Betterment Investing – What Is All About
Probably many of you who are trying to manage your money in a wiser way have already heard about Betterment investing at least once in life. Basically the definition about Betterment investing is quite simple- it is a modern way of investing which is actually a robo-advisor that doesn’t require minimum deposit. You will learn in this Betterment Review all you need to know of it.
However, the first thing that you have to do is to go to their page and create your own account. After that the sign up process will take you through some kind of quiz that will help you to come up with your own goal about your investing.
After receiving the results you will also receive an ultimate guide to achieve that goal such as recommended target and asset allocation that you should follow. In case, the customer is not comfortable with this feature, Betterment also allows you to add your own personal goal there and decide in which way your money will be invested. In this case, since there are 4 different types of accounts such as: Taxable, Traditional IRA, Roth IRA and SEP IRA, you will also have the option to choose which one you prefer in order to reach your retirement goal.
Of course, Betterment is not really the first company of this kind now a days which means that it has some competitors that also offer similar features like Betterment. Vanguard and Wealthfront are some of the biggest competitors to Betterment.
When one decides to join Vanguard they will have to provide their basic information and bank account information and then submit an e-signature so they could preceed in their online Vanguard account. In Vanguard’s case it is really important to have some balance in your account because then it is when the game starts. The users could invest their money using Vanguard mutual funds and ETFs, stocks, bonds, CDs and non-Vanguard mutual funds.
Wealthfront is another popular platform of this kind. Nevertheless, it is quite different from Betterment as it requires at least $500 to start your investment on your Wealthfront account. Once you are done with that requirement you will be able to choose what qualities you are looking in your financial advisor. You may choose: using a robo advisor, saving money on taxes, creating a diversified portfolio or matching/beating market performance. After that you will get to the dropdown box and then, same as Betterment, receive information about how to achieve your investment goals.
Making comparison between these three platforms of investing indeed is a compelling task and you can check my Betterment review compared with others.
Betterment returns is another tempting reason about why to use this platform as a smarter way of investing your money. Basically your expected returns depend on your asset allocation and in order to check it out you should log in to your Betterment account and click to view the Allocation tab.
There one could use the performance analysis tool in order to find out what is your expected Betterment returns. In fact, there are two types of Betterment returns: Money-Weighted Return and Simple Return.
Wondering what is the difference? Well, in fact, is very simple. If you have an investment account where the investment manager controls every money that goes in and out of your portfolio and you want to judge their overall performance, including their timing of the market, then you should definitely use a money-weighted return. That also would be the case if you were attempting to time the market yourself and wanted to check your performance.
Nevertheless, if you have made a single investment then Simple Return is the one that you should go with. Simple Return has one limitation though- treats all of the deposits into an investment account as having happened at the same time as the first deposit.
Online investing- what is it?!
Alright, now probably after reading this Betterment review, a bunch of positive comments about Betterment from my side you are probably asking yourself what makes so special this platform when there are a bunch of other online investing platforms now a days?! Probably this might be super unclear in your head right now, but believe me I am about to clear up every single doubt that you have regarding this topic.
So let’s first talk about what makes so unique this platform and how it is so different from the traditional online investing platforms, huh?
First of all, the great thing about Betterment is that it doesn’t require minimum balance on your account when you get start – which is perhaps the leading factor that convienced me to join Betterment and start investing my savings there. I mean, it is true that now a days we are living in the era of technology where pretty much everything works through it including investing our money yet that doesn’t mean that every single platform of this kind is relevant and safe to use. How would you feel if you invest your money at the beginning and end up being a victim of spam, right?! I would feel horrible, nevertheless Betterment doesn’t require minimum balance which is great for people who are still sceptics about online investing like me.
Another thing that personally made me choose Betterment above all those online investing platforms is that unlike most of them, Betterment is quite simple and easy to use. Not everyone is an expert in investing or economy, in general, not everyone would be able to understand how it all works if it is made in such a way that only economy experts could understand it, right? Well, lucky us, Betterment is quite easy to understand and use even for us, the ordinary people who are just trying to learn a smarter way to manage their own money.
Higher returns with lower risk are also a motivation to become Betterment user without thinking twice, or at least, it was for me. I like the fact that there is even a performance analysis tool which helps the users to learn how high should be their expected returns according to their asset allocation- again, not every online investing could offer this feature!
And last, but not least in this Betterment review is transaction in exact dollar amounts. The great thing about is that that way you won’t have to buy whole shares which will save your time, money and effort.
SO THE QUESTION NOW IS HOW TO JOIN BETTERMENT?
Okay, so the first thing that you should know before trying to create your account on this platform is that Betterment right now only operates in the United States and besides residents within the United States including Hawaii, Alaska and Puerto Rico residents it doesn’t accept users which are not located in some of the mentioned locations
NOTE: Residents in Guam and the Virgin Islands are also not supported yet.
If you are already a resident of some of the locations mentioned above then you could go ahead and sign up to Betterment. When signing up you will need to enter three things which are:
- your age
- retirement status
- annual income
After that you will get to choose between
- general investing
- safety net
which actually are part their goals list. After that you will be taken to their drop-down box where you will receive all the necessary information about the strategy that Betterment will use in order to achieve the goal. Of course, the users also have the option to come up with their own their own personal goal and then the company will provide them an ultimate plan about how they are going to achieve the goal.
That goal would be achieve through some of their 4 types of accounts: Taxable, Traditional IRA, Roth IRA and SEP IRA which could be chosen by the user. After completing all those requirements your journey with Betterment will start.
Oh and I forgot to mention! In case you have multiple accounts on this platform such as: personal account, a trust account (authorized to invest in securities by a U.S domestic trust) or joint account (joint accounts of two people who try to achieve a goal together), you could still set up a default account which will be the one to see first right after you log in.
Pretty simple, right?!