Author Topic: Betterment or Vangaurd?  (Read 64025 times)

Cincy Stache

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Betterment or Vangaurd?
« on: January 14, 2014, 12:26:07 PM »
I could be rehashing old stuff here.  But after hearing about Betterment on a few podcasts I thought I'd look into it.  WOW, am I late to the party?  This looks like a perfect "investing" compliment to my Mint account...
The problem is, I'm not sure if Betterment or Vangaurd is right for me.  (I need to roll some things over just to get my ball rolling again)

I'm thinking about pulling 12k from my OPERS (Ohio Public Employee) account since it's unlikely I will be a public emp again.  I'm 28 years old and have 6 years in the system.
I want to roll over my "deffered compensation" account with ING that has about 5k just sitting with no contributions since I've been a public emp 2 years ago.

My thought is once I get one or both of these accounts rolled into a Betterment or Vangaurd and get $100/month going again that I'll be back on track with my retirement savings.

I would also like to start keeping my "savings acct/emergency fund" into this as well, since it seems fairly liquid if I were to NEED $.

**I like the idea of tracking, but not messing with my longterm investments.

Is Betterment really as good as I think it is for my use?  Any current users?

Thanks in advance!

Honest Abe

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Re: Betterment or Vangaurd?
« Reply #1 on: January 14, 2014, 07:01:15 PM »
I'm a big Betterment fan.

The long story short: if you enjoy tinkering/tweaking your investments and trust yourself to do it faithfully and correctly for the next 30 years, use Vanguard.

If you want to just throw money into investments and not have to think about it and feel that .25% is worth it, knowing that it'll be done correctly every time.. then go with Betterment.

Cyrano

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Re: Betterment or Vangaurd?
« Reply #2 on: January 14, 2014, 07:08:06 PM »
If you want to go completely hands off at Vanguard, pick an automatic investment amount and a target date fund. No further tinkering required.

wtjbatman

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Re: Betterment or Vangaurd?
« Reply #3 on: January 14, 2014, 07:29:01 PM »
For the casual investor who only needs to know one thing (your preferred Asset Allocation, such as 80% stocks and 20% bonds), and just wants to deposit money into on a regular basis, Betterment is the perfect tool. I use it for my long term savings. It's probably the most user friendly, attractive, easiest to use set-it and forget-it investment account out there. And fees are minimal compared to everything except index funds.

Will

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Re: Betterment or Vangaurd?
« Reply #4 on: January 14, 2014, 07:49:53 PM »
If you want to go completely hands off at Vanguard, pick an automatic investment amount and a target date fund. No further tinkering required.

+1

You can't get any easier or inexpensive than this.  Target date or even Life Strategy funds would work too.  After you pick one and set up that automatic investment there is no annual .25% leeched off.

arebelspy

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Re: Betterment or Vangaurd?
« Reply #5 on: January 15, 2014, 06:59:10 AM »
If you want to go completely hands off at Vanguard, pick an automatic investment amount and a target date fund. No further tinkering required.

+1

You can't get any easier or inexpensive than this.  Target date or even Life Strategy funds would work too.  After you pick one and set up that automatic investment there is no annual .25% leeched off.

+2.

I vote Vanguard.

It's just as easy to set up automatic and hands off stuff, without giving up extra money for not much.
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aj_yooper

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Re: Betterment or Vangaurd?
« Reply #6 on: January 15, 2014, 07:13:54 AM »
I don't get Betterment.  They have slick marketing and get people into their funds, but they charge more than Vanguard.  If you invest $10,000 per year on a monthly basis, the .25% Betterment up charge in 10 years is $1249.40.  Over a lifetime of significant investing, this turns into a very large sum.

My advice is to read their blog a little, then put your money in Vanguard.  Then read the Vanguard site and Bogleheads at:  http://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Set it up and then fund Vanguard regularly. 

[Mod Edit: Fixed Hyperlink.]
« Last Edit: January 15, 2014, 07:14:59 AM by arebelspy »

randymarsh

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Re: Betterment or Vangaurd?
« Reply #7 on: January 15, 2014, 07:23:57 AM »
You may want to consider just leaving the funds with OPERS. You're fully vested and you forfeit all service credit when you get a refund or do a rollover. The funds they offer have extremely low expense ratios.

Their stock index fund for example has an ER of 0.03%. Vanguard's ER on their total stock market fund (with admiral shares) is 0.05%. Even their target date funds are extremely cheap - 2050 is 0.08%.

If your account balance is over 5K, you won't have any other fees or expenses associated with the plan.

Will

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Re: Betterment or Vangaurd?
« Reply #8 on: January 15, 2014, 07:44:39 AM »
I don't get Betterment.  They have slick marketing and get people into their funds, but they charge more than Vanguard.  If you invest $10,000 per year on a monthly basis, the .25% Betterment up charge in 10 years is $1249.40.  Over a lifetime of significant investing, this turns into a very large sum.

