Author Topic: Is Betterment a good idea for a new investor?  (Read 3780 times)

jojoguy

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Is Betterment a good idea for a new investor?
« on: September 13, 2018, 05:47:08 PM »
?

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #1 on: September 13, 2018, 07:00:31 PM »
sure, you could do worse

you could also do better

Another Reader

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Re: Is Betterment a good idea for a new investor?
« Reply #2 on: September 13, 2018, 07:12:27 PM »
I would avoid Betterment.  The investment results have no track record.  Unlike traditional brokers, they will not allow you to transfer in kind if you are dissatisfied with the results.  You have to sell and move the cash.  If you have a taxable account and there is a gain, you then pay taxes on the gain. 

Fidelity has no cost and very low cost index funds with no minimum investment.  Schwab has similar funds.  Vanguard has $3000 minimums for almost all their funds, but that should not be that difficult to accumulate.

Open an account with one of the big three, look at the various index funds, and sign up to automatically invest in the ones you select.  A total US stock market fund is a good place to start.  Do some reading on investing, and ease your way into it.

TheHardenedInvestor

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Re: Is Betterment a good idea for a new investor?
« Reply #3 on: September 13, 2018, 07:16:27 PM »
What he said.

Preference: Vanguard. Research their structure and their founder.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #4 on: September 13, 2018, 07:57:39 PM »
Unlike traditional brokers, they will not allow you to transfer in kind if you are dissatisfied with the results.  You have to sell and move the cash.

I transferred in kind out of Betterment. So in my experience this is not true.

not_a_trex

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Re: Is Betterment a good idea for a new investor?
« Reply #5 on: September 13, 2018, 08:58:22 PM »
If you are completely new, I would do some reading on some of the basics of investing and try doing it by hand first. I wouldn't hand over the reigns of something as important as your retirement funds if you don't understand what they're going to do with it.

The JL Collins Stock Series is one good place to start. There are also some books you can pick up (perhaps at your local library :D ) such as A Random Walk Down Wall Street.

Services such as Betterment have their place. There are people that absolutely cannot manage their money and need someone else to do it for them. But if you do a little bit of homework and try it out yourself, I think you'll find that it can be FAR EASIER than you expect it to be. We're talking about just checking up on it for five minutes once or a few times a year. Do you need to pay someone else hundreds or thousands of dollars to do that for you?

Telecaster

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Re: Is Betterment a good idea for a new investor?
« Reply #6 on: September 13, 2018, 09:40:25 PM »
Betterment is a bad idea for all investors. 

jc4

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Re: Is Betterment a good idea for a new investor?
« Reply #7 on: September 14, 2018, 08:36:47 AM »
I may get hated on here, but I use betterment for taxable investments.

I could just as easily buy the funds directly via vanguard. I'm counting on the tax loss harvesting to more than cover my costs.

I could tax loss harvest myself, but that'd take more consistently following my balance and making decisions.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #8 on: September 14, 2018, 09:05:40 AM »
Betterment is a bad idea for all investors.

Why? I suspect what you really mean is Betterment is not the best idea for all investors.

You know Edward Jones manages like a trillion dollars of investments right? A few of their customers would probably be better served by Betterment.

not_a_trex

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Re: Is Betterment a good idea for a new investor?
« Reply #9 on: September 14, 2018, 09:12:05 AM »
I may get hated on here, but I use betterment for taxable investments.

I could just as easily buy the funds directly via vanguard. I'm counting on the tax loss harvesting to more than cover my costs.

I could tax loss harvest myself, but that'd take more consistently following my balance and making decisions.

It depends on what you think your time is worth. I get a monthly statement and I take a quick look then to see if I have anything that can be harvested. That's all that I feel is necessary to do TLH.

If I had 100k with betterment it would cost me $250 to do the harvesting. I'm willing to open an app once a month for $250.

Dr Kidstache

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Re: Is Betterment a good idea for a new investor?
« Reply #10 on: September 14, 2018, 10:59:53 AM »
I use Betterment for most of my investments. I like the interface, organization, investment approach, and I find that I am more more active in investing extra dollars in Betterment than I have been in Vanguard. I also like the ease of having a tax-coordinated portfolio and tax loss harvesting. For me, the extra motivation to invest and the services are worth the fees.

shinn497

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Re: Is Betterment a good idea for a new investor?
« Reply #11 on: September 14, 2018, 11:55:49 AM »
Yay Betterment people

Ok so I am super into Betterment and I have read their whitepapers and even tweeted a bit to Dan Egan.

