Author Topic: Betterment?  (Read 83136 times)

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #100 on: September 19, 2014, 03:18:25 PM »
Brooklyn Guy,

If I were in your shoes, I probably wouldn't switch over either.  For your particular instance it likely doesn't make sense. 

On the other hand I don't think it would not be at all irrational or harmful for you to make the switch.

MD

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #101 on: September 19, 2014, 04:13:51 PM »


But, given that (i) I can only effectively make use of $3k of tax losses per year (and only for a few years until FIRE) and (ii) I think there is a relatively high likelihood of being able to manually harvest some or all of those losses, I have not reached the same conclusion as MF that Betterment is the optimal choice (for me).

Agreed, tax loss harvesting seems like a bad reason to pay a higher ER for the rest of your life, and go through all the hassle of avoiding the wash rule, making sure Betterment doesn't start making bad decisions with your money over the next 50+ years...etc, especially for someone who will be FIRE soon.

The main problem though is that if you tax loss harvested the S&P 500 just twice over the 14 year period they mention, you probably would have gotten the same TLH benefit as their continuous (or whenever) rebalancing, since it would have generated enough loss carry forwards to offset the $3K of income indefinitely.

A few minutes of my time when rebalancing is definitely worth the $100,000 dollars or so the 0.15 ER Betterment would take, over my expected lifetime.

Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #102 on: September 19, 2014, 04:53:25 PM »
I agree that it is excellent article in line with the exceedingly high standards that MF has set for himself.

Beric01, I'm not sure why you say it seems like he forgot that people have money in tax-advantaged accounts when, as he described in the article, he is structuring his entire strategy around the fact that his portfolio is split between taxable and tax-advantaged accounts (and he is upfront about that fact that moving only taxable accounts to Betterment will require him to monitor his tax-advantaged accounts in light of what's going on inside Betterment).

But, given that (i) I can only effectively make use of $3k of tax losses per year (and only for a few years until FIRE) and (ii) I think there is a relatively high likelihood of being able to manually harvest some or all of those losses, I have not reached the same conclusion as MF that Betterment is the optimal choice (for me).

As I have explained 3-4 times in this thread (though everyone seems to be ignoring it), Betterment does not let you adjust your type of asset allocation based on the funds you have in your tax-advantaged account. I can only conclude that MF has a completely balanced portfolio in his tax-advantaged account, and has an identical balanced portfolio in his Betterment account. This is not very good tax-wise, as bonds have much worse taxes than stocks. You want to put all of your bonds in your tax-advantaged account! In addition, while I do not have a  low-cost domestic total stock market fund in my 401(k), I do have an international one. But I can't select only domestic stocks in Betterment!

Betterment is fundamentally a bad option for me based on the offerings in my 401(k), as well as the funds available in my 401(k) (and maximizing the amount of money I put in those accounts). And I can't be the only person who is optimizing their taxes by placing high-taxed funds in tax-deferred accounts. When I retire I will be paying no capital gains and dividends taxes due to my low tax bracket, so I need to optimize my taxes for now.
« Last Edit: September 19, 2014, 04:55:49 PM by Beric01 »

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #103 on: September 19, 2014, 05:04:54 PM »
Beric01

There is a lot of misinformation in your statement

Bonds should not necessarily be kept in your tax sheltered accounts.  Muni bonds are very reasonable in taxable accounts  and even treasuries are usually more tax efficient than high growth/high dividend stock funds which will have both taxable dividends and more capital gains.  Reits are the worst and should never be kept in taxable accounts.  (Betterment has none.) 

Also worth noting that Betterment switches asset allocation for taxable and non taxable accounts.

Your particular reasons for not using Betterment seem rational but have more to do with the bizarre investment options in your particular retirement account, than anything that MF should have addressed in his post.




Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #104 on: September 19, 2014, 05:49:23 PM »
Beric01

There is a lot of misinformation in your statement

Bonds should not necessarily be kept in your tax sheltered accounts.  Muni bonds are very reasonable in taxable accounts  and even treasuries are usually more tax efficient than high growth/high dividend stock funds which will have both taxable dividends and more capital gains.  Reits are the worst and should never be kept in taxable accounts.  (Betterment has none.) 