My advice is to read their blog a little, then put your money in Vanguard.  Then read the Vanguard site and Bogleheads at:  http://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Set it up and then fund Vanguard regularly. 

[Mod Edit: Fixed Hyperlink.]

This.  Not only do they charge more THAN Vanguard, they charge more FOR Vanguard.  They point out the low cost of the funds they want to put you into and then charge you to do it.  That would be like me telling you how much you can save by shopping at Costco and then making you pay me to shop for you at Costco.

Cincy Stache

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Re: Betterment or Vangaurd?
« Reply #9 on: January 15, 2014, 08:39:08 AM »
Thanks all!  It looks like Vangaurd wins purely from a fee standpoint.  This is the route I'll likely go...

For now, maybe I'll just leave my OPERS account alone and track how it's doing.

What are your thoughts on a place to put an "emergency fund" or savings account.  Frankly, I'm tired of keeping my savings in a brick n' mortar bank along with my checking.  Is a .85% online savings account better than throwing it in (betterment suggested) conservative investment account that can be withdrawn on anytime?  How can I make the most of this sitting $ while also being able to access it quickly if I needed to?

Thanks again!

arebelspy

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Re: Betterment or Vangaurd?
« Reply #10 on: January 15, 2014, 09:04:30 AM »
Thanks all!  It looks like Vangaurd wins purely from a fee standpoint.  This is the route I'll likely go...

For now, maybe I'll just leave my OPERS account alone and track how it's doing.

What are your thoughts on a place to put an "emergency fund" or savings account.  Frankly, I'm tired of keeping my savings in a brick n' mortar bank along with my checking.  Is a .85% online savings account better than throwing it in (betterment suggested) conservative investment account that can be withdrawn on anytime?  How can I make the most of this sitting $ while also being able to access it quickly if I needed to?

Thanks again!

I have mine earning 1% at SmartyPig.com - takes about 3 days to transfer, but I'm not sure of an emergency where I couldn't use a credit card (temporarily, then pay off with cash), or couldn't wait 3 days for the funds.
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imbros

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Re: Betterment or Vangaurd?
« Reply #11 on: January 15, 2014, 11:43:57 AM »
I don't get Betterment.  They have slick marketing and get people into their funds, but they charge more than Vanguard.  If you invest $10,000 per year on a monthly basis, the .25% Betterment up charge in 10 years is $1249.40.  Over a lifetime of significant investing, this turns into a very large sum.

My advice is to read their blog a little, then put your money in Vanguard.  Then read the Vanguard site and Bogleheads at:  http://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Set it up and then fund Vanguard regularly. 

[Mod Edit: Fixed Hyperlink.]

This.  Not only do they charge more THAN Vanguard, they charge more FOR Vanguard.  They point out the low cost of the funds they want to put you into and then charge you to do it.  That would be like me telling you how much you can save by shopping at Costco and then making you pay me to shop for you at Costco.

Couldn't explain this better myself!

buckkatherine

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Re: Betterment or Vangaurd?
« Reply #12 on: January 15, 2014, 01:11:30 PM »
Hi Cincy Stache,

Katherine from Betterment here. The fee Betterment charges for its services is minimal compared to the value provided.


My advice is to read their blog a little, then put your money in Vanguard.

[Mod Edit: Fixed Hyperlink.]

If you read our blog, you'll discover all that we provide our customers for such a low fee. For example, we recently posted an analysis of the behavior gap, or the performance many investors forgo due to poor investing behavior. Betterment, on average, provides customers a performance gap that is 1.3% less than what an average investor experiences. That's 1.3% in additional returns per year for investing with Betterment (and the most you'll pay us in a management fee is 0.35%). Even if you're a well-behaved investor, our software is designed to optimize long-term returns. It automatically rebalances customers' accounts and automatically reinvests dividends -- you can do that on your own, but why would you want to? Let's suppose you invest $100,000 with Betterment. The fee amounts to $15 per month. Take that time you would spend doing everything Betterment does automatically on your own, and you can use it to the tune of a lot more value than $15. Whether it's work, learning a new skill, spending time with family, or even sleeping, we're giving you your life back for a minimal cost.

Our rollover process is also one of the most efficient in the industry. We have completed thousands of rollover and ensure what is normally a frustrating process runs smoothly.

Take care,
Katherine

grantmeaname

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Re: Betterment or Vangaurd?
« Reply #13 on: January 15, 2014, 01:36:32 PM »
That's some really interesting shilling.

arebelspy

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Re: Betterment or Vangaurd?
« Reply #14 on: January 15, 2014, 01:58:04 PM »
That's some really interesting shilling.

Now, now, play nice.

