Wednesday, April 27, 2011

Betterment Review: Making Investing Easy For The Rest Of Us.

Image representing Betterment as depicted in C...Image via CrunchBaseBetterment is an easy way for the new investor to get started saving for retirement. All of us know that investing in equities is one of the best ways to prepare for retirement and future goals like college or purchasing a home. The problem is, it's hard to get started investing because you don't know what investments are the right ones. Your choices consist of stocks, bonds, mutual funds, and ETF's. Who knows what to pick? Even if you knew what to invest in, what percentages in each investment is appropriate.

Betterment solves all those problems. You pick how much you want to invest in stocks and how much you want to invest in Treasury bonds. If you don't know what to pick, Betterment helps you choose with recommendations depending on your goals and age. Signing up is quit and easy. You have a dashboard where you can set up automatic deposits. You link your Betterment account with your bank. Transferring money in or out of your account is available at any time with no fees involved.

Click Here to open an account at Betterment

What does Betterment invest my money in?

Your money is invested in a stock market portfolio made up of ETFs that reflect the broad US market, which allows you to invest in literally thousands of companies all at once. Currently the Stock Market basket is made up of the following of ETFs:

  • 20% Vanguard Total Stock Market 
  • 20% iShares S&P 500 Value Index 
  • 20% iShares S&P 1000 Value Index 
  • 15% iShares Russell 2000 Value Index 
  • 15% iShares Russell Midcap Value Index 
  • 10% DIAMONDS Trust Series 1 

Why these investments?

Individual stocks are very risky, but they deliver a higher overall return. Some stocks don't do so well. The trick is picking the winners. Most professional stock pickers don't always get it right. For the new investor, it's extremely difficult to be successful. Over the last 80 years the US stock market has returned about 9.4% per year on average. The key to long term stock investing is diversification. Betterment's portfolio represents the total US stock market, so it's like owning a little piece of every company in America. This spreads risk and reward over a broad number of companies.

Betterment also invests your money in Treasury bond ETFs that are lower-risk and steadier-earning than most other investments. They consist of:

  • 50% iShares Barclays TIPS Bond Fund 
  • 50% iShares Barclays 1-3 Year Treasury Bond Fund

With this simple combination of stocks and bonds your portfolio is ready to go. With these few investments Betterment gives you abroad diversification.

What's this going to cost me?

The fee structure is very simple. There is an annual 0.95 fee prorated over the four quarters of the year, 0.225% a quarter. There is no other charges. There are no transaction fees, no deposit fees, no withdrawal fees, no rebalance fees, no maintenance fees, and no other hidden fees.

Why do I like Betterment?

  • They pick all the investments.
  • The fee structure is dead simple.
  • You can move your money in and out when ever you like. It's linked to you checking account.
  • Your account is automatically rebalanced when it drifts by 5%.
  • Betterment is a Registered Investment Advisor with the SEC and they’re SIPC insured.
  • No minimum balance to sign up.

Here is a link to the free Betterment Demo Page.

Why trust my money to Betterment?

Betterment is an SEC Registered Investment Advisor, and Betterment Securities is a broker-dealer regulated by FINRA and the SEC. The securities in your account are protected up to $500,000 by SIPC. Betterment is simple and transparent. Your money is invested in well-established funds, chosen for their good management, efficiency, and long track records.

Who will benefit from Betterment?

If you are brand new to investing, without a clue of what to do, or where to get started, this is for you. They take care of it all. At Betterment you will finally have an easy way to get your feet wet in investing.


  1. Seems like Betterment caught your heart! (*smiles)

    For starters, this is a very nice option. It's the same as having a finance mentor at a lower price. However, I don't see this as a permanent solution. Investing easy is not how this game should be played. To get more out of an investment - research,insider knowledge and more knowledge are the important keys.

    Best regards,

  2. Betterment is just a start as I see it. I believe for most people the hardest part of investing is just getting started. They have no idea where to put their money and then picking investments can be difficult also.
    As they learn they are more confident and get into other investments that may suit them better. I think it's a great way to get your feet wet.

  3. Have you made up your mind to start investing in real estate, but you're torn in deciding where to invest?
    guarantor loans


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