Also worth noting that Betterment switches asset allocation for taxable and non taxable accounts.

Your particular reasons for not using Betterment seem rational but have more to do with the bizarre investment options in your particular retirement account, than anything that MF should have addressed in his post.

So if you look at Betterment's portfolio, are you truly going to say that their bond holdings are no worse in a taxable than in a tax-deferred account? I don't see solely municipal bonds in the taxable portfolio.

Also, if I have additional "space" in my 401(k) beyond my bond allocation, what should I buy, if not the best funds available? My 401(k), FYI, has only an S&P 500 fund (all other total market funds available are at 1% expense ratio and greater), so I don't think I'm making a mistake by putting the Vanguard total international index in my 401(k) and buying total domestic in my taxable account.

You're not see much about this type of thinking outside the FIRE community because of the tax bracket issues. I expect to have as low as a 0% tax bracket in FIRE. I will not pay any dividend or capital gains taxes either, so putting all my bonds in my 401(k) won't be an issue later on.

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #105 on: September 19, 2014, 06:39:11 PM »
Almost every asset class performs better in a tax sheltered account than in a taxable account, bonds included.

The question is which assets receive the most benefit from being tax sheltered.

I am in no way criticizing what you have selected in your 401(k) fund. I am merely pointing out that your limited choices are quite specific to your own personal situation and are  hardly universal.

KBecks2

  • Pencil Stache
  • ****
  • Posts: 618
Re: Betterment?
« Reply #106 on: September 19, 2014, 07:29:44 PM »
I have invested with Vanguard for 15 years and have been very pleased with the service, low fees and variety of investments available.

Didn't hear of Betterment until recently and I do not see the value.  Why would I pay to have a service to invest my money in funds for me?

I pay about $100/month for specific individual stock and option investing advice and education, but funds are a total piece of cake.  Rebalancing your funds?  It's really no big hairy deal.

People should learn how to manage their own money, not just hand it over and forget it. You should watch your assets.
« Last Edit: September 19, 2014, 07:31:23 PM by KBecks2 »

KBecks2

  • Pencil Stache
  • ****
  • Posts: 618
Re: Betterment?
« Reply #107 on: September 19, 2014, 07:32:38 PM »
I *almost* signed up for Betterment. Then I realized I was just being lazy. It only takes a little more work to buy the funds yourself, and avoid the fees completely. And then you avoid the institutional risk of Betterment going down, and also give yourself more options for the future.

Institutional risk is a real concern.  How long has this Web site been around?   I would be careful about where and with whom you place  your assets. 

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Betterment?
« Reply #108 on: September 19, 2014, 08:16:21 PM »
I *almost* signed up for Betterment. Then I realized I was just being lazy. It only takes a little more work to buy the funds yourself, and avoid the fees completely. And then you avoid the institutional risk of Betterment going down, and also give yourself more options for the future.

Institutional risk is a real concern.  How long has this Web site been around?   I would be careful about where and with whom you place  your assets.

That really isn't a risk. Betterment doesn't own your assets. If betterment folds, your assets are protected. You will be able to transfer them to whatever broker you like. The only part that might be messy is cost basis tracking. I haven't transferred a etf between brokerages recently so I can't tell you if that just works or not.

I suppose their is some risk of them massively changing their AA or funds (i.e. fidelity buys them out and switches everyone to the fidelity index funds) and causing you to realize gains. Seems unlikely.

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #109 on: September 19, 2014, 08:42:59 PM »

I have invested with Vanguard for 15 years and have been very pleased with the service, low fees and variety of investments available.

Didn't hear of Betterment until recently and I do not see the value.  Why would I pay to have a service to invest my money in funds for me?

I pay about $100/month for specific individual stock and option investing advice and education, but funds are a total piece of cake.  Rebalancing your funds?  It's really no big hairy deal.

People should learn how to manage their own money, not just hand it over and forget it. You should watch your assets.

Why "should" people learn how to manage their money?  Is there data to support this assertion? 

Are you implying that you are more knowledgable and thoughtful about investing than the mad fientist?