My thesis is betterment is a fit for you if you are down with Behavioural Investing. E.G. the idea that you probably can't do better than the market and you should just focus on earning and saving as much as possible.

Their app is designe do make investing turnkey and low friction, the protfolio selection is more diversified and less prone to large swings (as well as having a value tilt), they have a focus on informing you of the tax consequences of your decisions, and they are set up to encourage you to invest for goals, in as clear and plain as possible.


With that sad. There is s .25% yearly fee (up to 2.5 million), services like Tax Loss Harvesting and Tax Coordination only make sense for some investors. In particular if you are higher earning and make consistant payments. And their portfolio currently is underperforming the SP500 due to its international tilt. I'm not saying they aren't perfect, but these are deal breakers for some.

I've reviewed mostly everything they do and tink I'm in line. Personally I think they are the best fit for set it and forget it type of investing. Let them handle it and focus on saving and earning more. But hey that is me. I don't know if I'd say they are for beginners, since there are consequences for investing with them, but they do have some awesome blog posts. So I say review those first before pulling the trigger.

letired

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Re: Is Betterment a good idea for a new investor?
« Reply #12 on: September 14, 2018, 12:39:06 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

My thesis is betterment is a fit for you if you are down with Behavioural Investing. E.G. the idea that you probably can't do better than the market and you should just focus on earning and saving as much as possible.

I am 100% baffled by this claim and cannot take anything else you say seriously. If you can't do better than the market, why are you paying betterment a whole bunch of money to do something other than buying the whole market?

shinn497

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Re: Is Betterment a good idea for a new investor?
« Reply #13 on: September 14, 2018, 01:02:53 PM »
I'm paying them since, in my mind,  they make investing easier, less painful, less risky, and with some tax advantages that I don't have to handle myself. Granted I could do everything on my own. But by offloading some stuff to them, I am free to do other things. And also I am encouraged to invest more.

Its working out for me. I am ahead of my investing goals. And I think part of it is because I enjoy using their product so much.

PizzaSteve

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Re: Is Betterment a good idea for a new investor?
« Reply #14 on: September 14, 2018, 01:27:22 PM »
Per the advice above, the cost of Betterment is not worth it and will drag performance over time vs simple total market index funds at one of the big firms.  ETrade, TDAmeritrade can be added to the list, and will pay you cash to open a new account if you have some money to start with.

Betterment wont spot you $2500 cash to deposit $1M, they will charge you that every year!  ETrade, Schwab, Fidelity will pay you to open an account.  Just google broker bonuses.

Then dont buy any of their services, just buy a total market ETF.  Set it on auto reinvest. The web site will be just as entertaining with information and charts as Betterment, but for free.  You will get to download statements, auto import into tubotax, etc, plus even get free seminars with food or coffee at their physical locations, if you need to deposit a check or get one issued or have free time to listen to investor information (I get free wires, from Schwab...etc.).  Ive tried all the brokers and they are all fine.  I like Schwabs service, but bonuses have been smaller lately.

That said, it is better that a bad broker who churns your money, if you need some investing complexity in you life.  TLH does not require technology, just the ability to notice your funds dropped below purchase price, which btw you hope you never benefit from anyway.
« Last Edit: September 14, 2018, 01:29:43 PM by PizzaSteve »

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #15 on: September 14, 2018, 01:34:28 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

DS

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Re: Is Betterment a good idea for a new investor?
« Reply #16 on: September 14, 2018, 01:37:17 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

Just toss $10 in to see their allocation and use that on your own separate, no advisory fee allocation.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #17 on: September 14, 2018, 01:46:28 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

Just toss $10 in to see their allocation and use that on your own separate, no advisory fee allocation.

Yes, do that and report back what happens.

shinn497

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Re: Is Betterment a good idea for a new investor?
« Reply #18 on: September 14, 2018, 02:15:56 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

THIS

DS

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Re: Is Betterment a good idea for a new investor?
« Reply #19 on: September 14, 2018, 02:19:51 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

Just toss $10 in to see their allocation and use that on your own separate, no advisory fee allocation.

Yes, do that and report back what happens.

