Betterment.com Review Update: $25 Bonus, Asset Allocation, Fees
The hardest part of investing is taking that first step. Most people never start investing because they lack the knowledge of where to invest. Today we have so many different investment companies competing for our money. Their advertising can sometimes be confusing and contradictory. Even if you do manage to sign up for an account then you are faced with the choice of what to invest in. All these concerns have been addressed and solved by Betterment.com.
Application
The application process allows you to get started entirely online. They say you can the process only takes 60 seconds. It takes a little longer but couldn’t be easier. Enter your personal information, they verify it through information on your credit report. You then enter your bank information so they can link it to set up quick deposit and withdrawls.
Asset Allocation
After answering a few simple questions Betterment.com offers a asset allocation suggestion based on my answers, goals and age. They gave me an allocation of 50% stocks/50% bonds.
Their current breakdown of stocks and bond portions are:
Stock Portion Only
- 25% Vanguard Total Stock Market (VTI)
- 25% iShares S&P 500 Value (IVE)
- 25% Vanguard Europe Pacific (VEA)
- 10% Vanguard Emerging Markets (VWO)
- 8% iShares Russell Midcap Value (IWS)
- 7% iShares Russell 2000 Value (IWN)
Bond Portion Only
- 50% iShares Barclays TIPS Bond ETF (TIP)
- 50% iShares Lehman 1-3 Year Treasury Bond ETF (SHY)
I like it that they are investing with passive index ETFs that are very low in fees. The weighted expense ratio of all the stock ETFs together is 0.16%. The weighted expense ratio of all the bond ETFs together is 0.18%.
What’s all this going to cost me? (fees)
When I last reviewed Betterment.com they had a 0.9% annual fee for all accounts with balances up to $25,000. There were no monthly fees, no maintenance fees, no minimum requirements, and no commission charged for any trades. In March, their fee schedule has been changed to lower fees for most users, but also raised some fees for certain smaller accounts.
Here is the new fee schedule:
The $25 bonus offer for opening a new account, with a $250 initial deposit is a sweet way to try the process out.
Category: Investing