I disagree with most of her post, but it's nice that they're at least coming on to discuss their product, hopefully honestly, and thus able to answer questions, etc. about it.
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grantmeaname

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Re: Betterment or Vangaurd?
« Reply #15 on: January 15, 2014, 02:13:33 PM »
I don't know. People who want to company line can find it with a one word google search, and all of those arguments have been given by Betterment's marketing team on this forum before. (Deja vu.)

seattlecyclone

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Re: Betterment or Vangaurd?
« Reply #16 on: January 15, 2014, 02:20:26 PM »
The argument that most people don't manage their portfolios optimally (given their desired asset allocation) is a valid one. The question is whether the OP would be disciplined enough to do so, or at least get close enough to be better off than paying a 0.25% management fee.

arebelspy

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Re: Betterment or Vangaurd?
« Reply #17 on: January 15, 2014, 02:46:35 PM »
I don't know. People who want to company line can find it with a one word google search, and all of those arguments have been given by Betterment's marketing team on this forum before. (Deja vu.)

True.

The argument that most people don't manage their portfolios optimally (given their desired asset allocation) is a valid one. The question is whether the OP would be disciplined enough to do so, or at least get close enough to be better off than paying a 0.25% management fee.

Fair enough.  What that means to me though, is that the advice should be given as "Vanguard is better, but with the caveat that...*" (insert info about discipline and investor psychology, risk tolerance, etc.), and let the person decide based on that.

That is, not argue that theirs is mathematically better in some way, ala:
Quote
Even if you're a well-behaved investor, our software is designed to optimize long-term returns. It automatically rebalances customers' accounts and automatically reinvests dividends -- you can do that on your own, but why would you want to?

Or that the fee is small ($15 on 100k), but basically say it's for people who can't handle the mathematically better investing because it takes discipline.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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grantmeaname

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Re: Betterment or Vangaurd?
« Reply #18 on: January 15, 2014, 02:51:31 PM »
Don't forget to elide over that dividend reinvestment is free, effortless, and instantaneous with or without giving Betterment .25% of your money every year.

Honest Abe

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Re: Betterment or Vangaurd?
« Reply #19 on: January 15, 2014, 05:07:06 PM »
It seems that I'm the resident Betterment fanboy so here we go. I'll put it in a less eloquent way then Betterment can because they would be afraid to insult their potential customers.

That .25% is money well-spent. It's protection money. Only rather than protecting you from the mafia or a local gang, it's protecting you from yourself.

"But I don't need protection from myself... I know exactly what I'm supposed to do and I'm disciplined enough to do it consistently for the next 40 years!"

If the above statement sounds like you, then chances are..... You need protection.

The service Betterment offers is not just passive index investing. You can get that from Vanguard. What Betterment offers you is the ability to just throw money into your account without having to think about anything. I mean ANYTHING. Ever. Just let that sink in.

In the past 16 months I've paid less in fees to Betterment than I paid in a single month to Sharebuilder as an active trader (back when I thought that was cool.)

If you have the time to sit down and calculate your current balances and correct percentages to allocate new funds on every deposit (I deposit weekly) then go for it. You probably won't always have the time or interest to do so, for various personal and professional reasons. (In fact, I hope you don't... Having a family and a fulfilling career is a wonderful thing.)

But if you don't have the time, if you just want to throw this extra $500 sitting in your checking account into a diversified basket of low-cost funds without having to stress AT ALL then Betterment is for you.

If you think that you're good enough, smart enough, and persistent enough to manage your investments for the next 40 years without skipping a beat then good for you!.....But you're probably wrong. :)

aj_yooper

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Re: Betterment or Vangaurd?
« Reply #20 on: January 15, 2014, 05:32:42 PM »
For me, financial knowledge eases money anxiety and worry.  Doing an investment policy statement and then deciding on asset allocation and index funds is not that hard.  Of course, one can overthink or do too much slicing and dicing, but there are plenty of simple portfolios at Bogleheads and other sites that will fit most people.  There are knowledgeable people here and on other forums to help if you ask. 

Betterment's ad writing is smooth and enticing and it does contain some good stuff, but it simply leads to higher cost.  Remember, a typical financial adviser does not act in a fiduciary capacity.  Further, if you are planning on a 4% draw on your retirement savings, losing .25-.35 to Betterment during the buildup of an account and the spend down seems unnecessary when it is easy peasy at places like a Vanguard. 

arebelspy

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Re: Betterment or Vangaurd?
« Reply #21 on: January 15, 2014, 05:33:29 PM »
It seems that I'm the resident Betterment fanboy so here we go. I'll put it in a less eloquent way then Betterment can because they would be afraid to insult their potential customers.

That .25% is money well-spent. It's protection money. Only rather than protecting you from the mafia or a local gang, it's protecting you from yourself.

"But I don't need protection from myself... I know exactly what I'm supposed to do and I'm disciplined enough to do it consistently for the next 40 years!"

If the above statement sounds like you, then chances are..... You need protection.

The service Betterment offers is not just passive index investing. You can get that from Vanguard. What Betterment offers you is the ability to just throw money into your account without having to think about anything. I mean ANYTHING. Ever. Just let that sink in.

In the past 16 months I've paid less in fees to Betterment than I paid in a single month to Sharebuilder as an active trader (back when I thought that was cool.)