Behavioral finance tells us that when it comes to prediction, algorithms consistently outperform experts who consistently outperform amateurs.

And you to pay $1200 a year for a stock picking/options newsletter so that you can function as an amateur stock picker/options trader?

C'mon now.

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #110 on: September 19, 2014, 11:29:09 PM »
I have invested with Vanguard for 15 years and have been very pleased with the service, low fees and variety of investments available.

Didn't hear of Betterment until recently and I do not see the value.  Why would I pay to have a service to invest my money in funds for me?

I pay about $100/month for specific individual stock and option investing advice and education, but funds are a total piece of cake.  Rebalancing your funds?  It's really no big hairy deal.

People should learn how to manage their own money, not just hand it over and forget it. You should watch your assets.

Most in this thread agree, there are just a few active posters who are defending it.  It's very hard to see the value here.  Just invest in Vanguard directly.  Especially if you live in Massachusetts, California, New Jersey, New York, Ohio, or Pennsylvania, and intend on holding bonds in a taxable account.  Vanguard offers muni bond funds in these states which are both federal and state tax exempt.  This is not possible with Betterment.

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #111 on: September 19, 2014, 11:35:55 PM »
I *almost* signed up for Betterment. Then I realized I was just being lazy. It only takes a little more work to buy the funds yourself, and avoid the fees completely. And then you avoid the institutional risk of Betterment going down, and also give yourself more options for the future.

Institutional risk is a real concern.  How long has this Web site been around?   I would be careful about where and with whom you place  your assets.

Yes, yes it is.  If there is ever a situation where institutional risk is a concern, it's with a new tech startup, who employs robots to automatically trade our account on their behalf.  I won't be recommending anyone put their life savings, money they will be counting on for possibly the next 50+ years, into such an account.  Too much risk.

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #112 on: September 19, 2014, 11:49:32 PM »
I agree that it is excellent article in line with the exceedingly high standards that MF has set for himself.

Beric01, I'm not sure why you say it seems like he forgot that people have money in tax-advantaged accounts when, as he described in the article, he is structuring his entire strategy around the fact that his portfolio is split between taxable and tax-advantaged accounts (and he is upfront about that fact that moving only taxable accounts to Betterment will require him to monitor his tax-advantaged accounts in light of what's going on inside Betterment).

But, given that (i) I can only effectively make use of $3k of tax losses per year (and only for a few years until FIRE) and (ii) I think there is a relatively high likelihood of being able to manually harvest some or all of those losses, I have not reached the same conclusion as MF that Betterment is the optimal choice (for me).

As I have explained 3-4 times in this thread (though everyone seems to be ignoring it), Betterment does not let you adjust your type of asset allocation based on the funds you have in your tax-advantaged account. I can only conclude that MF has a completely balanced portfolio in his tax-advantaged account, and has an identical balanced portfolio in his Betterment account. This is not very good tax-wise, as bonds have much worse taxes than stocks. You want to put all of your bonds in your tax-advantaged account! In addition, while I do not have a  low-cost domestic total stock market fund in my 401(k), I do have an international one. But I can't select only domestic stocks in Betterment!

Betterment is fundamentally a bad option for me based on the offerings in my 401(k), as well as the funds available in my 401(k) (and maximizing the amount of money I put in those accounts). And I can't be the only person who is optimizing their taxes by placing high-taxed funds in tax-deferred accounts. When I retire I will be paying no capital gains and dividends taxes due to my low tax bracket, so I need to optimize my taxes for now.

Yes, a huge deal considering their 100% stock allocation is over 50% international.  Combined with the possible higher ER funds you'll have to choose to avoid the wash sale issues, it becomes much harder to manage your accounts.

KBecks2

  • Pencil Stache
  • ****
  • Posts: 618
Re: Betterment?
« Reply #113 on: September 20, 2014, 10:07:04 AM »

I have invested with Vanguard for 15 years and have been very pleased with the service, low fees and variety of investments available.

Didn't hear of Betterment until recently and I do not see the value.  Why would I pay to have a service to invest my money in funds for me?

I pay about $100/month for specific individual stock and option investing advice and education, but funds are a total piece of cake.  Rebalancing your funds?  It's really no big hairy deal.