I won't. Wrapped up business with Betterment. No more advisory fees for me :)

letired

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Re: Is Betterment a good idea for a new investor?
« Reply #20 on: September 14, 2018, 02:37:45 PM »
Everything Betterment does, you can do, and probably better, definitely cheaper.

Doing so would be quite a bit of work. You'd have a portfolio of like a dozen or 15 ETFs plus their tax loss partners. It'd take quite a bit of accounting to know where to allocate the new investments and all the dividends you're receiving.

You may argue that their portfolio is unnecessarily complex. You may argue that the auto tax loss harvesting just isn't worth it. Or that the value tilt isn't worth it. Or that you don't need emerging market bonds. Or whatever. (These are all things that I think.)

I think I could do something that is better, and definitely cheaper. But I don't think I could do what they do better and cheaper.

THIS

I guess I didn't specify, but I include simpler as a subset of better. I also didn't say faster or for less effort than paying them, but we're on the MMM forum, home of insourcing, so I figured people might just get that part.

jojoguy

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Re: Is Betterment a good idea for a new investor?
« Reply #21 on: September 14, 2018, 05:34:49 PM »
Wow! Thanks for all of the replies. I`m really loving the info. I`ve got a lot of reading up to do. I`d also care to hear more opinions on things as well.

aspiringnomad

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Re: Is Betterment a good idea for a new investor?
« Reply #22 on: September 14, 2018, 11:42:10 PM »
Unlike traditional brokers, they will not allow you to transfer in kind if you are dissatisfied with the results. 

I'm strictly a DIY investor so I wouldn't use Betterment myself, but this is patently false. You can transfer in-kind with Betterment.

I'll add that Betterment is a better option than nearly every traditional broker, particularly the EJs of the world. But DIY is still best for anyone with a modicum of desire to learn and ability to stay the course.

not_a_trex

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Re: Is Betterment a good idea for a new investor?
« Reply #23 on: September 15, 2018, 06:34:25 AM »
jojoguy, if you don't mind me turning it back to you, what are your thoughts so far and what do you want to learn or have questions about? Are you leaning one way or the other and why?

Another Reader

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Re: Is Betterment a good idea for a new investor?
« Reply #24 on: September 15, 2018, 07:52:52 AM »
Hmmmm...I read a number of posts in various forums that stated Betterment will not transfer in kind.  Going to research that now, because I do not like them opening accounts without my permission and the general nanny attitude.  It was an experiment, one from which I would like to extricate my small number of dollars. 


jojoguy

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Re: Is Betterment a good idea for a new investor?
« Reply #25 on: September 15, 2018, 04:47:11 PM »
jojoguy, if you don't mind me turning it back to you, what are your thoughts so far and what do you want to learn or have questions about? Are you leaning one way or the other and why?


Still not sure exactly. Probably 60/40 leaning towards Betterment after some of the posts sway me a little their way. I`m still reading though. I haven`t made a final decision yet.

Steeze

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Re: Is Betterment a good idea for a new investor?
« Reply #26 on: September 15, 2018, 05:01:59 PM »
One of my coworkers uses betterment. He also lost 1000s trading in and out of bitcoin and is now doing the same with weed stocks.

Steeze

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Re: Is Betterment a good idea for a new investor?
« Reply #27 on: September 15, 2018, 05:05:46 PM »
My advice for a newbie is open an account with one of the big three firms and use a target date fund until you learn enough to make a well researched decision about your asset allocation.

I would tell my sister to use betterment because she is incapable of learning to manage her own money or navigate a brokerage account.

not_a_trex

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Re: Is Betterment a good idea for a new investor?
« Reply #28 on: September 15, 2018, 05:34:03 PM »
Is there anything we can answer to help you make a decision? Anything we can send in your direction as far as resources go?

Could you share your thoughts on Betterment and buy and hold investing? That would tell us what you know so far and could help us fill in any holes you think are present.

Telecaster

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Re: Is Betterment a good idea for a new investor?
« Reply #29 on: September 17, 2018, 09:44:05 PM »
Betterment is a bad idea for all investors.

Why? I suspect what you really mean is Betterment is not the best idea for all investors.

You know Edward Jones manages like a trillion dollars of investments right? A few of their customers would probably be better served by Betterment.

