Author Topic: My 3-Month Betterment Review  (Read 11574 times)

Honest Abe

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My 3-Month Betterment Review
« on: December 23, 2012, 11:05:23 AM »
On October 2nd this year, I rolled my old 403b from a dingy old American Funds account into a Betterment account. For those of you unfamiliar with this brokerage you can check out my old thread on it here.

No deposits have been made to the IRA account since. I checked my account today and played with the analysis tool. I attached an image of the results.

Also here's what I got off the website about the data used to make the graph:

About the data
This graph shows the time-weighted return of your portfolio and comparisons at the selected time points. Time-weighted returns compensate for external cash flows such as deposits, withdrawals, and dividends which are inherent in a typical portfolio. This allows apples-to-apples comparison to other possible Betterment allocations and benchmarks where similar flows may not have occurred.

Obviously 3 months is not enough time to do a full review, but as you can see from the benchmark comparison it's been doing quite well, except for the International index which has done exceptionally well.

Overall I've been very happy with my account at Betterment. I still have a brokerage account with Sharebuilder that I hold individual securities in, as well as a P2P account. I plan on keeping both of these in addition to this account.

The rebalancing aspect of Betterment is really the best part.. every time I make a deposit to the account (I have made a few lump sum deposits to my After-Tax savings account as well as a weekly contribution) and every time a dividend pays out Betterment "tops off" the funds to get them back to their set allocation. Was last week bad for the stock market? This week you'll buy more from the VTI You can check out the funds used and % allocations in the second attachment below.

To me this is worth the 0.25% fee that Betterment charges. Again, this is a 3 month snapshot, but I'll update again in a few months.
« Last Edit: December 24, 2012, 05:15:15 AM by Honest Abe »


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Re: My 3-Month Betterment Review
« Reply #1 on: December 30, 2012, 12:30:21 PM »
Jon Stein, CEO of Betterment here.

@Honest, thanks for your kind words and straight-forward review. I'm glad you're happy with your account, and agree with you about the magic of Betterment's rebalancing algorithm. It's powerful. The automation is also nice.

Your account will perform in line with its component parts - some international equity, some domestic equity, some bonds. Over the long term, these ought to provide you with the best possible return for the level of risk that you select.



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