Our Betterment Review + Why It’s the Financial Tool for Your 30’s

I decided to do this quick Betterment review because it’s a different type of investing platform that can help make the most of your money. You’ve heard me say the only way to live your best life is by taking control of your money. That not only means saving and managing your money with a budget, it also means finding ways to make your money grow.

Back in December, I wrote about an affordable investing tool called Ally Invest that allows you to invest money in the market through various types of trade based on your level of comfort. But, if you’re still unsure about getting into the market, and investing jargon like diversification, option trades, ETFs, Index, and 401k scare you (and who the heck is Roth?), there’s another investing tool for newbies that I really like.

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That tool is Betterment.

You don’t need a degree in finance or have a lot of understanding of the market to get started. Click here to get started with Betterment and then walk through getting set up with us in the tutorial below. 

What is Betterment?

Betterment is a robo advisor that uses computer algorithms to recommend a personalized balance of ETF stocks and bonds according to your age, income, and retirement status. It’s cheaper than hiring a human investment broker to pick stocks for you.

There is no minimum balance, no minimum investment, and you can cancel anytime. In fact, you can start investing with $5 (although, to get any benefit from investing, you’ll want to invest more than that, or make monthly automatic transfers).

Betterment is great for long-term and short-term savings/investing goals. You can save for retirement, a down payment on a house, a car, school, or that trip to Europe.

Any savings goal longer than a year or greater will do better invested with Betterment.

Signing Up is Easy

Got 10 minutes? 

That’s how long it will take to sign up (or less). You’ll need income and banking information like annual income, social security number, full name, current address, an email address and secure password. Click here to sign up now. 

First, put in your age and income (this example is for a 23-year-old making $35,000 a year).

Next, Betterment will recommend 3-types of investment goals for you.

  • Safety Net
  • Retirement
  • General Investing

It also recommendations the proper stock-to-bond ratio based on your age.

If you’re in your 20’s, you should be investing for a long time, 30+ years, so they recommend a 90% stock to 10% bond ratio for retirement and general investing. This is because the younger you are, the more time you have to take advantage of compound interest (which Einstein said was the 8th wonder of the world) and the fastest way to become a millionaire by the time you’re 50!

Once you choose a goal (don’t worry, you can change it later), it will prompt you for an email address and a new password.

If you still have questions, you can always email, call, or browse their FAQ database.

Once your goals are picked, link Betterment to your bank and make your first transfer.

Once the transfer is complete (in about 4-5 days), you’ll be investing in the market. Easy peasy!

The Best Part About Using Betterment

Not only does Betterment allow you to invest with very little money to start, and with very little experience. It also saves you money with automatic tax-loss harvesting and dividend reinvestment, so none of your money is sitting idle at zero-percent interest.

There’s also no need for hours of research to find the right portfolio, just tell Betterment what you want to save and it will give you time, amount, and allocation recommendations:

Want to save up $15,000 in 4 years?

Betterment will give you recommendations on:

  • How much you should save per month to get there.
  • Stock Risk – How aggressive you need to be.
  • Time period – How long it will take based on your current rate of saving.
  • What you’ll make in an average market performance and a poor market performance.

Based on your desire to save $15,000 in a Safety Net account with the following:

  • Allocation of 70% stocks and 30% bonds
  • $1000 initial deposit
  • $50 a month automatic deposit

It recommends you save for 14 years and up your monthly deposit to $204, OR make an initial investment of $9260.35.

This is how Betterment makes you an informed investor. How awesome is that!

How Much Does Betterment Cost?

Sign up is free but once you start saving money in a portfolio, Betterment charges a flat yearly rate. There are no extra charges for ETF expense ratios.

  • Betterment Digital – 0.25% – No Minimum Balance
  • Betterment Plus – 0.40% Minimum Balance is $100,000
  • Betterment Premium – 0.50% Minimum Balance is $250,000

Both the Plus and Premium tiers come with annual or unlimited calls with a professional CPA and professional account monitoring.

Is Betterment a Good Idea? Our Honest Betterment Review.

Betterment is an automatic goal-based investing service so the new investor still unsure about how the market works can start investing and take advantage of compound interest. Thus, my answer to this is a resounding Yes!

While investing always comes with risks, Betterment does their best to reduce your risk in the market by picking low-fee ETF funds at a rate based on your goals, age, and retirement status. The longer you invest, the better your portfolio will perform. And, your money is likely to earn more interest in a Betterment account than in a regular savings account.

Betterment not only helps you save for retirement, but also for a down payment on a house, a car, a wedding, school, or that backpacking trip to Europe.

Are you ready to give Betterment a try? It’s free and you can cancel anytime! Click here to sign up.

 

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