People should learn how to manage their own money, not just hand it over and forget it. You should watch your assets.

Why "should" people learn how to manage their money?  Is there data to support this assertion? 

Are you implying that you are more knowledgable and thoughtful about investing than the mad fientist?

Behavioral finance tells us that when it comes to prediction, algorithms consistently outperform experts who consistently outperform amateurs.

And you to pay $1200 a year for a stock picking/options newsletter so that you can function as an amateur stock picker/options trader?

C'mon now.

--People should learn to handle their money because nobody else cares about it as much as they will.  Everyone should take time to become informed, read different points of view, learn the rules about taxes and retirement account types, and, as much as they want, learn about different kinds of investments to see what will best suit *their* wants and needs.

-- I am not claiming to be better than anyone else.  I enjoy stock market investing and make time for it.  I try to do it well, and I believe in active management (for me personally).  If I did not have time or interest, I would do index funds with Vanguard and be happy with that.

There is not *one right way to invest*.  There are many ways to be a successful investor.  I prefer that people use their own brains and make their own decisions about their money, rather than hand it over and forget it.  Investments should not be forgotten.  They can be put on autopilot but like an airplane, you want someone (you) to be present at the controls.  We're talking about too much money to "set it and forget it".

-- My investments are making money and I'm very satisfied with how it's going.  I hope that everyone can find satisfaction and enjoyment in their investments, whatever path they choose.


milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #114 on: September 20, 2014, 11:14:13 AM »
I agree wholeheartedly that people should learn to handle their money.

It's just that your quoted post implied that people who use betterment haven't learned to handle their money, whereas those who spent $1200 a year on stock picking newsletters were making rational decisions.

That's the part that lost me. 

KBecks2

  • Pencil Stache
  • ****
  • Posts: 618
Re: Betterment?
« Reply #115 on: September 21, 2014, 12:18:16 PM »
I was just sharing what I do, and it's something different, and that is OK.   People will have individual preferences and should find their own style, and what works for them.  To me, betterment looks like a service where you delegate most of the decision making to an online service.  It does not sound like it adds value *to me*, but people do get to make their own choices. 

jstash

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: Betterment?
« Reply #116 on: September 22, 2014, 02:07:13 AM »
Glad to see more people are becoming less knee-jerk dismissive of Betterment. I've been with them over a year and like the experience a lot. And I've never asked for referrals, either.

boarder42

  • Walrus Stache
  • *******
  • Posts: 7849
Re: Betterment?
« Reply #117 on: September 22, 2014, 05:50:22 AM »
just a quck note on this.  The tax lost harvesting they do is worth a ton.  so much that the mad fientist has moved his taxable accounts over.  and MMM even responded saying he was going to have a write up doing the same thing.  so if you have 50k to get the TLH benefits i think its probably worth it to go with betterment.  I'm moving my taxable account over b/c Etrade is costing me far too much. 

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #118 on: September 22, 2014, 07:03:12 AM »

just a quck note on this.  The tax lost harvesting they do is worth a ton.  so much that the mad fientist has moved his taxable accounts over.  and MMM even responded saying he was going to have a write up doing the same thing.  so if you have 50k to get the TLH benefits i think its probably worth it to go with betterment.  I'm moving my taxable account over b/c Etrade is costing me far too much.

Mrmoneymustache has been beating the market average with LendingClub too. Will you be investing with them as well? If not, why not?

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #119 on: September 22, 2014, 09:47:49 AM »

just a quck note on this.  The tax lost harvesting they do is worth a ton.  so much that the mad fientist has moved his taxable accounts over.  and MMM even responded saying he was going to have a write up doing the same thing.  so if you have 50k to get the TLH benefits i think its probably worth it to go with betterment.  I'm moving my taxable account over b/c Etrade is costing me far too much.

Mrmoneymustache has been beating the market average with LendingClub too. Will you be investing with them as well? If not, why not?

Poor analogy.

Lending club has an expense ratio of 1% and is impossible to backtest because it's such a new financial product.

