The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: tophdna on April 16, 2015, 09:44:08 PM
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I have a question for those that use Betterment.
I want to start investing with Betterment but I would be starting the account with nothing to put in initially. If I begin the account at $0 and deposit 100 dollars a month the management fee is 0.35%. I've been researching if it would be smart to start an account from scratch and just begin dumping 100 dollars in a month at that rate but I have not been able to find anything. So I was hoping to maybe get some insight here. Thanks!
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yes you can open the accoutn before funding it.
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Sorry, let me rephrase. What I meant to ask, is it smart to start at nothing with the feeds associated or should i wait until i have a sizable amount to put in from the start?
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If you've decided to give Betterment your money, despite the 0.35% fee, you must expect a return greater than that, right? If so, giving them $100 at a time, makes just as much sense as waiting 6 months and giving them $600 at a time. If it were a transaction fee (say $10 a deposit) that would be different, but with a percentage fee you don't have to worry about this.
If you're concerned about the fee, however, why not go with WiseBanyan (https://wisebanyan.com)? Pretty much the same as Betterment, but no fee. I'm sure someone on here can give you an invite.
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put the money in. Get in the habit of putting money in every month, before long you'll have a bunch in the account and the fees will go down. After one year ($1200) invested, they will get $4 and change from you...we're not talking about a lot of money. Don't over think it. If you like their model of investing, dive in.
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Whether you do $100 a month or save up and deposit $1,200 after a year, it is still 0.35% of assets under management (as long as you deposit at least $100 a month). Just create the account now and start making your monthly contributions. Just make sure you continue adding $100 a month or that $3 fee will eat into your returns.
One thing I've mentioned to friends and family when referring them to Betterment...it doesn't have to be $100 all at once. If you get paid twice a month, you could do $50 each payday. If you get paid every 2 weeks, then you can do $50 every 2 weeks which is an average of $108.33 a month. For some people who aren't used to investing and have a tight budget, splitting it up helps them out.
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thanks guys. ya'll are awesome