If you have the time to sit down and calculate your current balances and correct percentages to allocate new funds on every deposit (I deposit weekly) then go for it. You probably won't always have the time or interest to do so, for various personal and professional reasons. (In fact, I hope you don't... Having a family and a fulfilling career is a wonderful thing.)

But if you don't have the time, if you just want to throw this extra $500 sitting in your checking account into a diversified basket of low-cost funds without having to stress AT ALL then Betterment is for you.

If you think that you're good enough, smart enough, and persistent enough to manage your investments for the next 40 years without skipping a beat then good for you!.....But you're probably wrong. :)

What would stop someone like that from just setting up an autodraft into Vanguard which automatically purchases a target date fund (which itself automatically rebalances, reinvests dividends, etc. etc.)?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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wtjbatman

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Re: Betterment or Vangaurd?
« Reply #22 on: January 15, 2014, 05:58:48 PM »
I reiterate that, IMO, Betterment is perfect for the casual investor who just wants to deposit money and watch it grow "in the stock market". It's easy for us to say that investing on your own is easier, but tell that to the people who come here and post in Ask a Mustachian and tell us about how they want to invest $25,000 that's been sitting in their bank for the last five years, but they are so intimidated they obviously haven't even tried googling about how to get started investing. Those people want someone to hold their hand throughout the process. That's what Betterment does well, and I believe Betterment is there for. It's not a service that most of us here would likely need. But considering the alternative for uninformed investors (getting fleeced for 1%-2% somewhere), I don't mind recommending it if all you want is simplicity.

Eric

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Re: Betterment or Vangaurd?
« Reply #23 on: January 15, 2014, 06:00:49 PM »
The service Betterment offers is not just passive index investing. You can get that from Vanguard. What Betterment offers you is the ability to just throw money into your account without having to think about anything. I mean ANYTHING. Ever. Just let that sink in.

Okay, I have to ask.  What is someone with no interest in thinking about investing at all doing hanging around the Investor Alley section of this forum?

Abe

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Re: Betterment or Vangaurd?
« Reply #24 on: January 16, 2014, 07:01:18 AM »
I do that with Vanguard. Ok, I may have to think for a few minutes about adjusting my allocation in a couple years, but should have some time to pencil that in.  I'll probably have to spend more time remembering my password, but that's the risk of both methods!

grantmeaname

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Re: Betterment or Vangaurd?
« Reply #25 on: January 16, 2014, 07:13:26 AM »
Okay, I have to ask.  What is someone with no interest in thinking about investing at all doing hanging around the Investor Alley section of this forum?
For real. The forum that goes along with a blog about insourcing, empowering yourself by educating yourself to do things you previously paid others to do, and seeking out useless recurring expenses and cutting them! Of course we'll find paying hundreds of dollars a year to have your hand held and not have to think objectionable. That's the whole point.

Cincy Stache

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Re: Betterment or Vangaurd?
« Reply #26 on: January 16, 2014, 08:15:13 AM »
Okay, I have to ask.  What is someone with no interest in thinking about investing at all doing hanging around the Investor Alley section of this forum?
For real. The forum that goes along with a blog about insourcing, empowering yourself by educating yourself to do things you previously paid others to do, and seeking out useless recurring expenses and cutting them! Of course we'll find paying hundreds of dollars a year to have your hand held and not have to think objectionable. That's the whole point[/i].

Thanks all!  That is really what it comes down to, isn't it?  Why pay an electrician to come and change the outlet when I can google it myself, learn something, and save some $oldiers at the same time.

mandies

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Re: Betterment or Vangaurd?
« Reply #27 on: January 16, 2014, 08:44:44 AM »

What are your thoughts on a place to put an "emergency fund" or savings account.  Frankly, I'm tired of keeping my savings in a brick n' mortar bank along with my checking.  Is a .85% online savings account better than throwing it in (betterment suggested) conservative investment account that can be withdrawn on anytime?  How can I make the most of this sitting $ while also being able to access it quickly if I needed to?


I used Ally Bank for my emergency fund ($5k), and for depositing checks online (I run a small website and get a lot of little payments by check and this saves me from mailing in and running to the bank), and I'm happy with their rate. I think Barclay's online is slightly higher but only by about a half a percentage point. I like that I can write checks, have a debit card, and bank transfer to my credit union checking in a couple of days. The money is very accessible, and six free withdrawals a month is more than enough for me.

As for Betterment vs Vanguard, I'm just using Vanguard. I use this tool every time I have a question about what I should do with investments and extra money:
https://personal.vanguard.com/us/funds/tools/recommendation

I take the recommendation, and buy funds accordingly. It's really quite easy. I'm going to open a cash account with excess we save after maxing our Roths each year, and use the LifeStrategy Moderate Growth all-in-one fund for that -- based on the recommendation from that tool.

monarda

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Re: Betterment or Vangaurd?
« Reply #28 on: January 16, 2014, 08:59:54 AM »
It seems that I'm the resident Betterment fanboy so here we go. I'll put it in a less eloquent way then Betterment can because they would be afraid to insult their potential customers.

