Using Betterment for Easy Investing

[yodelo]

Hello,

I just opened an Individual Taxable Account on Betterment and it set my allocation at 90% stocks and 10% bonds. Is this a good way to start investing and get 7% returns over the long run? Planning on contributing $1500 per month to the account.

I also opened up a Roth IRA with them and put in the maximum contribution. Also a safe way to get 7%?


Thanks, and sorry if I sound dumb. I'm a completely newbie to investing and don't really understand how it works.

[Michread]

You would be better off in the long run to have set yourself up with Vanguard Group.  Read bogleheads.org for more info. 

For a good laugh and great info watch Jamie oliver

https://m.youtube.com/watch?v=gvZSpET11ZY

[Aggie1999]

If you want to see how much those Betterment fees will cost you in the long run, checkout the following link:

http://www.begintoinvest.com/expense-ratio-calculator/

To summarize, ditch Betterment and go with low cost index funds directly yourself through Vanguard, Fidelity, etc.

[marty998]

What do you mean by "safe" way to get 7%?

No return except for cash or government bonds is guaranteed, and even those have risks (inflation etc).

And also... if buying shares (Betterment, Vanguard or direct ownership) it won't be a smooth return. Some years it'll be -30% some years +30% or any amount in between or above.

[aFrugalFather]

You would be better off in the long run to have set yourself up with Vanguard Group.  Read bogleheads.org for more info. 

For a good laugh and great info watch Jamie oliver

https://m.youtube.com/watch?v=gvZSpET11ZY

I clicked through just to find out what a Chef would have to say about investing!  :P

[yodelo]

Can anyone provide step by step instructions on how to invest in this Vanguard? Like I've heard it a millions times, but how does one actually do that? What website do you go to? What options do you select?

[Eric]

Can anyone provide step by step instructions on how to invest in this Vanguard? Like I've heard it a millions times, but how does one actually do that? What website do you go to? What options do you select?

If you can't even figure out where the Vanguard website is located, then you should stick with Betterment.  It's going to be worth you paying those extra fees for the extra help.

[Rocket]

This is vanguard open account page.  I imagine you can also call them and setup an account if thats more comfortable.

https://personal.vanguard.com/open-account/oax/app/triage#/newfund

Can anyone provide step by step instructions on how to invest in this Vanguard? Like I've heard it a millions times, but how does one actually do that? What website do you go to? What options do you select?

[moneymustard]

I'm currently using wealthfront, mainly because I don't have a ton of time to set things up and wealthfront has made it really easy w/ .25% flat fee and I felt like w/ Fidelity I was paying a trading fee for investing each month ($8/mo) and the .25% was significantly less than that for the amount of money I have.  Thoughts?

[Dicey]

Um, in your situation, I think that caption should read "Using Betterment for Expensive Investing."

Go visit the esteemed JL Collins for an easy step-by- step primer and save yourself a bucket load of fees.

BM has its place, but even the mighty MMM only tucked a tiny portion of his net worth there.

[GU]

Maybe learn more about investing while you continue to contribute to your Betterment accounts.  Just by doing that you're ahead of 90% of people.  Betterment charges higher fees than Vanguard, which over the long run will lower your return appreciably.  But it will have little effect in the short term, and Betterment's fees are still lower than most mutual funds.  It's not the emergency  some on here are making it out to be. 

When you reach over $10,000 in your Betterment account, ditch Betterment and switch to Vanguard Admiral Shares.  If you already have this much, first, congratulations, second, learn more and then switch (once you've learned enough, the reason for switching will be obvious).  Or just keep Betterment if you're not willing to learn on your own--like I said, it still puts you in the 90th percentile just by opening and contributing to ANY investment account.

[soccerluvof4]

I agree , go to Vanguard and for a smidgen of the money use one of there managers for 6 months and then go on your own. Sounds like you have a lot to learn and thats perfectly ok. No better time to get started then now.

[yodelo]

I didn't realize that Betterment was not the best place to go!!

If I already put $5500 in a Roth IRA on betterment, can I take it out and put it somewhere else?

[Aggie1999]

I didn't realize that Betterment was not the best place to go!!

If I already put $5500 in a Roth IRA on betterment, can I take it out and put it somewhere else?

Sure, just open up the process through Vanguard. They will have you print out the paper work that you must get "signed" with a medallion signature available through most banks. You mail the paper work to Vanguard and they forward it on Betterment. Betterment will sell all your assets in the account and send Vanguard a check. Process will take around a month.

[Dicey]

I didn't realize that Betterment was not the best place to go!!

If I already put $5500 in a Roth IRA on betterment, can I take it out and put it somewhere else?

Sure, just open up the process through Vanguard. They will have you print out the paper work that you must get "signed" with a medallion signature available through most banks. You mail the paper work to Vanguard and they forward it on Betterment. Betterment will sell all your assets in the account and send Vanguard a check. Process will take around a month.

Whatever you do, do NOT wait until you hit 10k at BM. You'll pay more fees than necessary. And do NOT take the Roth money out yourself. Contact Vanguard and they will take care of the transfer for you. DIY transfers can have expensive consequences.

[moneymustard]

When you reach over $10,000 in your Betterment account, ditch Betterment and switch to Vanguard Admiral Shares.  If you already have this much, first, congratulations, second, learn more and then switch (once you've learned enough, the reason for switching will be obvious).

Any recommendations for things to read?

[BogleBoy]

"I am altering the deal. Pray I don't alter it any further. "

Keep in mind that Betterment just raised their fees significantly. They can do that whenever they want. If you have taxable account money with them and have it there for years you may incur a huge capital gains tax bill if you decide to leave and take your money elsewhere.

Automated tax-loss harvesting is nice but as their fees go up I'm not sure that's worth it. Just doing my own TLH has worked, simply wait for a big correction like the one a little over a year ago.

[Michread]

Go to boglehead.org and read, read, read and watch the videos. Then ask questions on Bogleheads.  Then call vanguard and asked them to help you get your money out of betterment and into vanguard.  I suggest vanguard balance index fund.

[GU]

When you reach over $10,000 in your Betterment account, ditch Betterment and switch to Vanguard Admiral Shares.  If you already have this much, first, congratulations, second, learn more and then switch (once you've learned enough, the reason for switching will be obvious).

Any recommendations for things to read?

Bernstein, The Four Pillars of Investing

JLCollinsNH Stock Series:  http://jlcollinsnh.com/stock-series/

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