INVESTING FOR THE 21ST CENTURY

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  • Fiscal Frontiers

ROBO ADVISER REVIEW - 2019


January Update

(Disclaimer at end of post)

OUR ROBOTS


The first month of the new year was a welcome reprieve from the tumult of late 2019. You can see our 2018 Year In Review to get a sense of how bad the last quarter of 2018 was, but to focus on the positives here, by the end of January 2019 our robo advisers were both up over 6%, from a combined $1,877.06 to $1,990.40, ending the month like this:

  1. WealthSimple $973.91

  2. Questwealth $1,016.58

Note that for 2019 we’re going to equalize the two accounts to both be worth $1,000 as of January 1st, so that we can better compare them. The majority of the difference between the two accounts comes from the fact they were opened about 6 weeks apart, while markets were tumbling. Making this adjustment, the first month of 2019 for our two accounts can be graphed like this:

And the result is that the two accounts performed almost identically. When opening these accounts, we did our best to make our settings as aggressive as possible, answering all the questions in a way that made sure it was known that we were long-term investors aiming for growth and that we were not afraid of incurring short-term losses for the chance at long-term gains.


If you are interested in investing with Questwealth, than you can use our referral code (baxg1ibj) to get your first month of management free.


Before we compare our WealthSimple and Questwealth accounts directly to the ETFs we have chosen to compare them to, we should discuss those ETFs individually.

OUR ETFS


We have outlined Our Control Group for this blog, being three Vanguard ETFs. As a quick recap, we are keeping track of:

  • The Vanguard S&P 500 ETF (VOO): which is designed to track the S&P 500, the most commonly cited benchmark for stock market investors.

  • The Vanguard Total World Stock ETF (VT): which is designed to track the global stock markets as a whole, with holdings in 8,109 different stocks and 42.1% of the market value being derived from outside North America.

  • The Vanguard Short-Term Government Bond ETF (VGSH): which is our “risk free” rate of return, obtained by having the fund track the Bloomberg Barclays US Treasury 1–3 Year Bond Index, which includes fixed income securities issued by the US Treasury with maturities between 1 to 3 years.

As above, we’ve done the math such that each of these is tracked as if we’d made a $1,000 investment on January 1, 2019. We’ll add the value of any dividends paid back into the investment. For January 2019, the value of an investment in each of these ETFs looked like this:

Unsurprisingly, with world markets lifting following the 2018 plummet, They actually mirrored one another closer than our two robo accounts, moving in almost perfect lockstep. Our VGSH investment did exactly as it was meant to do; it had held steady during the 2018 falling market and it did the same during the bump of early 2019.

ROBOTS VS. ETFS


The big question, though, is how our ETFs compared to our robo-investments. The next table compares the two different investments. Note that, if you just want to look at it and get the gist of what happened, then the robo-investments have remained with solid lines and the ETFs are shown again with dashed lines:

And the results show that, at least for the first month of 2019, when the markets were largely rising, our robots tracked the general market tracking ETFs, though they fell a little behind, largely, it looks like, due to an early January dip that the ETFs didn’t experience. If we standardize each investment to have been worth $1,000 on January 1, 2019, then the value of each of these investments on January 31, 2019, ranked best to worst, was as follows:

  1. $1,081.22 Vanguard Total World Stock ETF

  2. $1,078.35 Vanguard S&P 500 ETF

  3. $1,055.12 WealthSimple

  4. $1,057.45 Questwealth

  5. $1,002.33 Vanguard Short-Term Government Bond ETF

CONCLUSION


A rising tide lifts all ships is an apt phrase for the stock markets through the first month of 2019. Through the first few weeks of 2019 the markets have begun to rise, so we are excited to see how these five investments move, and how closely correlated they are over the coming months and years.


We hope to also add more robo-investors over the coming months and years. If you have a particular robot you think we should be looking at, then let us know in the comments, on Twitter @fiscalfrontiers or via email at fiscalfrontiers@gmail.com. Alternatively, if you have an ETF that you think would be a good one to track, then let us know via any of those channels, too.


Next week, we plan on doing a review of our past few months dabbling in crytpo-vesting.


DISCLAIMER: We at Fiscal Frontiers are not investment advisers and our only goal is to report to you on the performance of investments we have made so that you can consider our experience along with all the other information available to make an informed decision on what is best for you. Investing in the stock market is inherently risky and all of a particular investment could be lost.


 
 

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