While this concept has ushered in index fund investing, robo-advisors, and a wealth of new tools designed to make investing easier and more profitable, Nexus is pushing the efficient frontier into new territory.

Nexus is an app that combines a checking account and an investment account in a single app. As a user, you can establish your cash minimum, and then every dollar past that cash threshold is pushed into an investment account where it can be efficiently invested according to your risk tolerance.

If you’re constantly looking for a way to eliminate the cash drag in your portfolio, Nexus could be the right tool for you.

What Is Nexus?

Nexus is a first-of-it’s kind checking account and robo-advisor combination. The Seattle-based company was founded in 2023, and its checking service is provided by Evolve Bank & Trust. The investment advisory services are provided by an SEC-registered entity Financial Choice Inc. Nexus is dedicated to removing the negative performance effects of cash drag on your investment portfolio.

Rather than keeping your checking account in a low-interest account, Nexus keeps a minimal amount in an FDIC-insured checking account (currently earning 2.5% APY), and puts the rest to work in the market.

Nexus is providing a new technology solution to an old problem. How do you keep cash from acting as an anchor on your portfolio? Nexus’s solution is to keep cash to a minimum, even if it's the money you’ll use for rent, groceries, and to fund your life.

What Does It Offer?

Nexus offers a single app to manage your cash and your investments. It’s designed to push you away from cash and towards higher-yielding assets including bonds, T-bills, and even stocks.

Cash Is In FDIC-Insured Fee Free Checking

Any cash that you hold in your Nexus account is kept in an FDIC-insured checking account. At the time of this writing, you will earn 2.5% APY on the balance and your principal is guaranteed. Nexus provides typical checking account features including a debit card, online check writing, online bill pay, fee-free ATM withdrawals, and more.

Select Your Own Target Asset Allocation

Nexus suggests targeted asset allocation that accounts for minimal cash needs as well as investments that suit your income and net worth. You can also adjust these suggestions based on your own cash needs and preferred risk profile.

Directly Manage Investments and Cash Like a Single Portfolio

Nexus manages the cash in your checking account and the assets in your investment account like they are a single portfolio. By looking at your entire portfolio, Nexus can see whether you are too conservative with so much cash on hand. It moves you away from low-yielding cash and into higher-yielding assets like US Treasuries, bonds, and even stocks. If you need money to cover your expenses, Nexus will sell assets from your investment portfolio to cover your needs.

Withdrawals Designed To Rebalance Your Portfolio

When you spend more than you have in cash, Nexus sells your investments to cover the withdrawal. The Nexus algorithm uses withdrawals to push your portfolio toward your target allocation. It sells whatever asset you have too much of to put your portfolio in balance. Nexus sells the oldest shares of a stock when a stock needs to be sold.

Are There Any Fees?

Nexus does not charge any fees for banking or advisory services. It does not charge a monthly banking fee, advisory fee, or even an ATM withdrawal fee. You will not be charged if you overdraw your account, but Nexus may prohibit future transactions during an overdraw.

How Does Nexus Compare?

Nexus acts a bit like other AI-driven savings apps, such as Acorns, that move money from your checking account into longer term investments. But those apps help by reviewing spending patterns and keep a generous buffer in your account.

Nexus is the only app that we know about that puts your checking and investments together. JoinSave offers a similar concept, but it doesn't really help you understand how you're earning a higher yield than normal.

Wealthfront offers a similar service, but the checking and investment accounts aren’t systematically linked; they remain two separate entities. Wealthfront doesn’t proactively move money from your cash position into your investment account. Also, Wealthfront currently offers 4.55% APY on its checking account, which is more than the 2.5% APY Nexus currently offers.

Frankly, Nexus has a concerning disregard for the importance of cash as a personal finance tool. Markets are volatile, and you need cash to pay for everything from guac at Chipotle to daycare for your child. The Nexus approach can leave you short on needed funds when the market goes down. Alternatively, you may aggressively pay short-term capital gains taxes when you sell positions for a gain.

Rather than using a single app for checking and investing, consider having two accounts. Choose a high-yield checking account for your everyday banking. Then set up automatic transfers to a free brokerage account or a low-cost robo-advisor. You’ll suffer a bit more cash drag, but you’ll have your money when you need it. And more efficient taxation may yield better returns overall.

How Do I Open A Nexus Account?

You must be 18 years old, and a legal resident of the United States to open a Nexus Account. To open the account, download the app on the App Store or Google Play. Provide an email address and secure password, and you’ll have a Nexus App Account.

To start using the account, you must answer a series of questions including your legal name, address, date of birth, and information about your household income and net worth. Nexus uses your income and net worth information to recommend an asset allocation to you.

Once you’ve provided your personal details, you can fund the account by transferring money to Nexus or by setting up direct deposit. Nexus will mail you a debit card.

Is It Safe And Secure?

From a technological standpoint, Nexus offers bank-level security for its checking and investment accounts. The cash portion of your account is FDIC insured up to $250,000. Your investments may lose financial value, but the account is SIPC-insured meaning the money cannot be lost due to hacks or theft. Nexus has processes, policies, and technology in place designed to keep your personal information safe, but there is always a small risk that a breach could lead to identity theft.

The technology side of Nexus may be safe, but that doesn’t make it a safe app. The money in your investment account may lose value, and Nexus’s suggested asset allocation seemed quite aggressive given the fact that I use money almost every day.

Without understanding my spending patterns, it suggested a minimum cash value of just $200-$300 for my circumstances. I would not feel safe if the money that I needed for everyday expenses was subject to market risks. The stock market is not a high-yield savings account, and I don’t want my money subject to that level of risk.

How Do I Contact Nexus?

Contact Nexus by emailing [email protected]. The company’s mailing address is P.O. Box19792, Seattle, Washington, 98109.

Is It Worth It?

Nexus’s focus on maximizing returns seems misplaced. While you may benefit from increased convenience and efficiency, you run the risk of having short-term money (which should be kept 100% safe) placed into a long-term investment with no principal guarantee.

You should have available cash to meet your short-term needs while you save for your long-term goals. Nexus puts the focus on the long-term without considering how that will affect your ability to buy groceries today. People need access to cash every day, and most financial experts recommend setting aside at least 3-9 months of expenses in cash or cash equivalent assets.

I applaud Nexus on its efforts to push people to invest. It's true inertia or lack of knowledge keep many people out of the market. But its approach is too aggressive and could lead to tax inefficiencies and cash flow crunches. It’s much better to automate your investments while keeping adequate cash on hand.

Check out Nexus here >>

Nexus Features