Betterment uses a Black Litterman optimized portfolio of low cost funds and has an expense ratio of 0.15-0.35%. You can back test a similar portfolio going back to the 70s with ease.




Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #120 on: September 22, 2014, 11:17:13 AM »


just a quck note on this.  The tax lost harvesting they do is worth a ton.  so much that the mad fientist has moved his taxable accounts over.  and MMM even responded saying he was going to have a write up doing the same thing.  so if you have 50k to get the TLH benefits i think its probably worth it to go with betterment.  I'm moving my taxable account over b/c Etrade is costing me far too much.

Mrmoneymustache has been beating the market average with LendingClub too. Will you be investing with them as well? If not, why not?

Poor analogy.

Lending club has an expense ratio of 1% and is impossible to backtest because it's such a new financial product.

Betterment uses a Black Litterman optimized portfolio of low cost funds and has an expense ratio of 0.15-0.35%. You can back test a similar portfolio going back to the 70s with ease.

Oh I agree for sure. You are 100% correct.

RapmasterD

  • Pencil Stache
  • ****
  • Posts: 589
  • Location: SF Peninsula
Re: Betterment?
« Reply #121 on: September 24, 2014, 07:49:23 PM »
I am 100% knee jerk dismissive of Betterment.

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #122 on: September 24, 2014, 10:57:43 PM »
I am 100% knee jerk dismissive of Betterment.

That's 100% obvious!

But its always good to honestly recognize your own biases.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28234
  • Age: -999
  • Location: Seattle, WA
Re: Betterment?
« Reply #123 on: September 24, 2014, 11:26:44 PM »
But its always good to honestly recognize your own biases.

That's a good point.

Tell me how you feel about WalMart.

;)
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.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

milesdividendmd

  • Handlebar Stache
  • *****
  • Posts: 1913
  • Location: Portlandia
    • Miles Dividend MD
Re: Betterment?
« Reply #124 on: September 24, 2014, 11:27:40 PM »

But its always good to honestly recognize your own biases.

That's a good point.

Tell me how you feel about WalMart.

;)

You made my day ARS!

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28234
  • Age: -999
  • Location: Seattle, WA
Re: Betterment?
« Reply #125 on: September 24, 2014, 11:30:57 PM »
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.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #126 on: November 04, 2014, 11:33:52 AM »
Well, now it looks like MMM sold out to Betterment, complete with the referral link, which will certainly cover his $150 fee and more.

usmarine1975

  • Guest
Re: Betterment?
« Reply #127 on: November 04, 2014, 11:39:18 AM »
I think it's crazy to say that Mr. MMM sold out to Betterment.  He has been making money on his Blog way before Betterment.  I knew that when I started reading it.  It doesn't mean that some of the information isn't worth while.  Many people charge for what they do.  If you thought this was a free Blog and advice you were just sadly mistaken or ill informed.  Even Vanguard Charges for their services.

Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #128 on: November 04, 2014, 11:49:13 AM »
I think it's crazy to say that Mr. MMM sold out to Betterment.  He has been making money on his Blog way before Betterment.  I knew that when I started reading it.  It doesn't mean that some of the information isn't worth while.  Many people charge for what they do.  If you thought this was a free Blog and advice you were just sadly mistaken or ill informed.  Even Vanguard Charges for their services.

Recommending a product of already dubious value, before MMM has even proven he's earned enough to cover the $150 fee, right along with a flashy referral banner at the bottom of the post is WAY more blatant that anything I've seen. This latest post is a level beyond anything else on this site.

Vanguard is non profit and investor-owned. It's just a tiny a bit different than a for-profit company like Betterment. ;)

pzxc

  • Stubble
  • **
  • Posts: 196
Re: Betterment?
« Reply #129 on: November 04, 2014, 11:54:40 AM »
One of the best things about Betterment is that you can get started right away even if you have no savings.  Vanguard, and most other places, require $3k or more minimum deposit.  That shouldn't be ignored.

usmarine1975

  • Guest
Re: Betterment?
« Reply #130 on: November 04, 2014, 11:55:15 AM »
Yes certainly Vanguard isn't about making money.

http://www.celebritynetworth.com/richest-businessmen/wall-street/john-bogle-net-worth/

I will concede that at first that was my initial thought but then I remembered that almost every recommendation on the website benefits Mr. MMM


I think it's crazy to say that Mr. MMM sold out to Betterment.  He has been making money on his Blog way before Betterment.  I knew that when I started reading it.  It doesn't mean that some of the information isn't worth while.  Many people charge for what they do.  If you thought this was a free Blog and advice you were just sadly mistaken or ill informed.  Even Vanguard Charges for their services.

