Betterment vs. Wealthfront

bettermentvswealthfront

Who is Winning With Our “Test” Portfolio? We started with $10,000

 

Portfolio started April11, 2016. Last update June 14,2016.

Betterment Safety Net: +$63.67 (Mkt. Value: $10,206.05) – 1st Place

Betterment General Investing: –128.33 (Mkt. Value: $9,881.49) – 3rd Place

 

Wealthfront 0.5 Risk Tolerance: +$129.87 (Mkt. Value: $10,127.24) – 2nd Place

Wealthfront 10 Risk Tolerance: –$132.21 (Mkt. Value: $9,863.89) – 4th Place

 

Tweet The Winner:

 

Both Betterment and Wealthfront has been around for a long time so instead of giving you the benefits which you can find by clicking on their perspective websites we will provide you with a “test” results we did to see which investment advisor offers the best return on your money. The market we tested is in the week of April 13 – present.

We chose this market for a reason. We are looking at volatility in the market, to see how both robo-advisors would or could perform during periods of bulls and bears. Our goal was to catch the worst possible scenario, especially when DOW dropped over 100 points as well as the best scenario when DOW increased over 100 points.

Both Betterment and Wealthfront suggest leaving your money for a long term, which we agree, however; our goal was to compare those two how they perform in the period of time we tested it.

Let’s say you invest money today, you do not want to see a negative sign right away. The idea is to figure out by how much each advisor can grow your money per each month. This method can change depending on a market conditions but we would like to provide you with a guesstimate for your own considerations.

Our Investing Strategy:

  1. We had $10,000 in “test” cash that we tested with. We opened a free portfolio on Google Finance.
  2. We found from each advisor how much stock they buy for each index fund. You can easily do the same on their site.
  3. For Betterment we tested their “Safety Net” and “General Investing”.
  4. For Wealthfront we tested their risk tolerance at 0.5 and 10.

 

Betterment “Safety Net”

Once you go through Betterment you will find that they provide you with a few questions up front. Once you answer them you will come to a page where they give you options to choose from.

One of those options is the “Safety Net” and their allocation as below. 40% Stocks and 60% Bonds is the suggested allocation. This is a great way to see how your money will work for you.

betterment-allocation

Betterment “General Investing”

Betterment ‘General Investing” is aggressive in stocks, that is 90% is invested in stocks and 10% in bonds. Also, it shows in which funds your money is invested into. From Total Stock Market Index Funds to Small-Cap index funds.

betterment-allocation-general-investing

 

Wealthfront 0.5 Risk Tolerance

Wealthfront uses numbers to shows your tolerance level. Once you go through their system it will give you an idea what your tolerance level is. This is another great way to determine how you should be invested.

At 0.5 Tolerance level you can see that your investment will be spread our around few index funds. It tells you how much of each asset class is invested and where. Example it shows 8% invested in U.S. Stocks and 35% in Municipal Bonds.

 

welthfront-05

 

Wealthfront 10 Risk Tolerance

This is one of the highest investments that Wealthfront offers. At this risk you will see your money invested, at least 35% of it in U.S.Stocks and 5% in Municipal Bonds.

 

welthfront-10

Comparing and Fees

When comparing Betterment risk tolerance and Wealthfront tolerance we found that they are very close. Betterment has more index funds in their portfolio vs. Wealthfront. Each of them targets similar index funds, as well as group of other index funds.

One important aspect of both advisors are fees. Many finance websites suggest that if you have $100,000 to invest go with Betterment, and if you have less than that go with Wealthfront.

One huge advantage of Wealthfront is that they do not charge any fees for the first $10,000. This is a great way to get started if you have less than $10,000 and want your money to grow.

Betterment charges fees and you can find their structure on their pricing page here.

 

Our Starting Point For Both Advisors

To see how each advisors is performing on Google Finance, we took a screenshot of our portfolio almost every day. We missed few days, but you can see dates and screenshots below. Each account was funded with “practice” money of $10,000 and we bought shares according to each advisors page of risk tolerance percentage. For a full disclosure, we may be off some shares as this is a test to see who is safer and who is more aggressive when it comes to returns on your money.

