Betterment Just Got Better
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Today is a beautiful day; not only has the weather been quite mild here and will continue for the rest of the week, but today Betterment announces a couple of big changes. Both of them are huge pluses for investors.
Before I get into the details of their new IRA offerings and the lower fees, let me give a quick review of Betterment and how they can be an easy and effective way to handle your investments.
Betterment – Simple, Effective Investing
Put simply, Betterment makes investing as easy as depositing money into a savings account. I think it's one of their main strengths and a great way for investors to get started.
Betterment uses exchange-traded funds (ETFs) for their portfolios and users choose how much of their portfolios they want invested in stocks and bonds. ETFs track a particular index (like a index fund), but they’re traded like stocks.
Why Automating Investments and Re-balancing Works
Betterment offers you automatic rebalancing every quarter and whenever your assets allocation changes dramatically from your plan. This means that you don't have to worry about buying and selling to keep your portfolio on target.
Automation can be really beneficial because it can help us overcome our tendency to tinker with our investments when we shouldn’t. Investor returns don't always match investment returns – people tend to get emotional and buy/sell at wrong times.
Asset allocation is about maximizing your portfolio’s return while minimizing your risk. While maximizing returns seems fairly clear and measurable, risk is subjective and differs person to person.
Betterment Offer IRAs
The big news for Betterment is that they are offering both Traditional and Roth IRAs for new customers. If you don't have an IRA started for your retirement you now have a new option.
Rollover Your 401(k) – Get More and Pay Less
According to Hewitt Associates Inc, almost half of employees with balances of $100,000 or more leave their 401(k) money with their old employer, which may not offer that many selection and have funds with higher than typical fees.
Even if you don't have $100,000 in your old 401(k), you could do better by rolling it over to a lower cost IRA. You can streamline your finances by setting up your preferred asset allocation and contributions easily.
Betterment Now Has Lower Fees => Happy Investors
While I'm excited about IRAs being available at Betterment, I'm much more delighted that Betterment is lowering their annual fees even further. That means lower pricing for everyone, ranging from 0.15% to 0.35%!
I've included below the details below:
Even better, all new customers will get their first 30 days of Betterment for free! This is a great opportunity to open account and start investing for your retirement. Current customers have the option to stay with the old pricing plans if they prefer.
If you’re an investor looking for a simple, no hassle option, then I think Betterment could be a good fit for you. Get a $25 Account Bonus when you sign up for Betterment.
Thoughts on Betterment
I think this is great news for investors looking at ways to lower their investment costs. How many of you are thinking of taking advantage of Betterment's lower fees? I'm glad that fees are getting lowered – it's better for the investor, both now and in the long run.
Sounds like a BETTER option for many!
This is a great move for so many people…don’t be that person who sells your investments when the market tanks….you lose YEARS when that happens.
The only worry I have about this at all is that many people develop their plan based on some silly cchart of “risk tolernace”. Who cares what your risk tolerance is if you aren’t going to reach your goal? Base your decisions and your education on what you have to do to meet the goal, not based on your comfort zone.