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