Author Topic: Recently opened a betterment account and it has been a little dishartening  (Read 10232 times)

xclonexclonex

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I deposited a total of $700 in two goals. One of them is an experiment account (I will make a post about it later), and the other is going to be my main retirement account.

Either way, its just a little disheartening for a newbie investor like myself to see nothing but losses ever since I opened the account.

http://i.imgur.com/5XW881j.jpg

I know I shouldn't read too much into this, highs and lows are a part of life in the stock market. Anyway, just wanted to share this with you guys.

Thanks for reading.

dandarc

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Should have started 2 or 3 years ago - the early results would have looked much different.

I, for one, am hoping this downward slide continues for quite a while - still accumulating, so lower prices are good for me.

Anyway, if you want to feel more comfortable with the stock market, the stock series is pretty fantastic.  http://jlcollinsnh.com/stock-series/

xclonexclonex

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Yes indeed. I should have started earlier, but my philosophy at the time was very different. I didn't want to use the stock market for anything. I wanted to work till I couldn't work anymore, and then live off the savings (the way my grand parents did).

I now realize that I was wrong.

Thank you for the article. I will check it out.

tj

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there's nothing magical about betterment. It might save you some taxes. You can't invest in the stock or bond market and expect it to always go up. 3% less isn't really that bad.

xclonexclonex

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I understand. like I said, I am new to this. I need to get used to the dips.

innerscorecard

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Prepare for more pain. That's how investing works.

Or you could just stop monitoring your account balance. That's the easier way to deal with it.

Seppia

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You've lost 3% of $700, that's less than a pizza dinner for two :)
Like dandarc said, you should rejoice every time the market goes down, it means cheaper prices.
Think about stocks like something you want to own a lot of: the cheaper they are, the more your dollars will buy.
I am super sad the market is still at all time highs, luckily enough there's at least the energy sector on fire sale right now.

I'm a red panda

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The market kind of sucks right now.  (See the thread someone started: I lost 5 figures yesterday...)  Great time to buy!

But with such low dollar amounts- why are you in betterment?  There is just no reason to pay their fees to manage your money, when so little needs to be managed.

xclonexclonex

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As of now I dont have a lot of money in the account because I am saving for a down payment for a house. I will however contribute a lot more going forward.

I'm a red panda

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As of now I dont have a lot of money in the account because I am saving for a down payment for a house. I will however contribute a lot more going forward.

IMO, you'd do better somewhere with low expense ratios like Vanguard.

But I really don't get Betterment. I think you need A LOT to benefit from what they do.

Faraday

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As of now I dont have a lot of money in the account because I am saving for a down payment for a house. I will however contribute a lot more going forward.

IMO, you'd do better somewhere with low expense ratios like Vanguard.

But I really don't get Betterment. I think you need A LOT to benefit from what they do.

I started Betterment last November with $2k, kept a constant draw going from my checking account till I reached $4600. Drew the account down to zero at the end of July and closed it.

What I found is that every time I made money in Betterment, it came in two ways:
- dividends (great)
- growth (ok)

Either way, I'd lose money with:
- expense ratio (sucks, embedded in the fund)
- Betterment charges (sucks, very high if you are under $10k)

I ended up closing the account and pulling out exactly the amount I started with. Betterment essentially took everything I made. Quick napkin calculations showed me that I should have started with $10k and gone from there. That would have knocked the fees and charges down quite a bit.

But....I ended up following the advice of the above-poster: I took the money to Vanguard (started a Roth IRA) and I've been much, much happier. The price of the fund I have at vanguard goes up and goes down, but the expense ratio is so low that I lose far, far less money than I was losing to fees at Betterment.

No dis on Betterment - I LOVE their user interface and I LOVE how they do business. I just can't stand their fee schedule nor can I stand the fact that they just seemed to be taking all the profits for themselves and leaving nothing for me - and that was shown clearly on their own graphs....

Here's my original thread on the subject:
http://forum.mrmoneymustache.com/investor-alley/should-i-get-out-of-betterment-and-move-to-vanguard-roth-ira/msg703464/#msg703464
« Last Edit: August 21, 2015, 11:09:12 AM by mefla »

Derrian

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Just keep contributing and ignore the short term results. If it's any consolation, I started investing with betterment and was up $1200 over the past year and a half and am now down close to $600. It's part of investing. The trick is to follow Jack Bogle's advice "Don't do something, just stand there" meaning don't react to market swings. Let your money continue to work for you and keep contributing however much you feel comfortable with whenever you can.


matchewed

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Your losses have nothing to do with Betterment. You shouldn't be with them anyway though due to the fees. Go with Vanguard or Fidelity for their low cost fees.