Recommending a product of already dubious value, before MMM has even proven he's earned enough to cover the $150 fee, right along with a flashy referral banner at the bottom of the post is WAY more blatant that anything I've seen. This latest post is a level beyond anything else on this site.

Vanguard is non profit and investor-owned. It's just a tiny a bit different than a for-profit company like Betterment. ;)
« Last Edit: November 04, 2014, 11:57:36 AM by usmarine1975 »

Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #131 on: November 04, 2014, 11:57:33 AM »
Yes certainly Vanguard isn't about making money.

http://www.celebritynetworth.com/richest-businessmen/wall-street/john-bogle-net-worth/


I think it's crazy to say that Mr. MMM sold out to Betterment.  He has been making money on his Blog way before Betterment.  I knew that when I started reading it.  It doesn't mean that some of the information isn't worth while.  Many people charge for what they do.  If you thought this was a free Blog and advice you were just sadly mistaken or ill informed.  Even Vanguard Charges for their services.

Recommending a product of already dubious value, before MMM has even proven he's earned enough to cover the $150 fee, right along with a flashy referral banner at the bottom of the post is WAY more blatant that anything I've seen. This latest post is a level beyond anything else on this site.

Vanguard is non profit and investor-owned. It's just a tiny a bit different than a for-profit company like Betterment. ;)

I said non-profit and investor-owned. Nowhere did I say it wasn't about making money for investors - that's the entire point of the company. The guy's made his money investing in the funds the company offers. Don't put words in my mouth.

boognish

  • Stubble
  • **
  • Posts: 130
Re: Betterment?
« Reply #132 on: November 04, 2014, 12:04:58 PM »
Jesse from YNAB, MF, and MMM touting Betterment really have me re-evaluating my initial reaction to it.

I know they all likely receive referral bonuses, but I'm naive enough to believe that all three are smart honest guys who would only back a product/company they truly believe in.


juuustin

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Betterment?
« Reply #133 on: November 04, 2014, 01:47:07 PM »
Betterment just added a snazzy tax estimator tool as well, which I have been wanting for awhile.  I have my taxable account in Betterment and I have never made a withdrawal, but I really wanted to know what the "Net Realizable Value" of my account was after taxes.  Because I have been with them since Oct. 2012, it is awesome to see how much I can take out and not have to worry about short term cap gains.  I know there are people staunchly against the platform, but I think it is fantastic for the entry-level to intermediate investor!

RapmasterD

  • Pencil Stache
  • ****
  • Posts: 589
  • Location: SF Peninsula
Re: Betterment?
« Reply #134 on: November 04, 2014, 01:53:04 PM »
I think it's crazy to say that Mr. MMM sold out to Betterment.  He has been making money on his Blog way before Betterment.  I knew that when I started reading it.  It doesn't mean that some of the information isn't worth while.  Many people charge for what they do.  If you thought this was a free Blog and advice you were just sadly mistaken or ill informed.  Even Vanguard Charges for their services.

Recommending a product of already dubious value, before MMM has even proven he's earned enough to cover the $150 fee, right along with a flashy referral banner at the bottom of the post is WAY more blatant that anything I've seen. This latest post is a level beyond anything else on this site.

Vanguard is non profit and investor-owned. It's just a tiny a bit different than a for-profit company like Betterment. ;)

Beric01 - You're clearly mostly alone on this one. But I'm in your camp. I'd like to hear from some people who have MILLIONS invested with Betterment (not 100K) and can justify their fees for what might take 30 minutes per year to do on your own...and that's ONLY if you believe in immediate asset reallocation to the tenth of a percentage point ... which I do not.