That .25% is money well-spent. It's protection money. Only rather than protecting you from the mafia or a local gang, it's protecting you from yourself.

"But I don't need protection from myself... I know exactly what I'm supposed to do and I'm disciplined enough to do it consistently for the next 40 years!"

If the above statement sounds like you, then chances are..... You need protection.

The service Betterment offers is not just passive index investing. You can get that from Vanguard. What Betterment offers you is the ability to just throw money into your account without having to think about anything. I mean ANYTHING. Ever. Just let that sink in.

In the past 16 months I've paid less in fees to Betterment than I paid in a single month to Sharebuilder as an active trader (back when I thought that was cool.)

If you have the time to sit down and calculate your current balances and correct percentages to allocate new funds on every deposit (I deposit weekly) then go for it. You probably won't always have the time or interest to do so, for various personal and professional reasons. (In fact, I hope you don't... Having a family and a fulfilling career is a wonderful thing.)

But if you don't have the time, if you just want to throw this extra $500 sitting in your checking account into a diversified basket of low-cost funds without having to stress AT ALL then Betterment is for you.

If you think that you're good enough, smart enough, and persistent enough to manage your investments for the next 40 years without skipping a beat then good for you!.....But you're probably wrong. :)

Interesting.  I'm doing a trial for this year, to see which I like better for relatively hands-off investing, Betterment, or Sharebuilder (investing there mainly in Vanguard LifeStrat funds). I've invested $11,000 into each and we'll see what happens.

arebelspy

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Re: Betterment or Vangaurd?
« Reply #29 on: January 16, 2014, 09:11:11 AM »
Interesting.  I'm doing a trial for this year, to see which I like better for relatively hands-off investing, Betterment, or Sharebuilder (investing there mainly in Vanguard LifeStrat funds). I've invested $11,000 into each and we'll see what happens.

Awesome.  Would love to hear a six-month and one-year update.
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Re: Betterment or Vangaurd?
« Reply #30 on: January 18, 2014, 02:58:40 PM »
Interesting.  I'm doing a trial for this year, to see which I like better for relatively hands-off investing, Betterment, or Sharebuilder (investing there mainly in Vanguard LifeStrat funds). I've invested $11,000 into each and we'll see what happens.

Right, I wanted to suggest the OP look into Vanguard lifestrategy funds.  The fund keeps your assets automatically balanced in whichever of the four combinations you chose.  So, okay, you can't choose a really specific proportion like you can with betterment (and that remaining bit of control may be why Betterment appeals to the reformed traders), and you need the $3,000 min.  If you're using it as an emergency fund, I'm not honestly sure what happens if you withdraw money such that the balance is below 3k.  A quick perusal of bogleheads suggests that nothing happens.

I am curious, though, monarda, if you have well over the minimum, why you're paying commissions to sharebuilder rather than just investing in the fund directly with vanguard for free.  Actually, I'm not super curious because I'm sure whatever you're doing makes sense for your strategy.

monarda

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Re: Betterment or Vangaurd?
« Reply #31 on: January 18, 2014, 04:27:41 PM »
Interesting.  I'm doing a trial for this year, to see which I like better for relatively hands-off investing, Betterment, or Sharebuilder (investing there mainly in Vanguard LifeStrat funds). I've invested $11,000 into each and we'll see what happens.

Awesome.  Would love to hear a six-month and one-year update.

Will do, arebelspy. I've got my spreadsheet started, and I remembered a column for making a note of the S&P500.  I'll check once a month or maybe quarterly or whenever I make changes and make a chart. 

Sheepstache, it's mostly a matter of convenience for now - I've had my savings in ING/Cap1-360 for a long time, and they have a convenient link to sharebuilder. My experiment isn't for IRAs (I've had those in Schwab for 20 years, I just got mad at them wrt their high fees for brokerage accounts and closed 'em, harumph). This money is going to be asked (nicely) to grow and I might just buy another rental property with it if it decides to do well. That's worth $38 for the two $19.95 funds I've bought.

Serpentstooth, the Vanguard Target Date funds might be another good idea. I was deciding between them and the Vanguard Lifestrat funds that I went for. And sure, I can fund Vanguard directly if I decide I like Vanguard better than Betterment. I wasn't planning to add regularly to those funds at $19.95 a pop through Sharebuilder.  I will be adding monthly to Betterment, since that's free (but I'll normalize my report to the initial investment) All being factored in to the overall preference.