Betterment is a bad idea.  Edward Jones is also a bad idea.  Edward Jones being bad doesn't make Betterment good.



jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #30 on: September 17, 2018, 09:58:40 PM »
Betterment is a bad idea for all investors.

Why? I suspect what you really mean is Betterment is not the best idea for all investors.

You know Edward Jones manages like a trillion dollars of investments right? A few of their customers would probably be better served by Betterment.

Betterment is a bad idea.  Edward Jones is also a bad idea.  Edward Jones being bad doesn't make Betterment good.

You still didnít say why 

Telecaster

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Re: Is Betterment a good idea for a new investor?
« Reply #31 on: September 17, 2018, 10:04:55 PM »
Still not sure exactly. Probably 60/40 leaning towards Betterment after some of the posts sway me a little their way. I`m still reading though. I haven`t made a final decision yet.

There are two problems with Betterment.  First is that as your harvest your losses now, your gains become higher in the future.  If you were trading individual stocks, this might make sense.  But not for broad based index funds, which is what most of us here do.   The other problem is the fees.  You are starting from a position of loss right off the bat.  Wealthfront in particular is stridently against comparing their returns to the index because...they can't beat index. 

A third problem is that lots of financial bloggers get money from referral links.  So they pump up the benefits far beyond reality.  Bottom line is if the benefits even exist, they are paper thin, and you can get almost all of them yourself. For free.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #32 on: September 17, 2018, 10:22:16 PM »
Still not sure exactly. Probably 60/40 leaning towards Betterment after some of the posts sway me a little their way. I`m still reading though. I haven`t made a final decision yet.

There are two problems with Betterment.  First is that as your harvest your losses now, your gains become higher in the future.  If you were trading individual stocks, this might make sense.  But not for broad based index funds, which is what most of us here do.   The other problem is the fees.  You are starting from a position of loss right off the bat.  Wealthfront in particular is stridently against comparing their returns to the index because...they can't beat index. 

A third problem is that lots of financial bloggers get money from referral links.  So they pump up the benefits far beyond reality.  Bottom line is if the benefits even exist, they are paper thin, and you can get almost all of them yourself. For free.

1.  Thatís what happens with tax loss harvesting. Not unique to Betterment. And you can turn their auto tax loss harvesting off if you donít want it.
2.  Fees. Sure 25 basis points isnít zero. But cmon not everyone can, or wants to, do the stuff on their own. Find something comparable thatís cheaper.
3.  Referral links. So are credit cards bad? Amazon too? Or a million other things.

Telecaster

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Re: Is Betterment a good idea for a new investor?
« Reply #33 on: September 17, 2018, 11:09:07 PM »
1.  Thatís what happens with tax loss harvesting. Not unique to Betterment. And you can turn their auto tax loss harvesting off if you donít want it.
2.  Fees. Sure 25 basis points isnít zero. But cmon not everyone can, or wants to, do the stuff on their own. Find something comparable thatís cheaper.
3.  Referral links. So are credit cards bad? Amazon too? Or a million other things.

1.  Right.  For the long term buy and hold index investor, tax loss harvesting provides no benefit.  So it paying someone to provide a service with no benefit is hazardous to your wealth.  Just a dumb thing to do. 

2.  Sure.  Simply buy and hold a low-cost index fund.   You'll be better off in the short term and the long term.

3.  The concept of referral links isn't bad of course.  But financial bloggers pumping up clearly sub-optimal schemes like Wealthfront and Betterment designed to separate people from their money isn't a good thing.  Amazon has referral links because Amazon wants you to buy stuff from them.  Wealthfront and Betterment have referral links for the same reason.  Be aware the blogger with the referral link is concerned about his bottom line, not yours. 

shinn497

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Re: Is Betterment a good idea for a new investor?
« Reply #34 on: September 18, 2018, 02:51:39 AM »
IF you continually contribute, tax loss harvesting does wonders since you can harvest your individual positions. It makes the most sense in the accumulation phase. BUT, you can harvest dividends as well!

For example. Lets say you have 100 positions in some index. And 3 you took out last week. If the markets go down, those positions will go under and can be harvested, but your positions you took out like 3 years ago are still much higher than their original price and cannot be harvest. Furthermore, with betterment, the system will harvest fractional shares, which you pretty much can't do anywhere else except save another robo-advisor.

Also credit cards ARE bad but lets please not argue this :b.

