August 18, 2016, 8:27 pm

3 Reasons to Start an IRA With Betterment

by: The Financial Blogger    Category: Investing Ideas
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Betterment is a novel new investment platform that takes the guesswork out of investing. They’re not the new kids on the block anymore, having been around since 2008, but they’re still new to a lot of investors. If you’re hoping to learn more about Betterment, here are three reasons that you might want to consider the service. Betterment offers a whole lot of value to users, especially users who are new to investment. We’ll examine some of their most important value propositions below.

 

  • Betterment’s Automated Diversification. Diversification is central to the strategy of any good investor. It essentially prevents investors from putting all of their eggs in one basket. When a single stock or an entire sector goes south, being invested in entire markets makes these losses a lot easier to compensate for. Betterment achieves automatic portfolio diversification through their new robo-advising methods. They put investors’ portfolio contributions into several pre-chosen ETFs. These ETFs represent index funds from US markets, international markets, developing markets, and more. The user also has a choice of how much of their portfolio to place in stable bonds, which are also automatically diversified.

 

  • Betterment’s Great Prices. Betterment charges their active customers only 0.35%, at most. People who deposit larger balances could pay only 0.25% of even 0.15% annually. That’s much less money than one would ever pay for a traditional investment advisor. Betterment is also likely to outperform these traditional advisors, many of whom don’t even beat the index every year. For such high prices, one would expect traditional managers to make the investor a lot more money, but they generally don’t. Betterment’s model is often described as “set it and forget it”, and there’s good reason why. By starting a simply account and making regular contributions, a user can set the stage for reliable returns in the long run, with little money paid and little daily oversight required.

 

  • Betterment Makes it Easy to Follow Goals. Lots of Betterment users use the service to prepare for distant retirement. Betterment makes this easy by showing you just how much money you can expect to make in the time between now and your planned retirement date. You’ll see how your funds can be expected to grow in strong investing climates, as well as weak ones. You’ll see how much you need to contribute to comfortably achieve your goals. The platform brings a lot of great visualization tools to the party, one of the most difficult aspects of understanding our portfolios.

 

Betterment offers a lot more value to users, especially people who have never invested before. They make it easy to roll over accounts like IRAs, they offer free tax-loss harvesting, and they even offer free service for new users. Their algorithms are powerful, giving reliable returns to users based on insights gleaned from millions of data points, not the hunches of a few experts. The market is too diverse and wild for anyone to legitimately claim expertise over it. Instead, the automated diversification methods built standard into Betterment are enough to do better than investors of yesterday.

 

 

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