I find it interesting that on Pete's chart, he places Buffett at the tippy top. Buffett clearly and repeatedly recommends a 90% S&P 500/10% short term bond allocation -- and would most likely scoff at the notion of paying a service as a "front end" to what SHOULD be a 'set it and forget it' investment strategy with Vanguard.

VirginiaBob

  • Bristles
  • ***
  • Posts: 429
    • LRJ Discounters
Re: Betterment?
« Reply #135 on: November 04, 2014, 01:56:47 PM »
Looked into it and appears to be a total rip-off.  Huge fee for something you can do by yourself.  For MMM to advocate do-it-yourself for so many other aspects of our lives, it seems weird that he would advocate paying huge fees for something that takes you maybe 15 minutes per month at most.  Change your oil, do all your own renovations, ride your bike, etc., but when it comes to your investments, please click on my referral link and have someone else do it for you.

Fishy

usmarine1975

  • Guest
Re: Betterment?
« Reply #136 on: November 04, 2014, 02:00:12 PM »
I didn't put words in your mouth.  Sorry but non-profit implies that profit or making money whatever you want to call it is not the reason the company or whatever was started.  I have nothing against Vanguard or John Bogle his office is just over an hour from my house and I know people that work for the company.  But to imply that a for profit company is all about making money and a non profit is not is just plain silly.  Hospitals make a mad amount of cash and most of them are non-profit. 

Sorry I didn't mean to offend you, my point was merely that this post is no different then any other.  Mr. MMM has gotten perks for every product or company he has recommended.  I haven't seen Vanguard as being one of them but who knows if he sent enough people to them he may have gotten something.

Mr.  MMM is not in my opinion Retired.  He is Financially Independent they are both very different things.

[/quote]

I said non-profit and investor-owned. Nowhere did I say it wasn't about making money for investors - that's the entire point of the company. The guy's made his money investing in the funds the company offers. Don't put words in my mouth.
[/quote]

RapmasterD

  • Pencil Stache
  • ****
  • Posts: 589
  • Location: SF Peninsula
Re: Betterment?
« Reply #137 on: November 04, 2014, 02:08:43 PM »
Looked into it and appears to be a total rip-off.  Huge fee for something you can do by yourself.  For MMM to advocate do-it-yourself for so many other aspects of our lives, it seems weird that he would advocate paying huge fees for something that takes you maybe 15 minutes per month at most.  Change your oil, do all your own renovations, ride your bike, etc., but when it comes to your investments, please click on my referral link and have someone else do it for you.

Fishy

+1

I'm REALLY not getting this one...for the reasons you mention.

usmarine1975

  • Guest
Re: Betterment?
« Reply #138 on: November 04, 2014, 02:19:29 PM »
I don't disagree with you.  I only pointed out that every other Recommendation for the most part has in one way or another paid Mr. MMM.  Credit Card Links, Lender, Republic & other cell phone companies.  Do some have better qualities while others worse qualities.  Certainly, but it doesn't change anything.  He is still recommending Products that benefit him.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28234
  • Age: -999
  • Location: Seattle, WA
Re: Betterment?
« Reply #139 on: November 04, 2014, 04:00:34 PM »
I'm with you guys.

I haven't read the post, but I was disappointed to see the title in my RSS feed this morning.

Brandon at MadFIentest at least gave a good explanation as to why, but I think it's an inferior product.

Besides people being paid to push it (won't mention names here, but I'm sure they'll post very quickly on this thread to defend Betterment), I don't see a lot of people who love it.
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.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5130
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: Betterment?
« Reply #140 on: November 04, 2014, 04:06:49 PM »
I too was a bit surprised to see the Betterment post today. It seems like a decent enough service for what it is, and it would be a vast improvement over the average person's investment strategy and advisory fees, but we Mustachians are supposed to be more badass than that. We shouldn't need to pay someone 0.15% to do tax-loss harvesting and rebalancing for us. I did both of those things myself this morning, saving perhaps $500 on this year's taxes and redeploying the proceeds in a way that makes my portfolio better match my desired asset allocation.

