Author Topic: Betterment or other RBO for college kid with less than $3k?  (Read 2948 times)

cr3

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Betterment or other RBO for college kid with less than $3k?
« on: April 02, 2015, 02:04:05 PM »
Hello,

I have read all the posts on Betterment and other RBO sites. I agree with investing with Vanguard or Fidelity directly for lower costs. However, I am trying to help my daughter get her first account set up. She is a college student with about $1500k and can contribute $100 a month. Rather than wait till she can get the full $3k do you recommend Betterment or other site for her? Trying to start her out early.

Thanks,
C

cr3

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #1 on: April 02, 2015, 02:05:56 PM »
Also forgot to add that I want to start my two younger high school kids out with an account. They have about $1k but don't have $100 a month but can contribute $20-$50 a month.

Thanks again,
C

milesdividendmd

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #2 on: April 02, 2015, 02:39:52 PM »
I'm a huge fan of Betterment, but for your purposes I would go Wealthfront since the first 10K invested had no additional fees.

skyrefuge

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #3 on: April 02, 2015, 02:44:03 PM »
Vanguard's Target Retirement funds now have $1k minimums, and $1 additional-contribution minimums. I'd go with those. And inside a (Roth) IRA if the money is coming from earned income!

cr3

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #4 on: April 02, 2015, 02:44:33 PM »
Are there concerns about these companies going out of business as they don't make enough to cover their costs? Just curious as I have worked at numerous startups that end up not serving due to expense vs revenue. Are your funds protected with Wealthfront or Betterment? I know that with Fidelity or Vanguard your money is safe.

Thank you,
C

cr3

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #5 on: April 02, 2015, 02:46:50 PM »
Vanguard's Target Retirement funds now have $1k minimums, and $1 additional-contribution minimums. I'd go with those. And inside a (Roth) IRA if the money is coming from earned income!

@skyrefuge

Only issue I have with the IRA option is you can't touch the money till 65. For early retirement that doesn't bode well if you need the money at 40.

skyrefuge

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #6 on: April 02, 2015, 02:53:05 PM »
Only issue I have with the IRA option is you can't touch the money till 65. For early retirement that doesn't bode well if you need the money at 40.

Not true. And I don't just mean that the penalty-free distribution age is 59.5, not 65. Nearly everyone on this forum plans for early retirement, and also puts money into IRAs. Learn why:

http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

That said, it's probably a bit early for your kids to know whether or not they care about early retirement! (especially if you're the one making that determination for them!)

iamlindoro

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #7 on: April 02, 2015, 02:54:20 PM »
Only issue I have with the IRA option is you can't touch the money till 65. For early retirement that doesn't bode well if you need the money at 40.

Not true. And I don't just mean that the penalty-free distribution age is 59.5, not 65. Nearly everyone on this forum plans for early retirement, and also puts money into IRAs. Learn why:

http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

That said, it's probably a bit early for your kids to know whether or not they care about early retirement! (especially if you're the one making that determination for them!)

My kingdom for a sticky thread!

tj

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Re: Betterment or other RBO for college kid with less than $3k?
« Reply #8 on: April 02, 2015, 04:55:54 PM »
Are there concerns about these companies going out of business as they don't make enough to cover their costs? Just curious as I have worked at numerous startups that end up not serving due to expense vs revenue. Are your funds protected with Wealthfront or Betterment? I know that with Fidelity or Vanguard your money is safe.

Thank you,
C

You're invested direclty in ETFS, so if betterment goes belly up, you're brokerage account will convert to whoever picks up their scraps, no reason your security holdings would change.