MMM is open about being an affiliate but i think he took his links down and is more honest. We will see.

MustacheAndaHalf

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Re: Is Betterment a good idea for a new investor?
« Reply #35 on: September 18, 2018, 03:16:22 AM »
For the long term buy and hold index investor, tax loss harvesting provides no benefit.
An overly broad statement like that is false, so maybe you can clarify what you intended.  Tax loss harvesting is like the IRS loaning you money at 0% interest, where you decide when to pay it back.  Even long-term investors buy many times a year over many years, and some of those investments will drop below their initial value.  That's an opportunity to tax loss harvest, and use the tax savings to invest additional money.  You get to decide when to take a gain (by selling), and in the meantime it's like a free loan from the IRS.
« Last Edit: September 18, 2018, 03:23:14 AM by MustacheAndaHalf »

MustacheAndaHalf

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Re: Is Betterment a good idea for a new investor?
« Reply #36 on: September 18, 2018, 03:22:34 AM »
BUT, you can harvest dividends as well! ... the system will harvest fractional shares
Dividends, which are reported on IRS form 1099-DIV, cannot be tax loss harvested.  When you reinvest dividends, the new shares you paid for with dividends are not called dividends.  They are simply new shares.

You can tax loss harvest fractional shares if you own a mutual fund.  You can sell 0.2 shares if you like, and tax loss harvest that amount.  You are not limited to buying and selling whole numbers of shares of a mutual fund at Vanguard, Schwab, Fidelity, etc.
« Last Edit: September 18, 2018, 03:24:20 AM by MustacheAndaHalf »

shinn497

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Re: Is Betterment a good idea for a new investor?
« Reply #37 on: September 18, 2018, 06:55:44 AM »
BUT, you can harvest dividends as well! ... the system will harvest fractional shares
Dividends, which are reported on IRS form 1099-DIV, cannot be tax loss harvested.  When you reinvest dividends, the new shares you paid for with dividends are not called dividends.  They are simply new shares.

You can tax loss harvest fractional shares if you own a mutual fund.  You can sell 0.2 shares if you like, and tax loss harvest that amount.  You are not limited to buying and selling whole numbers of shares of a mutual fund at Vanguard, Schwab, Fidelity, etc.

I stand corrected. But I am not sure how dividends are untaxlossharvestable. You use them to buy a new position right? Why would it matter where the money comes from?

not_a_trex

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Re: Is Betterment a good idea for a new investor?
« Reply #38 on: September 18, 2018, 07:55:19 AM »
I'm not sure what MustacheAndaHalf means, but if you automatically reinvest dividends into the same stock/fund/etf and they are reinvested within 30 days of an attempt to tax loss harvest then they create a wash sale.

This is easily countered by either not TLHing within 30 days of dividend disbursement or setting dividend reinvestment manually.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #39 on: September 18, 2018, 08:43:21 AM »
BUT, you can harvest dividends as well! ... the system will harvest fractional shares
Dividends, which are reported on IRS form 1099-DIV, cannot be tax loss harvested.  When you reinvest dividends, the new shares you paid for with dividends are not called dividends.  They are simply new shares.

You can tax loss harvest fractional shares if you own a mutual fund.  You can sell 0.2 shares if you like, and tax loss harvest that amount.  You are not limited to buying and selling whole numbers of shares of a mutual fund at Vanguard, Schwab, Fidelity, etc.

I stand corrected. But I am not sure how dividends are untaxlossharvestable. You use them to buy a new position right? Why would it matter where the money comes from?

It's not that dividends are "untaxlossharvestable". It's that saying "you can harvest dividends as well" just doesn't really make any sense.

jacoavluha

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Re: Is Betterment a good idea for a new investor?
« Reply #40 on: September 18, 2018, 08:47:37 AM »
For the long term buy and hold index investor, tax loss harvesting provides no benefit.  So it paying someone to provide a service with no benefit is hazardous to your wealth.  Just a dumb thing to do. 

So, Betterment et al really argue the contrary. I've read their white paper on the subject. I'm not taking a position here. And I don't use a robo advisor. But, I'm curious of your opinion. It's the old "stupid or liar." You must think that Betterment is either A) being intentionally misleading (lying), or B) factually wrong in their conclusion, in some way (stupid). Which do you think it is?

