March Investment Robo Advisor Report
Welcome to the first Investment Robo-Advisor Account Report for March 2016!

If you are just tuning in, I am investing $500 into three different investment accounts to see which one grows. Why might you ask? Well, for those new to investing or those who want to start but are not sure where to begin or, you might have some money and want to grow your wealth, but aren’t sure which is best for you, I wanted to test out some great options.

I chose to investigate robo advisors versus traditional investment vehicles to which how much my money will grow in each one. For a year, I will invest $500 into a Betterment (robo advisor) account, Wealthfront (robo advisor) account, and into an index fund, Vanguard, and watch to see which one does better.

This month has been great for returns! Across the board, all three accounts brought in money. Yay! I am a buy and hold kind of gal, meaning I will keep the money invested long term. The three accounts invest in index funds which fluctuate with the market, allowing your investments to be more diverse and set up for long term growth.

Betterment did the best starting out at the beginning of this journey, topping the month at 3.9% return or a total account value of $519.90! Wealthfront was second with 2.5% return and account value of $513. Vanguard did get a slow start because it took them longer to get the funds transferred and my “buy” of VOO took multiple days to process. We will see if the traditional investment vehicle will be able to catch up in the long run. Additionally, because VOO was trading somewhere around $139/share, I could only buy 2 shares of VOO. Essentially, I am not as fully invested with the Vanguard account as I am with Betterment and Wealthfront. With the more gains in the Vanguard account, I will be able to buy a third share shortly.

Anyone can sign up for these accounts and, personally, it was very easy to set up the account with the robo advisors. I recommend investing a few dollars and see what happens!

Want to join the challenge? Feel free to add a comment below on how your accounts are doing! Here is what I did to set up each of my investment accounts:

How I Set Up My Betterment Investment Account

How I Set Up My Wealthfront Investment Account

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  • This is an awesome project and I look forward to seeing how all three do in the longterm. I’ve been with Betterment for less than a year and am finally starting to see some returns.

    • I am excited to see the difference between the three. I have already experiences some major differences in interface, ease, and use between the robos.

  • It doesn’t matter what shares of a mutual fund cost on a particular day, if you told Vanguard to invest $500, they should have given you fractional shares.

    • I will definitely look into that. I think just the fact that barriers to investing are already high, the user face interaction and ease is very important to get someone to invest with a particular broker.

  • This is a great experiment! I just opened an account with Wealthfront am excited to see what happens. Not only is it investing, but it’s a learning opportunity!

  • I’m very interested in how your Betterment account dies, because I am currently saving up to invest there. If either of your other two test subjects does better, I might change my plans.

  • What a great experiment!

    I did a similar one with Betterment and other investing strategies for the Grow Your Dough Throwdown that Jeff Rose hosted. I found that Betterment did fairly well but that monthly fees gobbled up much of my earnings. To avoid those fees in the future, I started investing $100 per month — one way to get the lower Assets Under Management (AUM) fee instead of the $3 per month fee for assets under $10,000 (unless you do the auto-deposit).

    One of the advantages to Betterment as you reference is that your money is invested immediately and all of your money is invested. You can fund a brokerage account and have money on the ready for an investment but when you are getting started in investing, that process can take a few days to get bank accounts set up, money transferred, etc. Plus, you have to remember to make purchases.

    Investing in mutual funds is one way to buy fractional shares with Vanguard (and therefore invest all of your money) but most funds have a minimum of $3,000 though some have an $1,000 minimum. Smaller investors may want to go with a roboadvisor or check out Schwab’s line-up of index funds as minimums there are smaller than Vanguard’s.

    Hope your experiment continues to go well and reap great benefits.