Note to youngsters about my experiment. Since I'm over 50, I'm comparing one relatively conservative portfolio to another. If one of you 20-30-somethings wants to do a parallel experiment with more stocks than I have, that'd be helpful to the younger newbies who want to be hands-off.
« Last Edit: January 18, 2014, 04:59:38 PM by monarda »

kyleaaa

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Re: Betterment or Vangaurd?
« Reply #32 on: January 18, 2014, 04:44:04 PM »
Betterment is great. I prefer just investing directly with Vanguard, though. I don't really need any of the services Betterment argues. But if you do, you should consider them.

monarda

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Re: Betterment or Vangaurd?
« Reply #33 on: January 18, 2014, 05:29:33 PM »
Why in the blazes would you buy Vanguard funds through Sharebuilder? I buy them directly from Vanguard, have done so for years, and pay no commissions/fees to do so.

Why not? Maybe I'm mistaken, but I didn't think there were additional fees through Sharebuilder besides the $19.95 I paid. I'll look into it. Well, thanks for your 'suggestion' (even though you could have been nicer)... I just opened an account at Vanguard.  I'll add on to my experiment, putting some into Vanguard directly, and see what I think of them. I do like that my Sharebuilder total balance is posted right there next to my savings account, on a site I've been accustomed to using for 10 years.

kyleaaa

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Re: Betterment or Vangaurd?
« Reply #34 on: January 18, 2014, 09:10:05 PM »

Note to youngsters about my experiment. Since I'm over 50, I'm comparing one relatively conservative portfolio to another. If one of you 20-30-somethings wants to do a parallel experiment with more stocks than I have, that'd be helpful to the younger newbies who want to be hands-off.

I do not think this experiment will be helpful to anybody since the portfolios in question have totally different factor loads and 1 year is a very short time horizon. The results are going to be completely driven by randomness and not any inherent qualities of the portfolios themselves.

monarda

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Re: Betterment or Vangaurd?
« Reply #35 on: January 18, 2014, 10:41:35 PM »

Note to youngsters about my experiment. Since I'm over 50, I'm comparing one relatively conservative portfolio to another. If one of you 20-30-somethings wants to do a parallel experiment with more stocks than I have, that'd be helpful to the younger newbies who want to be hands-off.

I do not think this experiment will be helpful to anybody since the portfolios in question have totally different factor loads and 1 year is a very short time horizon. The results are going to be completely driven by randomness and not any inherent qualities of the portfolios themselves.
You're right, but it's not really an experiment for yield differences, just for user preference, style, customer service, good/bad surprises/fees. Regular old comparison shopping.  I just made the comment you quoted thinking  a conservative investor might care about different features than a more aggressive investor. I think 1 year will be long enough for me to decide if I like Betterment or Vanguard better (+/- Sharebuilder), which is the point of this thread, right?

sheepstache

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Re: Betterment or Vangaurd?
« Reply #36 on: January 20, 2014, 09:10:28 AM »
I do not think this experiment will be helpful to anybody since the portfolios in question have totally different factor loads and 1 year is a very short time horizon. The results are going to be completely driven by randomness and not any inherent qualities of the portfolios themselves.
You're right, but it's not really an experiment for yield differences, just for user preference, style, customer service, good/bad surprises/fees. Regular old comparison shopping.  I just made the comment you quoted thinking  a conservative investor might care about different features than a more aggressive investor. I think 1 year will be long enough for me to decide if I like Betterment or Vanguard better (+/- Sharebuilder), which is the point of this thread, right?

Exactly.  Hearing about other people's experience is always helpful because there may be some circumstance that relates to your own.  Comparisons are especially helpful as it a. avoids people just recommending what's familiar to them and b. is usually something that interests us just because we want to know which ONE option to go with and one person making the comparison and reporting on it saves the rest of us time.

19.95, though, man, that's crazy :)

monarda

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Re: Betterment or Vangaurd?
« Reply #37 on: January 20, 2014, 10:22:15 AM »
Thanks, sheepstache.

Plus, I can't help experimenting, I'm a scientist, after all.  I turn all kinds of comparisons into 'experiments'.....

n will be equal to 1, so my results will be "anecdata" (to use a non-word I love), but I'll still share hoping it might help someone to make their choice.

ASquared

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Re: Betterment or Vangaurd?
« Reply #38 on: January 20, 2014, 11:00:18 AM »
I like both.  My husbands 401k is at Vanguard (yay!) and we set up our daughters 529 with Vanguard.  However recently, we moved most of our "extra" money to Betterment.  I used a promo for a $100 bonus for a 10k investment.  I figure this gives us some time with the fees "covered" by the bonus to see how we like it.  So far so good!  I really do like the concept and the hands off approach.  I like that we can quickly adjust the ratio of stocks/bonds and that we can split money into different "bucket accounts" with different investment ratios.  Happy to update after we've been using it longer.

hoppy08520

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Re: Betterment or Vangaurd?
« Reply #39 on: January 20, 2014, 06:29:18 PM »
I also scratch my head at how Betterment can make it. Certainly Betterment is better than going to a place like Merrill Lynch or Ameritrade, or just buying whatever "Mad Money" Cramer screams about the night before.