HeartlandBrad

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Re: Is Betterment a good idea for a new investor?
« Reply #41 on: September 18, 2018, 09:19:07 AM »
It depends upon where you want to out-source and where you want to be your own DIY expert.

Betterment passes the first set of go/no-go criteria:
- they are a fiduciary and by law must work in your interest, not all financial planners are fiduciaries
- they invest in passive/index funds
- they have reasonable fees

Pros:
- becoming your own expert in everything is very time comsuing; you have to pick and choose.  I don't make my own cloths, grow my own food, fabricate my own bicycle parts, or repair my own A/C.
- while you're becoming an expert you can make mistakes.  Assume you have a $100,000 portfolio and Betterment charges $250.  You could easily make a $250 mistake rebalancing or sub-optimizing account allocation while you learn.

Con:
- haven't personally checked on transferring out in-kind if you decide to change, only matters for taxable accounts though.
- tax loss harvesting isn't magic.  Vanguard and Dimensional both have tax-managed funds for taxable accounts.  Read up on tax loss harvesting across funds when rebalancing and you could probably do it yourself.
- allocating chosen investments to the optimal taxable, tax-deferred and tax-free accounts isn't too hard either.

Unknowns:
- don't know how thorough and personallized the rest of their financial advice is.  Some is highly dependent upon your situation such as whether Roth or Traditional retirement accounts are best.

PizzaSteve

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Re: Is Betterment a good idea for a new investor?
« Reply #42 on: September 18, 2018, 09:32:09 AM »
It depends upon where you want to out-source and where you want to be your own DIY expert.

Betterment passes the first set of go/no-go criteria:
- they are a fiduciary and by law must work in your interest, not all financial planners are fiduciaries
- they invest in passive/index funds
- they have reasonable fees

Pros:
- becoming your own expert in everything is very time comsuing; you have to pick and choose.  I don't make my own cloths, grow my own food, fabricate my own bicycle parts, or repair my own A/C.
- while you're becoming an expert you can make mistakes.  Assume you have a $100,000 portfolio and Betterment charges $250.  You could easily make a $250 mistake rebalancing or sub-optimizing account allocation while you learn.

Con:
- haven't personally checked on transferring out in-kind if you decide to change, only matters for taxable accounts though.
- tax loss harvesting isn't magic.  Vanguard and Dimensional both have tax-managed funds for taxable accounts.  Read up on tax loss harvesting across funds when rebalancing and you could probably do it yourself.
- allocating chosen investments to the optimal taxable, tax-deferred and tax-free accounts isn't too hard either.

Unknowns:
- don't know how thorough and personallized the rest of their financial advice is.  Some is highly dependent upon your situation such as whether Roth or Traditional retirement accounts are best.
Good post, but need to add one item to the cons.  The fees.  The cumulative impact of a .25 to .40 fee on a portfolio over 30 years will be a 6 or 7 figures cost.  The $250 cost you site becomes a cumulative impact of thousands per year as you approach FIRE.  While we dont make our own clothes, if they cost me $7000 a year I might consider it.

scrapper

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Re: Is Betterment a good idea for a new investor?
« Reply #43 on: September 19, 2018, 02:47:43 PM »
Quote
Hmmmm...I read a number of posts in various forums that stated Betterment will not transfer in kind.  Going to research that now, because I do not like them opening accounts without my permission and the general nanny attitude. 

Anyone considering Betterment for a taxable account, please read this:  https://forum.mrmoneymustache.com/investor-alley/in-kind-asset-transfer-out-of-betterment-nightmare/

I wrote the original post.  It is possible to xfer assets out in-kind, BUT Betterment puts huge delays and road blocks into the process.  It is apparently a sleazy attempt to discourage people from moving their assets out.  Here's the sad thing, in my case it has worked (so far).  I've been busy, and haven't found time to visit a damn notary yet.

Note that Wealthfront offers basically the same robot investor service with TLH, same expense fee, but does not hold their customers hostage when they want to take control of their assets.  Until Betterment changes this policy, please check out Wealthfront. 

Before a Betterment apologist replies and says they transferred out and it wasn't too bad, please read for yourself and make your own judgment on whether Betterment's process is reasonable: 

I've transferred accounts from other brokers in the past - all have supported ACATS transfers.  Betterment's process is a throwback to the 70s and designed to discourage you from leaving.  If you can't tell - I'm not a fan of this business practice.