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Been on wealthfront 3 years now and my all time gain is -12%. Has been negative something every year for the past 3 years. Meanwhile, my individual investments into tech stocks in Robinhood are up 25% in the same time frame. Which means I'm doing a better job investing myself than a whole roboadvisor. My question is what's the point? I have 50000 in wealthfront that I'm thinking of withdrawing and just spending on individual tech stocks. What do you guys think?
I was about to start using Betterment... that makes me hold back now.
Same as OP, started 2 yrs ago and in negative. No better than vtsax or buying a shotgun array of random stocks.
And Wealthfront also takes some percentage of your money every year, right?
1) what's your stock/bond % 2) cherry picking a few tech stocks vs index investing is not comparing apples to apples 3) given how little you know about investing (not trying to be rude, but just frank her based on your post), you should stay in betterment and make sure you have >80% in stocks assuming you're decades from retirement
There are two separate topic here which surprised me. First, why is your return negative for 2019? Secondly, robo advisors based trading is not suitable for exceptional patterns in market link this covid situation. Walk out of any robo advisor based investment right NOW.
Actually you're right, seems my 2019 was up but overall still down -12%.
I have a wf account since 2014. It wasn't till 2016 I started seeing returns breaking even. But so far time weighted return has been 20%+. The portfolio did deep below total deposits in March but now recovering. Bottom line is you need to trust on their Modern Portfolio Theory based portfolio strategy, then make a long term commitment. They define long term to be 5+ years.
BTW if you select a high risk score (8+) at certain points in time you portfolio can go up or down significantly, over time your portfolio will tend to grow upwards and you can expect annualized returns of 6-8%.
I invest long term like 20 years or so. I believe over 20 year period Wealthfront will beat Robinhood or individual investors. Over 5-8 years is not a fair comparison. Here is an example when long term wealthfront is better. Look at https://www.google.com/amp/s/www.thestreet.com/.amp/opinion/25-winners-for-1999-592606 the top stocks of 1999. Most stock did not grow as expected and just lost money. If you where a individual investor over 20 yr from 1999 to 2020 you would not be able to predict the wining tech stocks. Tech is fast changing world.
If some robo advisor brokerage firm sell me above, I will say that is a huge drawback of that algorithm. Because you are expecting better returns only if you put in for 20 years. In practical life, how is that usual that someone will not want to rebalance assets in long period of 20 years. 5-10 years is a reasonable timeframe beyond that should be taken as locking disadvantage.
What's your risk score? That plays a huge role. I'm wondering how your portfolio got a negative return in 2019 since almost all ETFs were up.
Highest which is 10%. Actually you're right, seems my 2019 was up but overall still down -12%.
The market dropped 30% in a month - everyone is down