Dodge

  • Pencil Stache
  • ****
  • Posts: 790
Re: Betterment?
« Reply #141 on: November 04, 2014, 04:22:15 PM »
Looked into it and appears to be a total rip-off.  Huge fee for something you can do by yourself.  For MMM to advocate do-it-yourself for so many other aspects of our lives, it seems weird that he would advocate paying huge fees for something that takes you maybe 15 minutes per month at most.  Change your oil, do all your own renovations, ride your bike, etc., but when it comes to your investments, please click on my referral link and have someone else do it for you.

Fishy

Indeed, I am unimpressed.  I find even 15 minutes a month is overstating the time required, and if you don't want to rebalance just get a Vanguard life strategy fund.

Ending it with the "I'm glad I did" made me feel like I was reading an ad.  Very unimpressed.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4340
  • Location: CT
Re: Betterment?
« Reply #142 on: November 04, 2014, 04:51:04 PM »

VirginiaBob

  • Bristles
  • ***
  • Posts: 429
    • LRJ Discounters
Re: Betterment?
« Reply #143 on: November 04, 2014, 04:55:39 PM »

matchewed

  • Magnum Stache
  • ******
  • Posts: 4340
  • Location: CT
Re: Betterment?
« Reply #144 on: November 04, 2014, 05:04:34 PM »
*snipped for slower PC's*

Mr. Money mustache in 10 years?

Heh, nah just my general reaction to this sort of thing. I'm in the camp of it being a bit silly for badass DIY financial bloggers to suddenly be crowing about paying people to do things for you.

Beric01

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: SF Bay Area
  • Law-abiding cyclist
Re: Betterment?
« Reply #145 on: November 04, 2014, 06:43:53 PM »
I'm waiting for MMM to post an article about choosing a house-cleaning or gardening service next, or perhaps what personal chef you should choose to cook your meals. First the electric bikes and now this. MMM is a lot less Badass lately.

VirginiaBob

  • Bristles
  • ***
  • Posts: 429
    • LRJ Discounters
Re: Betterment?
« Reply #146 on: November 05, 2014, 06:53:28 AM »
I'm waiting for MMM to post an article about choosing a house-cleaning or gardening service next, or perhaps what personal chef you should choose to cook your meals. First the electric bikes and now this. MMM is a lot less Badass lately.

Lol, I'm surprised I didn't see an outsourcing your laundry article. 

pzxc

  • Stubble
  • **
  • Posts: 196
Re: Betterment?
« Reply #147 on: November 05, 2014, 02:34:49 PM »
Rebalancing yourself is certainly easy -- but how do you guys propose to do tax loss harvesting yourself with minimal time/effort?  I'm a smart technical guy, and I don't think I would be very effective at it. (let alone most people who are not as good at math as I)

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Betterment?
« Reply #148 on: November 05, 2014, 02:35:33 PM »
How often does automatic rebalancing occur? What fees, if any, are incurred by betterment to rebalance?

Honestly, the difference between a 0.15% and 0.05% expense ratio is... low. Low enough that a small but consistent increase in post-tax income can offset it easily. That alone makes me slightly interested. Or is it .15% on top of vanguard fees?

With that said, chances are I'll keep on my current path - vanguard. Currently have just the one fund in two accounts (roth / taxable), and as the cash pile grows enough to hit over 10k per fund, I'll add one a couple more while remaining all-stock. Small optimizations from betterment versus small changes in expense ratio are boring.

pzxc

  • Stubble
  • **
  • Posts: 196
Re: Betterment?
« Reply #149 on: November 05, 2014, 02:51:04 PM »
It's 0.15% on top of vanguard fees, and only if you have $100k minimum balance.  It's 0.35% (on top of the fund fees) with no minimum balance if you autodeposit $100/mo or more.

2 things make it worth it as an alternative to self-managed vanguard in my opinion:  Opening an account at vanguard has a $3k minimum, this has no minimum to get started. And I understand the concept of tax loss harvesting but I'm definitely not confident in my ability to sell some things for a capital loss to offset capital gains and then repurchase the same thing in another fund in such a way that the IRS doesn't consider it a wash sale.  Rebalancing I could certainly do myself, though.

Rebalancing occurs whenever your asset allocation drift reaches 5%, since you asked.