13 February 2015 ~ 0 Comments

Betterment Automated Investment Platform Review

A month or so ago I reviewed Acorns, which is a micro investment round-up app.  My biggest complaint about Acorns was the high fees, I have since dropped Acorns and have been experimenting with a Platform called Betterment.

Betterment is a much more well rounded system, it offers various types of accounts.  It has the standard Traditional and Roth 401ks as well as a normal brokerage account, however you can create accounts based on goals.

It has several pre-defined goals for you, like Safety Net, Retirement Savings, College Savings, Home Purchase, etc.

Now before you scream at me what a terrible idea it is to place Safety Net funds in an investment account, one thing that makes Betterment awesome is that you can adjust how much of your account is in stocks, and how much is in bonds.

For example, my retirement accounts are mostly all stocks, I’m young enough that the market can (and will) crash before I retire, but I have enough time for it to rebound, so I can accept the risk of a higher stock percentage, for the potential greater return.

On the other hand, I have a house savings goal, which is split about 40% Stocks and 60% bonds, this way there is some security with the bonds in case the market plummets, but I can still get some of the growth that the market brings along with it.

I do have also have an emergency funds account, while I do keep at least 6 months in my High Interest Savings account, being self employed can be a bit up and down, so I’m aiming for a 24-month emergency fund so I would have time to retrain if necessary.  The amount in this account is only 10% Stocks, with 90% bonds.  This gives me the security of having Bonds to prevent it from falling, but still with some extended growth that stocks can give.

Allowing you to set these percentages on your own, and change them at any time, is a great feature because it lets the more conservative investors be able to set something that helps them feel more comfortable, and the more risk averse among us can go all in with stocks.

The stocks that are being traded are all Vanguard ETFs: VTI, VTV, VOE, VBR, VEA, and VWO.  The bonds are varied from both domestic and international, again all Vanguard: SHV, VTIP, BND, LQD, BNDX, and VWOB.

This is a good mix to get you a lot of market sectors which is beneficial because, for example, of pharmaceuticals drop, you’ll have enough spread out that it wont be too impactful.

The fees for Betterment is where it gets.. well.. even better.

You pay a fixed annual percentage rate, considering this is a fully managed account, the fees are at an excellent rate.

If youhave less than $10,000 combined in your accounts, your fee is $3 a month, however if you have direct deposit set to a minimum of $100 a month, then the fee changes to 0.35%

For those with over $10,000 the fee decreases to 0.25% and once you have passed $100,000 then your fee drops even lower to 0.15%

These fees are extremely competitive, even for a self directed account, let alone a completely managed one.

You also get the first three months free to try it out.

I’ve tried a few different accounts, I had a 401k at Merrill Edge which I am in the process of rolling over, this was a self directed account and honestly I don’t know enough nor am active enough to maximize that, not to mention the fees were higher.

I also had a Scottrade account, which was $7 per trade, which is fairly high rate, and again self directed.

I really like that this account is fully managed, so I can just let it work on it’s own.  If my account gets off from the % I set, then it automatically rebalances with my next deposit.  Additionally they offer tax loss harvesting for accounts with over $50,000 to help minimize tax impacts.

Betterment is an incredibly easy to use, simple way for beginner investors, or busy people, to be able to invest on auto pilot, I’ve had it for about two months and so far am a huge fan.

The average Betterment return over the last decade has been 114%, meaning that people who invested $100 in 2004, now have $214.  Keep in mind this includes the 2008 recession, and this is with an average of 60% Stock, 40% Bonds.

That return is about on par with what should be expected, on average your money will double every 10 years, so this is slightly above what you would expect.

Personally, I have had my accounts open for 2 months and have gotten about 2% of a return, though keep in mind it ran at a loss for a lot of last month due to a declining stock market.

So far I’m pleased with Betterment, I think it’s perfect for someone like me who is new to investing, and wants something that can just do it for them, so far I’m only putting in the minimum $100 a month to reduce the fee, but am in the process of moving all my other accounts over to it because I am so pleased with the service.

You can try Betterment for 3 months totally free of charge, deposits and withdrawal are easy from your bank account using standard ACH, though I would recommend doing at least $100 auto deposit monthly to take advantage of the reduced rate if you are just starting out.

Have you tried Betterment?  What do you think?

 

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02 January 2012 ~ 0 Comments

Why New Years Matter.. but Shouldn’t..

“Should auld acquaintance be forgot, and never brought to mind ?”  I absolute love the New Years Eve / Day holiday time.  It’s a great ending to my favorite part of the year.  Christmas, followed by my birthday, and then the culmination of a years of efforts – New Years Eve.

A new year brings brand new opportunities.  It’s a time to reflect on your past and prepare for your future.  As a business owner it is my favorite time because I get to wipe the slate, clean the books, and plan a whole new year of events, ideas, and celebrate methods of new growth.  I get an opportunity to reflect upon my past, and use the lessons taught in 2011 to take me into 2012.  It’s a great feeling to start new and fresh, and new year is just that.  It’s time to not only prepare, but create our futures.  We as people decide to change our lives this day every year, we all pick a goal that we hope to take with us in to the new year to better our own lives and our own persons.

It’s important for us as people to make sure we are on a constant path of self enrichment and betterment.  It is up to ourselves to change our lives, we can’t sit and wait for someone else to do it for us, and this goal setting that New Years brings with it is one of the most profound parts of our existence.  Reflecting and taking action and responsibility.

Why?

Why do we feel the need to wait?

You are in control of your destiny, you are the only one who is empowered to make changes to your life.  Why wait?

A couple of quotes come to mind, both from music because I live every minute of my life with music, it is a deep passion of mine.

“You’ve got no one to blame for your unhappiness” – Wilson Phillips

Ok so the song is cheesy, but this line really sticks out.  You control your life and how you live it, if you wish something on yourself, then do something to make it happen! You can’t wait for someone or something to come and do it for you.

“You don’t have to wait until tomorrow, to resolve for change today” – Nate York

This is of great significance for me and basically sums up what I am trying to convey here.  I really should have made a blog post with just that one line.

If there is something you want, something you want to change, something you have been wanting to do.

Do it.  don’t wait for New Years day to plan to better yourself, why wait? Make resolutions, work towards bettering your life on New Years Day, and every day that follows.

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