improvements. The biggest is probably that you can now set up automatic bank withdrawals from THEO. Basically you set it up (relatively painless online) and they take a set amount from your bank account each month. That way you don't have to remember to send the money, and you don't have to pay for bank transfers (or use up your free ones with Shinsei). The minimum to do bank withdrawals is 10,000 yen a month.

THEO has also reduced the minimum investment needed to open an account to 10,000 yen. This probably won't make much difference, but might make it slightly easier to open an account.

Finally, THEO has a new mode where instead of deciding what level of risk you are happy with, they just run your account for you automatically based on your goals and investing time frame. This should make it easier for beginners to get up and running.

I'm going to carry on investing regularly through THEO, and plan to increase my monthly contribution in the new year. The service is unfortunately not as good as I thought it was, but I am still pretty happy with it.

How about you? Are you using THEO? Thinking about opening an account? Are you using one of the other robos? What do you think of them?