Author Topic: Would you recommend acorn or betterment for a novice?  (Read 4532 times)

SomedayStache

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Would you recommend acorn or betterment for a novice?
« on: October 20, 2015, 03:52:51 PM »
A friend who knows nothing about investing is asking.  I asked if she wanted taxable or retirement advice and the response was
" I'm looking for something that's beginner friendly, that will help me navigate my way around different  investments, and that'll help me be become more investment/savings literate. # clueless
I'm thinking of playing around on Acorn for awhile until I get a general idea of what I'm doing, and then moving on to something like Betterment."

I don't know, I want to proclaim about vanguard and send her the jlcollins link but I think that stuff would be too intimidating.

What would you say?

MDM

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Re: Would you recommend acorn or betterment for a novice?
« Reply #1 on: October 20, 2015, 06:47:21 PM »
"Put it all into VTTSX [editorial note: feel free to insert the Target Date fund of your choice instead of VTTSX] until such time as you can manage things better.  That time may never come, and you will still be fine if so."

Some "getting started" reading material:
www.etf.com/docs/IfYouCan.pdf
http://jlcollinsnh.com/stock-series/
http://www.mrmoneymustache.com/the-mmm-reading-list/ - Haven't read them all, but A Random Walk Down Wall Street by Burton Malkiel and The Four Pillars of Investing by William Bernstein were good.
Last but not least: http://www.bogleheads.org/wiki/Category:Getting_started

SomedayStache

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Re: Would you recommend acorn or betterment for a novice?
« Reply #2 on: October 20, 2015, 07:25:15 PM »
Thanks mdm.  But I'm thinking even simpler.  The grs or simple dollar blog maybe, that's where I initially dipped my toes in but I haven't read them in years and don't know if they are worthwhile anymore.

I wish I knew more about betterment and acorn since that's what she's asking about.

Suggest a target date fund through one of those platforms ?

MDM

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Re: Would you recommend acorn or betterment for a novice?
« Reply #3 on: October 20, 2015, 07:37:50 PM »
But I'm thinking even simpler.
Suggest a target date fund through one of those platformsVanguard
See https://investor.vanguard.com/mutual-funds/how-to-open-account-online

If that isn't simple enough...?

SomedayStache

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Re: Would you recommend acorn or betterment for a novice?
« Reply #4 on: October 21, 2015, 06:51:01 AM »
Oh, yes, I know it's quite simple.  =)

But I think she probably doesn't even know what I meant when I asked taxable or tax-advantaged.  Probably doesn't know what an IRA is, much less the difference between Roth and Traditional. 

Killerbrandt

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Re: Would you recommend acorn or betterment for a novice?
« Reply #5 on: October 21, 2015, 07:04:45 AM »
I have Acorn and many of my friends have it now. I love it, because I treat it as a fun money account for vacations, but my friends that are just starting in the world us it to build up their first investments and after they save up enough they want to open other accounts. You can start with I think 5 bucks and the micro investing is great because you hardly notice it. I fully recommend Acorn to everyone.

SomedayStache

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Re: Would you recommend acorn or betterment for a novice?
« Reply #6 on: October 21, 2015, 07:14:33 AM »
I ended up saying that of the two, I'd recommend Betterment.  I also mentioned that she'd probably end up invested in Vanguard funds through Betterment and that she could go directly to Vanguard to do so herself for lower fees.  I also threw in a Bogleheads link and a generic happy statement along the lines of The perfect being the enemy of the good and starting anything at all is a great first step.

SomedayStache

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Re: Would you recommend acorn or betterment for a novice?
« Reply #7 on: October 21, 2015, 07:20:02 AM »
I have Acorn and many of my friends have it now. I love it, because I treat it as a fun money account for vacations

But, but...agh!  I don't understand.  Why would you pay fees for something you can do yourself by opening a free online savings account and transferring small amounts of money over monthly?

Hurts my brain.

undercover

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Re: Would you recommend acorn or betterment for a novice?
« Reply #8 on: October 22, 2015, 02:35:24 AM »
Acorns seems like a very novice approach, at least the gimmicky "spare change" part of it, but not in a good way. It's just a way for them to get otherwise spendy individuals to commit to moving money over. The service itself is probably fine, but I still wouldn't recommend it because there is no option for tax-loss harvesting. Also, Betterment is just the more established player. Competitors like Acorns are having to come up with gimmicks like the spare change feature to get people to notice them.

Killerbrandt

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Re: Would you recommend acorn or betterment for a novice?
« Reply #9 on: October 22, 2015, 09:48:30 AM »
The Acorn fees are not much and you can open it with almost nothing compared to most mutual fund accounts that want 2500 or more. Acorn is great to get people started and still earn interest, even with the fee, the dividends each month cover it plus some for me at least. Also once you get to 5k the fee falls to .35 which is not bad at all. It is just a great stepping stone for a person to start saving and growing it, compared to so many that cannot save up 2500 or more to open their own account or even do 100 bucks on a regular basis.