Comment by workworkwork71

1. None of our portfolios are static or bucketed. We run the model on each goal/portfolio and it produces the optimal portfolio for that set of circumstances (goal, time horizon, risk, expected return).

2. You're 100% right, goals like vacation & car are going to be variable depending on the users inputs when creating the goal. We have a confidence question in the goal creation, ie. "how important is this goal to you". If the user selects that they have to have it by their given date, the model is going to opt for money market funds and potentially a small allocation to a return generating asset. This goal would lean heavily on the users contributions and not returns.

On the flip side, if it's something like a vacation fund where you are okay with not having a strict deadline ("nice to have, not certain"), then the model will have access to more return generating assets to help the portfolio generate a return. This is more about financial planning then it is pure investing. You're 100% right, but the user controls their own fate there.

3. Again you are correct that historically, an all S&P500 portfolio will have out-performed a target date portfolio but who's doing that? What institution, advisor or robo would advocate that any client is 100% invested in US equities?

We're not targeting pure performance here, it's risk adjusted returns factoring in for large drawdowns. We can model a portfolio that returns the exact same average 30-yr trailing return as the S&P500 at half the expected volatility (not really a brag, that's what robos and portfolio managers are trying to do as well).

If you're the type of person who can handle the volatility of investing in a 1 ETF portfolio then the product here isn't for you. I'd just recommend that you go and check the capital market expectations for the S&P500 over the next 10-25 years because it's actually trailing behind other global equities.

Blackrock has the following CMAs:

Ex-US equities

5 yr : 9.0% 10 yr: 8.6% 20 yr: 8.0% vol: 16.9%

US equities

5 yr: 6.2% 10 yr: 6.7% 20 yr: 7.4% vol: 18.4%

Forward looking estimates of course, but you can see my point. You're not even getting the optimal 1 ETF portfolio by simply buying SP500.