Betterment Initial Start “Safety Net”

As you can see, our total allocation came to $10,142 a bit higher than our initial “practice” amount of $10,000. But since this was for a “test” we left it as is.

bettrment1

Betterment Initial Start “General Investing”

As you can see, our total allocation came to $10,141.93 a bit higher than our initial “practice” amount of $10,000. But since this was for a “test” we left it as is. Also, you can see that this was also a first day of trading as “Gain %” column shows gains.

bettrment2

 

Wealthfront Initial Start “0.5”

As you can see, our total allocation came to $9,997.37 a bit lower than our initial “practice” amount of $10,000. But since this was for a “test” we left it as is.

wealthfront1

Wealthfront Initial Start “10”

As you can see, our total allocation came to $9,997.37 a bit lower than our initial “practice” amount of $10,000. But since this was for a “test” we left it as is. Also, you can see that this was also a first day of trading as “Gain %” column shows gains.

wealthfront2

Our Daily Performance:

Below are screenshots of daily performance. We will update this part often.

–June 14, 2016–

Betterment Safety Net:

betterment-june14-1

Betterment General Investing:

betterment-june14-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-june14-1

Wealthfront 10 Risk Tolerance:

wealthfront-june14-2

 

–June 1, 2016–

Betterment Safety Net:

betterment-june1-1

Betterment General Investing:

betterment-june1-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-june1-1

Wealthfront 10 Risk Tolerance:

wealthfront-june1-2

 

–May 24, 2016–

market-may24

Betterment Safety Net:

betterment-may24-1

Betterment General Investing:

betterment-may24-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may24-1

Wealthfront 10 Risk Tolerance:

wealthfront-may24-2

 

 

–May17, 2016–

Market Overview:

market-may17

Betterment Safety Net:

betterment-may17-1

Betterment General Investing:

betterment-may17-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may17-1

Wealthfront 10 Risk Tolerance:

wealthfront-may17-2

 

–May 11, 2016–

Market Overview:

market-may11

Betterment Safety Net:

betterment-may11-1

Betterment General Investing:

betterment-may11-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may11-1

Wealthfront 10 Risk Tolerance:

wealthfront-may11-2

 

 

–May 06, 2016–

Market:

market-may6

Betterment Safety Net:

betterment-may6-1

Betterment General Investing:

betterment-may6-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may6-1

Wealthfront 10 Risk Tolerance:

wealthfront-may6-2

 

–May 04, 2016–

market-may4

Betterment Safety Net:

betterment-may4-1

Betterment General Investing:

betterment-may4-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may4-1

Wealthfront 10 Risk Tolerance:

wealthfront-may4-2

 

–May 03, 2016–

Market Conditions:

market-may3

Betterment Safety Net:

betterment-may3-1

Betterment General Investing:

betterment-may3-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may3-1

Wealthfront 10 Risk Tolerance:

wealthfront-may3-2

 

 

–May 02, 2016–

Market Conditions:

market-may2

Betterment Safety Net:

betterment-may2-1

Betterment General Investing:

betterment-may2-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-may2-1

Wealthfront 10 Risk Tolerance:

wealthfront-may2-2

 

–APRIL 29, 2016–

Market overview and portfolio overview.

market-april29

Betterment Safety Net:

betterment-april29-1

Betterment General Investing:

betterment-april29-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-april29-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr29-2

 

–APRIL 27, 2016–

Betterment Safety Net:

betterment-apr27-1

Betterment General Investing:

betterment-apr27-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr27-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr27-2

 

–APRIL 22, 2016–

Betterment Safety Net:

betterment-apr22-1

Betterment General Investing:

betterment-apr22-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr22-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr22-2

 

–APRIL 20, 2016–

Betterment Safety Net:

betterment-apr20-1

Betterment General Investing:

betterment-apr20-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr20-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr20-2

 

–APRIL 19, 2016–

Betterment Safety Net:

betterment-apr19-1

Betterment General Investing:

betterment-apr19-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr19-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr19-2

 

–APRIL 18, 2016–

Betterment Safety Net:

betterment-apr18-1

Betterment General Investing:

betterment-apr18-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr18-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr18-2

 

–APRIL 15, 2016–

Betterment Safety Net:

betterment-apr15-1

Betterment General Investing:

betterment-apr15-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr15-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr15-2

–APRIL 14, 2016–

Betterment Safety Net:

betterment-apr14-1

Betterment General Investing:

betterment-apr14-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr14-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr14-2

–APRIL 13, 2016–

Betterment Safety Net

betterment-apr12-1

Betterment General Investing:

betterment-apr12-2

Wealthfront 0.5 Risk Tolerance:

wealthfront-apr12-1

Wealthfront 10 Risk Tolerance:

wealthfront-apr12-2

 

 

ratetake

ratetake

Martin - Head of Real Estate and Finance at RateTake
Martin is Head of Real Estate and Finance division at RateTake. He creates content that helps people understand and make the right decisions for their financial future.
ratetake

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Written by ratetake

ratetake

Martin is Head of Real Estate and Finance division at RateTake. He creates content that helps people understand and make the right decisions for their financial future.