My Wealthfront Returns Still Impress Me 4 Years Later

It has been 4 years since I opened my Wealthfront investment account, and since then, the markets have had their ups and downs. But as markets historically tend to do, they eventually trend up and to the right. And for us, that means we make money.

Something that has allowed me to quit my job and travel the world for the past few years is my disciplined savings habits. From my liquid savings account to my 401k’s and Roth IRA, I consider myself to be a big saver. For those of you who don’t know me, my name is Tony Florida. I’m a blogger and a travel vlogger on YouTube.

Below, I’m going to walk you through my Wealthfront account, specifically taking a look at how my Roth IRA has performed over the past 4 years. So without any further ado, let’s hop on into my Wealthfront dashboard.

Wealthfront returns and review after 4 years

Wealthfront Returns After 4 Years

Right off the bat, something that shocked me was the fact that since opening my account 4 years ago, I have earned a money-weighted return of 53%. But a money-weighted return isn’t the best way to measure Wealthfront’s performance as an investment advisor. A better measure is a time-weighted return. My Wealthfront time-weighted return is 55%; thus, my investment portfolio has grown a significant amount since 2016.

I started my account with an initial $3,500 deposit back at the beginning of January 2016. And basically every month since then, an automatic recurring deposit transferred $500 from my bank account and deposited it into my Roth IRA, which Wealthfront would automatically invest for me.

As you approach January 2020 in the graph below, you’ll see that when you add up all of my deposits, you get a total of $26,085 that came out of my pocket. However, and this is the exciting part, today, my account has a value of $33,395. So through automatic investing, I earned over $7,300, and I literally didn’t have to lift a finger. That’s passive investing at its finest!

Wealthfront performance returns graph

What Should Your Risk Score Be?

Now like I mentioned at the beginning of this blog post, markets go up and down, and every year sees different returns. So back in 2016, my account had a time-weighted return of 12%, 19% in 2017, -8% in 2018, and finally 25% in 2019.

I realized these returns with a risk score of 9.0/10 which essentially means that the majority of my investments are in more risky assets such as stocks whereas only 10% of my portfolio is invested in bonds.

Would I have seen less of a loss in 2018 with a lower risk tolerance score? Definitely. But at the same time, my returns during the other years would have been lower too.

As someone who just turned 30 years old, I can stomach a market crash and still have many years to recoup my losses before I retire. In general, the older you are, the lower your risk score should be. A higher risk score will amplify your gains as well as your losses.

Wealthfront Investment Asset Classes

At the bottom of my Wealthfront dashboard, you’ll find a breakdown of how each asset class performed on average each year under the annualized tab. You have your different types of stocks up at the top which, as we would expect, outperform the safer bonds down at the bottom.

In addition, you can also see how each asset class performed year-to-date under the YTD tab. I saw returns of between 15 and 30% across the board in 2019.

Wealthfront lifetime retuns per asset class in 2020

Finally, my lifetime returns for each asset class really blew me away. A 74% return on US stocks, 77% on dividend stocks, and an impressive 30-ish% return on real-estate and bonds.

The transparency of Wealthfront’s asset allocation has improved tremendously over the years. If you click on an asset class in this section, you’ll see a breakdown of the underlying funds’ fees. These fees are in addition to the 0.25% annual fee that Wealthfront charges to manage your account.

At the very bottom, you’ll see the risk score that we talked about above. In this case, my risk score is 9/10.

Start Investing Yesterday 🙂

Well that’s about it as far as the walkthrough of my account is concerned. My hope is that this blog post inspires you to start investing with a proven automated investment advisor like Wealthfront.

As you can see, one key to investing is patience. Investing is certainly a long term game, so if you can manage even just a few hundred dollars per year, I encourage you to get started saving today. Your future self will thank you. I am certainly thanking my former self back in 2016.

The best time to start investing was yesterday.

For all the value that they offer, Wealthfront only charges a quarter of a percent to have an account with them. And if you sign up with my personal invite link below, you can invest your first $5,000 without any fee.

Thanks for reading! For more finance and investing blog posts like this, go here.

About The Author

With a strong software engineering background, Tony is determined to leverage the internet to positively impact as many people as possible. Discover why Tony quit his dream job to pursue this mission. You can send Tony a message here.

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