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As an anecdote, I've had some money in both Wealthfront and Betterment for the past 2 years. Both seem to be performing about the same, though betterment has be
by dcosson 11y ago
As an anecdote, I've had some money in both Wealthfront and Betterment for the past 2 years. Both seem to be performing about the same, though betterment has better (but still very lacking) metrics on performance. They both show you what your money has done, but since I didn't deposit into both of them exactly the same amounts at exactly the same time every time, I can't compare them. Betterment at least shows some basic metrics about the time-weighted return over given periods in addition to your actual return, though you can't put in custom time windows. And of course, neither show you total fees you've paid in a time period.
The time-weighted rate of return on my betterment allocation of 80% stocks/ 20% bonds is -0.9% in the past 12 months and 12.6% total since May 2013 when I opened it.
By comparison the Vanguard 500 fund VFINX is up 3.8% in the past 12 months and 22.6% since May 2013 and looks like it has a 0.17% fee. So, it definitely does seem better than Betterment in every way. Meanwhile the S&P is up 4.6% in the past 12 months and up 23.8% since May 2013. Betterment and Wealthfront are very exposed to foreign markets, which somewhat ironically have been doing worse than the S&P for basically the whole time these services have existed yet they seem to be growing fast.
- deegles 11y agoYou're not doing tax loss harvesting in both portfolios are you? There are tax implications to that. Also, comparing returns on different portfolios in different services is meaningless. You could have had a bond-weighted portfolio in one service and a stock-weighted portfolio in the other; saying that one service is better than the other because it had better returns makes no sense. The service you use can't possibly influence the performance of its underlying funds. You should compare them on factors like features offered, ease of use, fees, customer service, etc.