But once any investor discovers why the Betterment portfolio is a good one (low-expense passive index funds), then you've cracked the code and now you you're knowledgeable enough to construct a comparable one-fund portfolio at Vanguard with a target retirement date or LifeStrategy fund. In other words, anyone smart enough to buy the Betterment spiel is smart enough to do it on their own for less.

I do recognize, though, that I and a lot of other people on this board are very analytical and motivated about these topics (we are, after all, reading this on a personal finance website with a disproportionate number of engineers), and not everyone else is equally so. If Betterment can save a few people from places like Edward Jones (where you'll lose 5.75% of your money off the top from commission loads, as well as getting put into expensive actively-managed funds AND pay 1% annually in management fees, plus other fees), then that's a good thing. If one of my clueless relatives asked me if they should invest at Edward Jones or Betterment, I'd tell them to go to Betterment in a heartbeat.

mandies

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Re: Betterment or Vangaurd?
« Reply #40 on: January 20, 2014, 07:13:18 PM »
I do recognize, though, that I and a lot of other people on this board are very analytical and motivated about these topics (we are, after all, reading this on a personal finance website with a disproportionate number of engineers), and not everyone else is equally so. If Betterment can save a few people from places like Edward Jones (where you'll lose 5.75% of your money off the top from commission loads, as well as getting put into expensive actively-managed funds AND pay 1% annually in management fees, plus other fees), then that's a good thing. If one of my clueless relatives asked me if they should invest at Edward Jones or Betterment, I'd tell them to go to Betterment in a heartbeat.

Just had to comment here, I finally convinced my parents to move their big nest egg out of Edward Jones to Vanguard. They are actively retired/self-employed, and I was appalled by what Edward Jones had done -- no fewer than 33 actively-managed funds, only 20% bond exposure, etc, a "money management advisory" fee to the tune of over $300/month, the fees went on and on and on. Needless to say, just making the switch should save them close to 10k this year. Anyone is welcome to msg me if they need help convincing relatives to make the switch.

ASquared

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Re: Betterment or Vangaurd?
« Reply #41 on: January 20, 2014, 07:21:41 PM »
I do recognize, though, that I and a lot of other people on this board are very analytical and motivated about these topics (we are, after all, reading this on a personal finance website with a disproportionate number of engineers), and not everyone else is equally so. If Betterment can save a few people from places like Edward Jones (where you'll lose 5.75% of your money off the top from commission loads, as well as getting put into expensive actively-managed funds AND pay 1% annually in management fees, plus other fees), then that's a good thing. If one of my clueless relatives asked me if they should invest at Edward Jones or Betterment, I'd tell them to go to Betterment in a heartbeat.

Just had to comment here, I finally convinced my parents to move their big nest egg out of Edward Jones to Vanguard. They are actively retired/self-employed, and I was appalled by what Edward Jones had done -- no fewer than 33 actively-managed funds, only 20% bond exposure, etc, a "money management advisory" fee to the tune of over $300/month, the fees went on and on and on. Needless to say, just making the switch should save them close to 10k this year. Anyone is welcome to msg me if they need help convincing relatives to make the switch.

Edward Jones - EXACTLY.  I would love to get some of our family off Edward Jones plans.  The convincing is HARD.  They have our family members convinced they investing is complex, difficult, you don't want to "make any mistakes" and Edward Jones "knows what they are doing".  I hear you though - 20+ funds per account, multiple investments per month, on and on.  So frustrating!

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Re: Betterment or Vangaurd?
« Reply #42 on: January 21, 2014, 08:30:21 AM »
I do recognize, though, that I and a lot of other people on this board are very analytical and motivated about these topics (we are, after all, reading this on a personal finance website with a disproportionate number of engineers), and not everyone else is equally so. If Betterment can save a few people from places like Edward Jones (where you'll lose 5.75% of your money off the top from commission loads, as well as getting put into expensive actively-managed funds AND pay 1% annually in management fees, plus other fees), then that's a good thing. If one of my clueless relatives asked me if they should invest at Edward Jones or Betterment, I'd tell them to go to Betterment in a heartbeat.

Just had to comment here, I finally convinced my parents to move their big nest egg out of Edward Jones to Vanguard. They are actively retired/self-employed, and I was appalled by what Edward Jones had done -- no fewer than 33 actively-managed funds, only 20% bond exposure, etc, a "money management advisory" fee to the tune of over $300/month, the fees went on and on and on. Needless to say, just making the switch should save them close to 10k this year. Anyone is welcome to msg me if they need help convincing relatives to make the switch.

Edward Jones - EXACTLY.  I would love to get some of our family off Edward Jones plans.  The convincing is HARD.  They have our family members convinced they investing is complex, difficult, you don't want to "make any mistakes" and Edward Jones "knows what they are doing".  I hear you though - 20+ funds per account, multiple investments per month, on and on.  So frustrating!