Read about investing in stocks, understand that they go up and down in the short and up in the long. http://jlcollinsnh.com/stock-series/

Mr. Green

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The market could move 3% in a day. I don't think I'd be worrying about 3% too much, otherwise playing the market may not be for you.

lostamonkey

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I deposited a total of $700 in two goals. One of them is an experiment account (I will make a post about it later), and the other is going to be my main retirement account.

Either way, its just a little disheartening for a newbie investor like myself to see nothing but losses ever since I opened the account.

http://i.imgur.com/5XW881j.jpg

I know I shouldn't read too much into this, highs and lows are a part of life in the stock market. Anyway, just wanted to share this with you guys.

Thanks for reading.

If you want to feel better, multiply your losses by 10,000 and realize that's how MMers with a $7M portfolio lost.

Water

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I deposited a total of $700 in two goals. One of them is an experiment account (I will make a post about it later), and the other is going to be my main retirement account.

Either way, its just a little disheartening for a newbie investor like myself to see nothing but losses ever since I opened the account.

http://i.imgur.com/5XW881j.jpg

I know I shouldn't read too much into this, highs and lows are a part of life in the stock market. Anyway, just wanted to share this with you guys.

Thanks for reading.

maybe this might make you fell better OP, this my unrealized loss.


Mr. Green

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I deposited a total of $700 in two goals. One of them is an experiment account (I will make a post about it later), and the other is going to be my main retirement account.

Either way, its just a little disheartening for a newbie investor like myself to see nothing but losses ever since I opened the account.

http://i.imgur.com/5XW881j.jpg

I know I shouldn't read too much into this, highs and lows are a part of life in the stock market. Anyway, just wanted to share this with you guys.

Thanks for reading.

If you want to feel better, multiply your losses by 10,000 and realize that's how MMers with a $7M portfolio lost.
I'm gonna go out on a limb and guess there aren't very many MMers with a $7M portfolio because they realized they could bail about $5M ago, give or take $1M.

a1smith

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The market could move 3% in a day. I don't think I'd be worrying about 3% too much, otherwise playing the market may not be for you.

You're psychic!  It just did . . . .   ;-)

a1smith

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I deposited a total of $700 in two goals. One of them is an experiment account (I will make a post about it later), and the other is going to be my main retirement account.

Either way, its just a little disheartening for a newbie investor like myself to see nothing but losses ever since I opened the account.

http://i.imgur.com/5XW881j.jpg

I know I shouldn't read too much into this, highs and lows are a part of life in the stock market. Anyway, just wanted to share this with you guys.

Thanks for reading.

If you want to feel better, multiply your losses by 10,000 and realize that's how MMers with a $7M portfolio lost.

I would argue that most MMers are <$7M portfolio if they are following FIRE principles.  The big picture principles of FIRE say to have low expenses and then retire early when you just have enough to make it.  SWR=4% is used a lot for rule of thumb (YMMV) so $7M/25 = $280k annual expenses.  So, you either:
1. saved way too much before retiring
2. expenses are really high
3. you made a killing in the market after retiring.  :-)

EDIT - should have read the whole thread, Mr. Green has the same idea.
« Last Edit: August 21, 2015, 06:28:40 PM by a1smith »

fb132

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I hope xclonexclonex is not panicking now with how the stocks have been doing this week.

Maxman

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I think Betterment is a great choice for the small investor. If you can put in $100 per month your fees are .25% per year. Keep investing dollars cost average into this dip things will be fine. Of course I have the hindsight of over 40 years of investing.

minority_finance_mo

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I am 3% down on my portfolio since the start of the year. It totally is disheartening at times - I'm with you. My comfort is in the fact that over the long term, it will continue to go up. I try not to check too often.

a1smith

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I think Betterment is a great choice for the small investor. If you can put in $100 per month your fees are .25% per year. Keep investing dollars cost average into this dip things will be fine. Of course I have the hindsight of over 40 years of investing.

1.0025^40=1.105.  So, just for round numbers, let's say someone outside of Betterment (w/o the additional 0.25% fee) reaches $1M in 40 years.  The person investing with Betterment will have $904,950.

NOTE: This is a quick back of the envelope calculation but it gives you an idea of the impact of fees over a long time period.
« Last Edit: August 22, 2015, 06:26:34 PM by a1smith »

Irish1842

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The market kind of sucks right now.  (See the thread someone started: I lost 5 figures yesterday...)  Great time to buy!

But with such low dollar amounts- why are you in betterment?  There is just no reason to pay their fees to manage your money, when so little needs to be managed.

Do you have a recommendation on where else to invest such low dollar amounts?  I was looking into Vanguard mutual funds, but with their minimum investment requirements I don't have the cash to get the stock/bond split I'm looking for. I'm saving for a house, which is why I want to start small.  Instead, I recently started investing $100 a month into Betterment because of their low minimums, until I have the cash to move to Vanguard.  I'm already investing in my company's 401k/Roth 401k and a Vanguard Roth IRA.  Thanks! 

