Personal Finance Diary Entry — Aug 27, 2021
How my Roboadvisor account in Wealthfront performed since July 2017
Awhile back in the Silicon Valley Investor Club, someone was asking about US-based roboadvisor, Wealthfront. I almost never log in to check it, but I wanted to share this “Lifetime Returns” screenshot which shows my experience with them since July 2017.
TL;DR: My account returned ~51% since July 2017.
Here’s a couple observations:
- My “Risk Tolerance Score” was 8 when I set it up back in 2017, so it wasn’t the riskiest option. Still though, pretty acceptable returns since common guidance suggests the market will do between 5~7% per year and I didn’t need to do anything but let it run on its own.
- Their annual advisory fee is 0.25%, which is more than Vanguard, as they also diversity across multiple ETFs besides Vanguard ones. (They have other features like automated tax loss harvesting, but it probably has limited impact unless you put a lot of money in there.)
- Putting 100% of my money into the SP500 (+77% since July 2017) or Gamestop (+857% since July 2017) definitely would have outperformed this. If you have time on your side, consider taking more risk!
Conclusion
- IMO, a solid performer if you want to try a roboadvisor and don’t feel confident picking stocks or ETFs yourself. You could also do what I do and “diversity” a small % of your portfolio to a roboadvisor.
Bonus Features
- Wealthfront has a really simple user interface and useful visualizations that make using it very delightful to use.
- You can also take out a cash loan from your account, which won’t affect your credit. They call it the Personal Equity Line of Credit (PELOC) and interest rates for borrowing against your portfolio have fluctuated between 2-4% since its launch.
Want to try Wealthfront?
- Use my referral link, and we’ll both get $5000 managed for free (waving the advisory fee up to that amount):
Hope this helps! To read more of my personal finance articles, check out the Dan Pham Personal Finance Articles Index and follow me :) https://danphamx.medium.com/index-of-dan-phams-personal-finance-articles-290f7a3fad98
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