As a financial analyst living 10 miles from their headquarters, I had someone ask me if I would apply for a job their as a financial advisor.  I said no thanks on the grounds that I refuse to take part in immoral occupations, including those that steal other people's money.

mpbaker22

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Re: Betterment or Vangaurd?
« Reply #43 on: January 21, 2014, 08:32:19 AM »

The service Betterment offers is not just passive index investing. You can get that from Vanguard. What Betterment offers you is the ability to just throw money into your account without having to think about anything. I mean ANYTHING. Ever. Just let that sink in.


As others have commented, Edward Jones provides the same 'service'.  A lot of other people will provide the 'service' too, it just happens that Betterment is providing that 'service' for less of a price.

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Re: Betterment or Vangaurd?
« Reply #44 on: January 27, 2014, 06:10:05 AM »
I also scratch my head at how Betterment can make it. Certainly Betterment is better than going to a place like Merrill Lynch or Ameritrade, or just buying whatever "Mad Money" Cramer screams about the night before.

But once any investor discovers why the Betterment portfolio is a good one (low-expense passive index funds), then you've cracked the code and now you you're knowledgeable enough to construct a comparable one-fund portfolio at Vanguard with a target retirement date or LifeStrategy fund. In other words, anyone smart enough to buy the Betterment spiel is smart enough to do it on their own for less.

I do recognize, though, that I and a lot of other people on this board are very analytical and motivated about these topics (we are, after all, reading this on a personal finance website with a disproportionate number of engineers), and not everyone else is equally so. If Betterment can save a few people from places like Edward Jones (where you'll lose 5.75% of your money off the top from commission loads, as well as getting put into expensive actively-managed funds AND pay 1% annually in management fees, plus other fees), then that's a good thing. If one of my clueless relatives asked me if they should invest at Edward Jones or Betterment, I'd tell them to go to Betterment in a heartbeat.
I opened my account at TD Ameritrade to buy Vanguard index funds. I'm not a US resident and I can't use vanguard directly. Is this a mistake?

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Re: Betterment or Vangaurd?
« Reply #45 on: January 29, 2014, 09:14:00 AM »
I tend to agree with some of the points made here. I've been using Betterment for the past 2 months--thoroughly enjoy it because it's very simple and no harder than an online checking/savings account. For someone like me who's never invested before (if you don't count my 401k--more on that in a bit), this is definitely like welcoming arms into this world. Contrast that with Fidelity, where my 401k is--it took me a couple years to finally get it. I was just too scared (or uninformed) to tweak or touch it. The user interface certainly was no help. After diving into the world of MMM and ERE and YNAB, I've suddenly become very curious about this world. Betterment opened my eyes. Betterment made me understand my Fidelity account better! Now having said that, and after diving deeper and discovering Boggleheads, I'm trying to learn a lot more and will eventually start a Vanguard account--looks like that is the way to go. However, how many people are willing to invest (pun-intended) their time and effort into learning all this? Certainly everyone on this board, but maybe only about 10% of my friends. I recommend Betterment to them and hope they too get the itch to learn more.

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Re: Betterment or Vangaurd?
« Reply #46 on: January 29, 2014, 10:10:44 AM »
One thing Betterment does really nicely that would be a royal pain to do myself is super-efficient rebalancing.  Basically, every deposit or dividend reinvestment goes to "top up" whichever funds are below their target in your allocation, and then the rest is deposited according to your allocation.  This is really useful especially for very small deposits (I auto-deposit weekly with my paycheck).  And Betterment is also good for small-dollar stuff, since for example one of my weekly deposits is under Vanguard's $50 minimum.  Likewise, for some people the $1000-3000 fund minimums can be a high hurdle starting out.

I'd say it depends what you're looking for.  If you want a plain vanilla target date retirement, Vanguard wins on lower fees.  But especially for very small dollar stuff, Betterment has a niche worth exploring.

kyleaaa

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Re: Betterment or Vangaurd?
« Reply #47 on: January 29, 2014, 11:05:37 AM »
nd Betterment is also good for small-dollar stuff, since for example one of my weekly deposits is under Vanguard's $50 minimum. 

FYI, Vanguard's minimum is $1, not $50. I've made contributions less than $50 many times.

huadpe

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Re: Betterment or Vangaurd?
« Reply #48 on: January 29, 2014, 11:22:27 AM »
nd Betterment is also good for small-dollar stuff, since for example one of my weekly deposits is under Vanguard's $50 minimum. 

FYI, Vanguard's minimum is $1, not $50. I've made contributions less than $50 many times.

Hm, maybe I was misled then.  Definitely said $50 here.  Though that's for auto-deposit, maybe the minimum is $1 for manual deposit.  https://investor.vanguard.com/mutual-funds/fees

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Re: Betterment or Vangaurd?
« Reply #49 on: January 29, 2014, 11:45:18 AM »
One thing Betterment does really nicely that would be a royal pain to do myself is super-efficient rebalancing.
But there's almost no benefit to rebalancing a lot compared to rebalancing occasionally, and Vanguard and its competitors can also do that (LifeStrategy, Target Retirement, Fidelity Four-in-One).