BTDretire

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I understand. like I said, I am new to this. I need to get used to the dips.

  If it makes you feel any better, from June 2008 to Mar 2009 I lost 33.5%
of my Vanguard portfolio.
Since Mar 2009 the portfolio has almost tripled.
 In the longer term the market is up.
Here's a nice graph of the Nasdaq.
You can see the dip and the 3 X rise.
http://tinyurl.com/ofrwft3

surething22

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I opened and fully funded my Roth IRA plus an additional brokerage account through Vanguard a little over a month ago. Hasn't done well, can't time the market, telling myself not to look at it. The JLcollinsNH stock series helps, and I'll probably read over the entire thing again.

Cressida

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I opened and fully funded my Roth IRA plus an additional brokerage account through Vanguard a little over a month ago. Hasn't done well, can't time the market, telling myself not to look at it. The JLcollinsNH stock series helps, and I'll probably read over the entire thing again.

Wait, are you me? :)

Yeah, I have no idea when that Roth will hit $5500 again, but it's not looking good. The taxable account will at least benefit from additional contributions this year.

I know, I know. Buy and hold.

tvan

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The market kind of sucks right now.  (See the thread someone started: I lost 5 figures yesterday...)  Great time to buy!

But with such low dollar amounts- why are you in betterment?  There is just no reason to pay their fees to manage your money, when so little needs to be managed.

Do you have a recommendation on where else to invest such low dollar amounts?  I was looking into Vanguard mutual funds, but with their minimum investment requirements I don't have the cash to get the stock/bond split I'm looking for. I'm saving for a house, which is why I want to start small.  Instead, I recently started investing $100 a month into Betterment because of their low minimums, until I have the cash to move to Vanguard.  I'm already investing in my company's 401k/Roth 401k and a Vanguard Roth IRA.  Thanks!

Are you hitting the max 18k in the 401k? 

grettman

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On Friday I lost about $55,000 of unrealized value.   This is on top of whatever other losses there were during the week.


mrpercentage

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Don't even bother looking if you are auto investing. Know you are doing the right thing. Betterment is very mediocre both in returns and losses. I recently watched my actively managed portfolio take big hits. If anything you should increase your contributions. Buy low is counterintuitive but believe me-- you should be buying right now. If you were playing with individual securities I would advise differently but Betterment is about as defensive diversified as you can get.

Tjat

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Heh, I started hardcore back in April and despite the old "sell in May and go away adage" coming true...I'm still confident long term (I think).

Down 7.5% so far...

Bikeguy

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Try maxing out your 401K and a year later you have the same amount.   2008 to 2009.  I was depressed until I realized stocks were "on sale" and I got a bargain on them.

Sent from my SCH-I545 using Tapatalk


Irish1842

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The market kind of sucks right now.  (See the thread someone started: I lost 5 figures yesterday...)  Great time to buy!

But with such low dollar amounts- why are you in betterment?  There is just no reason to pay their fees to manage your money, when so little needs to be managed.

Do you have a recommendation on where else to invest such low dollar amounts?  I was looking into Vanguard mutual funds, but with their minimum investment requirements I don't have the cash to get the stock/bond split I'm looking for. I'm saving for a house, which is why I want to start small.  Instead, I recently started investing $100 a month into Betterment because of their low minimums, until I have the cash to move to Vanguard.  I'm already investing in my company's 401k/Roth 401k and a Vanguard Roth IRA.  Thanks!

Are you hitting the max 18k in the 401k?

My 401k isn't maxed, but I'm at my company's match threshold (I'm putting 15% of my pay into 401k).  I started an account with Betterment because I thought it would be good to start developing an asset that I could turn to before retirement if necessary.

dandarc

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The market kind of sucks right now.  (See the thread someone started: I lost 5 figures yesterday...)  Great time to buy!

But with such low dollar amounts- why are you in betterment?  There is just no reason to pay their fees to manage your money, when so little needs to be managed.

Do you have a recommendation on where else to invest such low dollar amounts?  I was looking into Vanguard mutual funds, but with their minimum investment requirements I don't have the cash to get the stock/bond split I'm looking for. I'm saving for a house, which is why I want to start small.  Instead, I recently started investing $100 a month into Betterment because of their low minimums, until I have the cash to move to Vanguard.  I'm already investing in my company's 401k/Roth 401k and a Vanguard Roth IRA.  Thanks!

Are you hitting the max 18k in the 401k?

