Betterment Review – A Must Read Before You Invest 35 Comments
Hey everyone, Josh here again for another review. I really enjoy talking about investment options, strategies, trends, etc…. So, today, I’d like to go over a new investment option that you may really enjoy. It’s called Betterment. Just in case you haven’t heard of them. Betterment is a relatively new company in the investment market and, they are really making a name for themselves pretty quickly. In this review, I plan to tell you why they are growing so quickly, inform you of the positives in working with them and of course go over the cons of working with them. So, let’s get to it…
Betterment Short Review
Betterment Pros – Betterment boasts about smarter investing for busy people and, they are really able to do that! They’ve created a platform that helps to automate the process of investing by assessing risk vs. reward and making the split second decisions that you simply don’t have the time to make. With straight forward pricing, Betterment is not only an easy choice, it’s a fairly low cost one!
Betterment Cons – Although the costs associated with investing with Betterment are very straight forward, it’s important to remember that there is a cost associated with automation. The automation Betterment provides helps to increase your investment dollars as fast as possible but, the increases do come at a cost. It’s important to decide if the added cost of automation is worth it for you.
Betterment Overview – Betterment really is a great company to work with. By providing ways to automate your investing, they have become a great start up investment for new investors that don’t have too much to work with. They give consumers the opportunity to invest very little and grow. However, if you’re a bigger investor, you may want to consider other options like OptionsXpress to avoid the added cost for automation that you don’t need.
Betterment Long Review
OK, now it’s time to get into the juicy details that I just can’t get into when it comes to a short review. Wow, there is so much…I’m not quite sure where to start. I guess I’ll start with pricing which, is pretty unique in this case. With most investment platforms, we see pricing on a per trade basis. You have to worry about what type of trade, is it broker assisted, ect… With Betterment, the pricing structure is quite a bit different. Instead of charging a per trade cost that can be difficult to calculate, they charge a small percentage based on the type of account you have and the amount of money that you have in the account. So, depending on your exact account, your fees will range from 0.15% to 0.35%.
How Does It All Work?
Betterment set out to make their platform as simple and use friendly as possible. So, the process is pretty simple. First, you sign up for a free account and link the account to your checking account. You can set up automatic monthly withdrawals so that you don’t have to think about when it’s time to invest as well. Once you account is set up, you have 2 options. Either you can invest in a predetermined basket of stock ETFs or you can invest in a predetermined basket of bonds. Either way, Betterment has done a good job of diversifying the baskets to make sure that chances of loss are pretty slim.
What Investment Options Are Available
Currently, betterment allows you to put your hands into 6 different stock ETFs. Here is how it works… 25% of the investment will grow through the Vanguard Total Stock Market, another 25% will go into the iShares S&P 500 Value Index, 25% into Vanguard Europe Pacific, 10% in Vanguard Emerging Markets, 8% in iShares Russell Midcap Value Index, and 7% in 7% iShares Russell 2000 Value Index. As far as bonds are considered, they work on a 50/50 split between iShares Barclays TIPS Bond Fund and iShares Barclays 1-3 Year Treasury Bond FUN. As you can see, Betterment does a pretty good job of diversifying your investment profile for you so that you don’t have to!
My Favorite Part Of The Betterment Platform
I have to say that the coolest feature that they have is the dashboard. When you first sign up, you will create goals that you would like to reach in a specific amount of time. Based on how your investments are performing, Betterment will show you what you need to do to reach your goals and how close you actually are. They will tell you the monthly investment that they suggest as well as other key factors that will help you to keep your goals in the cross hairs!
My Least Favorite Part Of The Betterment Platform
I’d have to say that the cost is my least favorite part. Although the account is 100% free, the cost of investing with Betterment tends to be a bit higher than the cost of investing through other platforms. However, this makes a lot of sense. With other platforms, you tend to take on more risk than you would with Betterment. So, it’s really up to you to decide if the risk is worth the reward. If you’d rather not take a big risk, the cost is well worth it!
Who Should Consider Betterment
Because of the ease of use, I would say that this is a great option for the start up investor. This is because, starters don’t generally know how to diversify their portfolios and keep them safe. To learn, they generally work with brokers which can get crazy expensive. With Betterment, all investments are predetermined baskets created with risk in mind. By cutting out much of the risk, it seems to me that Betterment created a platform to meet the needs that the newer guys will have. As far as seasoned investors, I’d strongly advise looking into my review of OptionsXpress. If you are seasoned, you will know what to and not to do to keep your investment portfolio safe. In this case, it simply doesn’t make sense to pay the added cost associated with the platform.
Betterment Reviewed by Clarkgym on .