After opening a Roth IRA with Wealthfront 6 years ago, I want to share with you how much money I’ve earned over this time and how my account has performed.
Below is my dashboard for my Roth IRA with Wealthfront which has a current balance of $58,290. I opened my account back in January 2016 with an initial deposit of just shy of $3,600 and as you work your way from left to right towards the present day you’ll see by the dotted line that I had consistently made a deposit into my Roth IRA account that was equal to the maximum IRA contribution for that year.
As of January 3, 2022 I have invested a total of $37,772 dollars out of my pocket, but my account balance is $58,290 which equates to a profit of over $20,000! That’s equal to an impressive time weighted return of 102%.
Wealthfront Annualized Performance
Here is my annualized performance for my Wealthfront Roth IRA account each year since 2016.
- 2016: 12%
- 2017: 19%
- 2018: -8%
- 2019: 25%
- 2020: 11%
- 2021: 17%
Ups and Downs
Looking at the entire life of my Roth IRA, you’ll notice that in March 2020 there was a period of time where my account balance actually dropped below what I had invested out of my pocket which was at the worst a $3,500 loss, but then as 2020 continued on, you’ll notice that the gap between what I invested (which is the dotted line) and what I made in profit (which is the solid line) has increased to the point where it is today.
Wealthfront Diversified Portfolio
My investment portfolio is broken down into various asset classes. Here is how each has performed over the lifetime of my account.
- US Stocks: 167%
- Real Estate: 78%
- Emerging Market Stocks: 84%
- Foreign Developed Stocks: 73%
- Foreign Market Bonds: 33%
- Corporate Bonds: 37%
My Wealthfront Risk Score
The risk score that has allowed me to realize these gains is a 9 out of 10. A risk score is simply a measure of how much risk you’re willing to take, and this directly correlates to the breakdown of the asset classes in your portfolio. For example if you have a high risk score, you’re going to have more stocks than bonds, and if you have a low risk score, you’re going to have more bonds than stocks. This is because stocks are more risky than bonds and vice versa.
I’m 32 years old, relatively young, and can stomach a lot of ups and downs in the market over the next 30 years just like we saw in 2020 when the pandemic erased all of my earnings.
This certainly won’t be the last time that this happens, but depending on your age and your appetite for risk you might want to choose a different risk score than I did.
Do You Have a Wealthfront Account?
If you are interested in getting started with Wealthfront, I have this link which is good for getting your first $5,000 that you put into your Wealthfront account managed for free. Wealthfront has a very low fee which is just a 0.25%, but with my link the first $5,000 that you deposit will not be charged that fee.