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Betterment (The One Based On Goals)
Introduction: Of all of the automated investing options we have tried to date, Betterment tops the list. The company offers a great product at a great price while navigating the “Ease Factor” well.
The Basics: At the heart of the service, Betterment offers the ability to help you reach specific goals that you set for yourself. These goals include priorities such as: Creating a Safety Net, Retirement, or General investing.
Signing up: The sign-up process was very easy in my opinion. I was able to create an account and set up what I wanted within a matter of minutes. Even for someone inexperienced with financial terminology or concepts should be able to navigate the website with relative ease. The process was well-defined and allows you to start to “create” your investment allocation prior to the tedious need to input your basic information and link a bank account. Starting you off by setting up your goals first is an exciting way to
To see a detailed look of the sign-up process, please click here.
The Investments: Betterment utilizes six different stock ETFs and seven different bond ETFs in their diversified portfolio. Based on your inputs of required return and risk tolerances, an optimal allocation is created.
With proper diversification, Betterment believes you can achieve an optimal allocation with exposure to twelves different asset classes ranging from the US Total Stock Market (The stalwart VTI) to Emerging Market Stocks (VWO) and International Developed Stocks (VEA). There is also a wide array of bond ETFs that are also allocated based upon your requirements. The only major asset classes missing are real estate and commodities. Overall, we feel that the selection of ETFs is a cost-effective way at diversifying portfolios.
Cost: Compared to the investment advisory community as a whole, Betterment offers their services at bargain prices. Compared to other automated investment services, pricing is fair.
I am not a fan of the automatic fee without auto-deposit and the 0.35% fee for the first $10,000 invested is starting to look a bit high in relation to the competition. However, given the level of customizability and how much the product has to offer, pricing seems rather fair. While Betterment seems to excel in the other areas that we graded, pricing was graded as average.
The Positives: Overall, Betterment created a great product. I personally love the ability to customize your portfolio to your needs and how you can play around with different scenarios. The ability to set multiples goals and prioritize them based upon personal preference is also another plus. In using a goals-based approach, the customer can more relate to what they need and want which takes away from some of the complexity of investing. Too often products are created without the end functionality of the customer in mind but I think Betterment hits the nail on the head with this one.
The ease of signing up was the next best attribute about the company. It honestly took but a few minutes to sign up and start to see what the product could do for me. This quick gratification wLastly, the company seems to respond to questions and issues in a timely manner. Based on their activity on their twitter account, there is always someone to monitor questions being asked.
The Negatives: The one main negative I see with the product is also how customizable it is.While there is a fine line between it being a positive attribute (see above) and a negative one, I found the software to be a bit overwhelming at times. For instance, on the page below, you can pretty much hover over anything on the page and change a parameter or see more information. While some customers may like this, it also can be too much for someone looking for a simple approach.
Overall Wrap: Overall, we give Betterment 5 out of 5 stars. Betterment excels at all aspects of our rating system and we find it to be one of the best automated investing options on the market today. The positives far outweigh the negatives and with a little investment knowledge, Betterment is a powerful tool to help you reach your financial goals.
To see more on what Betterment has to offer, please visit: www.betterment.com
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There are many roboadvisors to choose from; each with distinct characteristics and a wide variety of services offered. We break down the similarities and differences between these firms here at The List.