My 401k isn't maxed, but I'm at my company's match threshold (I'm putting 15% of my pay into 401k).  I started an account with Betterment because I thought it would be good to start developing an asset that I could turn to before retirement if necessary.
Suppose it depends what you mean by "retirement" in this context, but this post might be informative:

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

tvan

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There is another robo advisor that has zero fees. I can't recall the name atm.

a1smith

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Don't even bother looking if you are auto investing. Know you are doing the right thing. Betterment is very mediocre both in returns and losses. I recently watched my actively managed portfolio take big hits. If anything you should increase your contributions. Buy low is counterintuitive but believe me-- you should be buying right now. If you were playing with individual securities I would advise differently but Betterment is about as defensive diversified as you can get.

Not quite sure what you're recommending . . . . don't watch your investments if they are passive but do watch them if you are active?

So, if you are mediocre in both returns and losses do you mean you go up less than the market but decrease more than the market?

Betterment has a range of "defensiveness" depending on how you set up your AA.  For example, MMM is 90% stock in his Betterment account.  Someone very close to retirement could be 40% stock, 60% bonds.  So, not quite sure what you mean.

Why increase contributions?  Are you sure we've hit bottom?  Why shouldn't we have been increasing contributions when the market was at the exact same value just a few months ago?

So, with individual securities what should we do differently?  Did you sell AAPL and DIS before they fell off a cliff?  Maybe we should start a new thread to discuss that.


a1smith

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I understand. like I said, I am new to this. I need to get used to the dips.

  If it makes you feel any better, from June 2008 to Mar 2009 I lost 33.5%
of my Vanguard portfolio.
Since Mar 2009 the portfolio has almost tripled.
 In the longer term the market is up.
Here's a nice graph of the Nasdaq.
You can see the dip and the 3 X rise.
http://tinyurl.com/ofrwft3

Well, if you going to show that plot then, in fairness and for the benefit of those who weren't investing back then, you must also show the NASDAQ from March 2000 to October 2002.  78% decrease and 15 years to get back to same value.  Notice all of the places where you have increases on the way down.  Those are people "buying on the dip." 

So, maybe this puts a 3% drop in perspective.  Don't worry about it.

Faraday

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Well, if you going to show that plot then, in fairness and for the benefit of those who weren't investing back then, you must also show the NASDAQ from March 2000 to October 2002.  78% decrease and 15 years to get back to same value.  Notice all of the places where you have increases on the way down.  Those are people "buying on the dip." 

So, maybe this puts a 3% drop in perspective.  Don't worry about it.

That's the dip that bit the hell out of me, back when I didn't understand you should "buy on the decline". I froze my contribs to my 401k, so I didn't get any of that juicy goodness. I feel bad that I missed out, but on the other hand, that's when I started paying down the mortgage and I saw every penny of that back, and more, when I sold that home. (OK, I got lucky and sold on the real estate "bubble". But you get the drift.)

I would expect a Betterment account to do better - after all, those guys take a cut out of your dough and they better be earning it.

BTDretire

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I understand. like I said, I am new to this. I need to get used to the dips.

  If it makes you feel any better, from June 2008 to Mar 2009 I lost 33.5%
of my Vanguard portfolio.
Since Mar 2009 the portfolio has almost tripled.
 In the longer term the market is up.
Here's a nice graph of the Nasdaq.
You can see the dip and the 3 X rise.
http://tinyurl.com/ofrwft3

Well, if you going to show that plot then, in fairness and for the benefit of those who weren't investing back then, you must also show the NASDAQ from March 2000 to October 2002.  78% decrease and 15 years to get back to same value.  Notice all of the places where you have increases on the way down.  Those are people "buying on the dip." 

So, maybe this puts a 3% drop in perspective.  Don't worry about it.

 My financial Guru sent me an email on Feb 11, 2000.
Let me tell you what it said!
Sell everything.
I did, yahooooo!
 It was a great call, however, he totally missed 2007.

a1smith

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I understand. like I said, I am new to this. I need to get used to the dips.

  If it makes you feel any better, from June 2008 to Mar 2009 I lost 33.5%
of my Vanguard portfolio.
Since Mar 2009 the portfolio has almost tripled.
 In the longer term the market is up.
Here's a nice graph of the Nasdaq.
You can see the dip and the 3 X rise.
http://tinyurl.com/ofrwft3

Well, if you going to show that plot then, in fairness and for the benefit of those who weren't investing back then, you must also show the NASDAQ from March 2000 to October 2002.  78% decrease and 15 years to get back to same value.  Notice all of the places where you have increases on the way down.  Those are people "buying on the dip." 

So, maybe this puts a 3% drop in perspective.  Don't worry about it.

 My financial Guru sent me an email on Feb 11, 2000.
Let me tell you what it said!
Sell everything.
I did, yahooooo!
 It was a great call, however, he totally missed 2007.

Well, for it to be a good call two good decisions have to be made - when to sell and when to get back in.

When did your financial guru recommend buying?