Week 3 Betterment v Wealthfront Results

This week in stocks had the worst week since February. The major averages declined more than 1 percent, the worst since Feb. 5, for S&P 500 and Nasdaq composite and the worst since Feb. 12 for Dow Jones Industrial average.

Looking at Betterment and Wealthfront, their decline wasn’t as big of a loss as the major averages.

Here are the numbers:

Dow Jones: -1.25%

S&P: -1.23%

NASDAQ: -1.23%

Betterment: -0.79%

Wealthfront: -0.45%

Here you’ll see that Wealthfront’s portfolio is slightly better than Betterment. Here are some screenshots of what each of these robo-advisory platforms invested in:

Betterment

Betterment allocation

Wealthfront

Wealthfront allocation

You can see that these two platforms invests completely different from each other. This is one of the reasons why I’m testing out to see which platform performs better in the long run.

Betterment’s website explains why they chose their ETFs:

Betterment exclusively uses open-ended index tracking ETFs rather than mutual or closed-end funds due to their low manager risk, low embedded costs and natural tax efficiencies. These structural advantages along with the maturation and growth of the global ETF market over the last two decades has led to liquid investments covering different asset classes, markets, styles, and geographies. As a result, we can source investment vehicles from a market of portfolio components which are versatile, extremely liquid, and easily substitutable. However, not all ETFs are exactly alike and the difference between an optimal and a suboptimal selection can have non-trivial effects on long-term performance of a portfolio.

You can find more information here: Why did you pick these ETFs?

I’ll explain further about the different ETFs in a blog post at a later date.

Week 2 Betterment v Wealthfront Results

We’re finally vested in Wealthfront! It felt like it was a longer process but we were able to get something going at the beginning of this week to see a good comparison!

Here are the numbers:

Dow Jones: 1.60% 

S&P: 1.71%

NASDAQ: 2.70%

Betterment: 1.35%

Wealthfront: 1.30%

Looking at this at first glance, you can see that Betterment performed better than Wealthfront, however, something happened in this week. Already, in week 2, I received a dividend of $1.05, which gave an extra boost of 0.11%. If I never received this dividend, Betterment would only have 1.24% for the week.

Last week, Betterment ended with $985.61, and Wealthfront with $1,000.00 (it took awhile for Wealthfront to process deposits). Even though Betterment ended in the negative last week, we’re not going to be comparing the results by numbers, instead, we’re going to be comparing it by percentages. The reason is because Betterment was vested a week earlier during very bad times. It was just fortunate that Wealthfront finally vested when the market was in the positives.

Week 2 Betterment Result: $ 1,248.90 ($250 vested, but not really) technically, $ 998.90.

Week 2 Betterment Depositing $250

Week 2 Wealthfront Result: $ 1,013.31

Week 2 Wealthfront Dashboard

 

 

Betterment vs. Wealthfront – who has the biggest gains?

People tell you that investing at an early age is best for you. But have you seen actual figures that backs up this statement? I haven’t… I’ve seen theoretical calculations, but I haven’t really seen any documented returns, which is why I’ve built this site.  I want to be transparent and show my gains or losses each week, and see the progress at the end of the year.

Investing can get pretty confusing and really complicated, so that’s why we’re currently seeing the rise of “robo-advisors,” an automated system that will invest in stocks or bonds for you based on your investment goals.

I built this site in hopes to shine some light in what these “robo-advisors” are really about and how they can perform with real numbers. There’s a list of different investment services out there, but I’m starting with two of the top robo-advisors on the market right now: Betterment and Wealthfront. Its a fight to the death! Or… Fight till I’m broke!

I’ve only invested in $1,000 with a recurring deposit of $250/month. This amount will give a good starting point into how effective investing in these services will be for people who just want to start getting into investing, but don’t want to put all their eggs in one basket.

The chart below will show the difference between Wealthfront and Betterment.

To be honest, I don’t really care about any of these things… At the end of the day, all I care about is the $$$, and I’m sure that goes with the majority of the people reading this.