Does anyone use Betterment (or has decided against it)? - Mothering Forums

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#1 of 7 Old 03-15-2013, 12:09 PM - Thread Starter
 
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I have been considering using Betterment (https://www.betterment.com) for longer term savings/investment and was wondering if anyone here has used it, or alternatively, considered it and decided not to. I am not very savvy WRT investments (and, frankly, have no interest in becoming so), so I am looking for something pretty simple (and I like the low deposit requirements).

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#2 of 7 Old 03-15-2013, 03:37 PM
 
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How small of an initial investment are you planning on?

 

With their investments, it seems like it might make more sense to just go through Vanguard, get the same (or similar) index funds and *not* pay the advisor fee.  If you want a balanced portfolio you could either go with the Vanguard STAR fund or pick a Vanguard Target Retirement Fund. 

 

You might be interested in "Bogglehead" investing where you just decide your asset allocation and leave it for the long haul (of course, reallocating as you age).  Target Retirment funds are an easy way to do that with *no* effort (because they change your allocation as you age).


 

 

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#3 of 7 Old 03-18-2013, 07:00 AM - Thread Starter
 
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Thanks! I guess my only question with those is, how easy is it to get money in & out? Will I end up having to call them, or send things through the mail? Things like that get on my todo list, but never seem to happen, whereas it looks like everything I would want to do with Betterment is right there on the website.

 

ETA - and with Betterment, it looks like you can just add any amount of money you want at anytime (with a min. of $100/mo), which is also appealing - it's hard for us to save up the, say $500 my IRA requires, b/c it always seems like there's something more immediate we could do with that amount of money, but if we were putting in $25/wk, that's a little easier to let go.

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#4 of 7 Old 03-18-2013, 08:10 AM
 
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Originally Posted by Okapi View Post

Thanks! I guess my only question with those is, how easy is it to get money in & out? Will I end up having to call them, or send things through the mail? Things like that get on my todo list, but never seem to happen, whereas it looks like everything I would want to do with Betterment is right there on the website.

 

Any major place will have the ability to transfer money online.  We use Fidelity and it is easy to connect your bank account to your investment account. How often will you want to be getting money in and out, though?  When you said "long term" I was thinking more like retirement, so not something you would be withdrawing from (except in a severe emergency) anyway.  If this is something that you are relying on for easy access to, then stocks/mutual funds/index funds are probably  an inappropriate savings location.

 

If you currently have an IRA, you shouldn't have to do deposits in $500 increments (of did I misread that).  Where is it located?


 

 

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#5 of 7 Old 03-19-2013, 06:31 AM - Thread Starter
 
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My IRA is with Principle. It was a rollover from a 401K w/ them when the company I was working for got bought out. The statements they sent always said I needed to send a min. of $500. Perhaps I was misunderstanding something?

 

As far as taking it in and out, I guess that's another question I have. One of the examples they give is a wedding 5 years out. Is that too short term? Not that I'm planning a wedding, but we are hoping to do a big family vacation in 5-7 years. The other things I would consider using it for would be savings for the girls for college (or whatever their chosen next step would be - roughly 13 & 18 years out).

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#6 of 7 Old 03-19-2013, 12:24 PM
 
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Originally Posted by Okapi View Post

My IRA is with Principle. It was a rollover from a 401K w/ them when the company I was working for got bought out. The statements they sent always said I needed to send a min. of $500. Perhaps I was misunderstanding something?

 

As far as taking it in and out, I guess that's another question I have. One of the examples they give is a wedding 5 years out. Is that too short term? Not that I'm planning a wedding, but we are hoping to do a big family vacation in 5-7 years. The other things I would consider using it for would be savings for the girls for college (or whatever their chosen next step would be - roughly 13 & 18 years out).

 

I would consider moving your IRA from Principle to a low cost invesment firm (Vanguard, Fidelity...).  Have you looked at what you are invested in there and how much the fees are?   You might be losing a lot of money.  Additionally, most other places do not have a $500 minimum for additional investments!

 

If you want to have access to something 5-7 years out you will want to have a more conservative portfolio than if you are planning for something 30-40 years out.  5-7 years is a bit longer than short term (where it would need to be CDs or the like) but not as long term to probably want a majority in stock (or stock mutual/index funds).  Your personal asset allocation is a combination of how comfortable you are with risk,your timeline and your goals.  Most financial advisors would say that you need to prioritize retirement savings before even considering college savings--- you can borrow money for college but you can't borrow money for retirement.

 

If you are interested in low-cost, long term investing and getting a better grasp on your personal finances, I cannot recommend the Bogleheads Forums strongly enough:

http://www.bogleheads.org/forum/index.php?sid=4f42b4bf4221be94f4a0bb9a1d8693a0

 

"Bogleheads" are people who follow the investing advice of John Bogle, the founder of Vanguard.


 

 

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#7 of 7 Old 03-23-2013, 10:11 AM - Thread Starter
 
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Thanks for the ideas! I will check out the Boglehead forum, and I guess start doing some research.
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