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What I don't see here is what I'm most interested in: how effective are robo-advisors? What percentage of the time do they beat the market, if ever? Am I better

What I don't see here is what I'm most interested in: how effective are robo-advisors? What percentage of the time do they beat the market, if ever? Am I better off simply investing in S&P 500 or a Vanguard target fund? Or does FutureAdvisor or Betterment or Wealthfront provide some unseen benefit? FWIW, I've seen stats that suggest that 85% of advisors (robo or otherwise) perform below the S&P 500, which frankly is not a great sign for that industry.

evanpw 11y ago
At least the big two (Wealthfront and Betterment) aren't trying to beat the market. They're basically just keeping your portfolio balanced between low-cost ETFs (like Vanguard's) representing different asset classes, and harvesting tax losses to reduce your capital gains taxes. I've heard them described as just a front end for index funds [1]. [1] http://www.bloombergview.com/articles/2015-03-18/would-you-be-ok-with-a-robot-managing-your-nest-egg- http://www.bloombergview.com/articles/2015-03-18/would-you-b...
vimarshk 11y ago
Am I better off simply investing in S&P 500 or a Vanguard target fund? Or does FutureAdvisor or Betterment or Wealthfront provide some unseen benefit? >> The space is relatively not mature yet to be able to gauge effectiveness. Time will tell. However, what we observed was some robo advisors are creative in a way to prevent losses. Also, another observation was who is in their team. Sometimes we see prominent brokers/experts on the team which may/may not translate to a better return, while there are clearly some who do not have stock investment experts which translates to weaker investment strategies.
runamok 11y ago
I use betterment and vanguard. Betterment allows me to set up a monthly contribution and it allocates that to a variety of domestic and internatiknal index funds as well as bonds. They also rebalance automatically. With vanguard you have to have a minimum of $3000 for most funds. I think once you have 3k in a given fund I think it is easy to make auto deposits with vanguard too.

evanpw 11y ago

At least the big two (Wealthfront and Betterment) aren't trying to beat the market. They're basically just keeping your portfolio balanced between low-cost ETFs (like Vanguard's) representing different asset classes, and harvesting tax losses to reduce your capital gains taxes. I've heard them described as just a front end for index funds [1]. [1] http://www.bloombergview.com/articles/2015-03-18/would-you-be-ok-with-a-robot-managing-your-nest-egg- http://www.bloombergview.com/articles/2015-03-18/would-you-b...

vimarshk 11y ago

Am I better off simply investing in S&P 500 or a Vanguard target fund? Or does FutureAdvisor or Betterment or Wealthfront provide some unseen benefit? >> The space is relatively not mature yet to be able to gauge effectiveness. Time will tell. However, what we observed was some robo advisors are creative in a way to prevent losses. Also, another observation was who is in their team. Sometimes we see prominent brokers/experts on the team which may/may not translate to a better return, while there are clearly some who do not have stock investment experts which translates to weaker investment strategies.

runamok 11y ago

I use betterment and vanguard. Betterment allows me to set up a monthly contribution and it allocates that to a variety of domestic and internatiknal index funds as well as bonds. They also rebalance automatically. With vanguard you have to have a minimum of $3000 for most funds. I think once you have 3k in a given fund I think it is easy to make auto deposits with vanguard too.