Why I Love Investing with Betterment
I have what may be an unhealthy love for investing with Betterment, an online robo-investment adviser. I check the Betterment app all the time to look at the modest number grow a little each day, even though it’s not wise to look at investments frequently (they fluctuate like crazy). I can’t help it; their easy-to-use app allows me to check on my account in seconds.
If this is starting to sound like an ad, I assure you: it’s not.
I’m no financial expert, nor a serious investor. Of all the career paths I explored, personal finance was never on my radar as even a remote interest. I got a bit more acquainted with the different ways to save while I was a bank teller after college, which is why I sought out an easy way to jumpstart my savings. Betterment advertises like crazy on my favorite podcasts, so I didn’t have to look very far for a solution.
If you’re curious as to why Betterment is a great place to start with investing, here are the reasons I love it:
1. It’s Accessible
First, I love that they have no minimum balance. I was able to start the account with 50 bucks, which is all I felt comfortable putting in at first. I appreciate how accessible this makes them. If you can scrape together a bit of money, you’re in.
I also appreciate how simple Betterment has made investing for people like me, first-timers who don’t really know what they’re doing. The Betterment interface makes it insanely easy to set up an account and understand exactly what you’re getting into. They’re up front about their fees (more on fees later) and use plain language to help you determine what to do.
2. It’s Separate From My Checking Account
I also love that, for once, the bulk of my savings is away from my checking account. I was guilty of volleying money between my checking and savings. I’d have a moment of optimism when I thought it could stay there, then I’d shamefully transfer it back upon remembering the student loan payment coming out the next week. Least fun do-si-do of all time.
Using Betterment for my savings fixes both of sides of this issue. I don’t put money in if I’m not absolutely sure that I’ll be fine without it. Once it’s in there, I won’t transfer it back since it takes a few days to process.
3. Help Saving for Different Time Horizons
I also love how helpful Betterment’s system is for both long and short-term savings goals. I was able to set up separate accounts: a “we’ll have a house someday” savings account for our eventual down payment, a safety net for emergencies, and retirement. These all have different very timelines, of course.
Betterment asked a few simple questions to determine how much money I want to have saved for each goal by a certain future year. Then, they work backwards to determine exactly how much I’d need to put in the accounts each month to reach the different goals. With any luck, you’ll be able to put that much away. If you’re like me, you’ll have an orange “off-track” marker on your account to remind you that it’s not looking good. But hey, you’re still saving!
4. Their Fees Aren’t Too Painful
Fees are a reality for any investment account, but Betterment’s fees are some of the lowest in the biz. This is in part because algorithms are doing the work that a person does at other firms. There are pluses and minuses to this, of course; you lose out on expert experience (which may not be that valuable, anyway), but you don’t end up paying a ton just to have the account. This is especially important if you don’t have much to invest in the first place.
Fees are a big part of how people determine where to invest their money, as fees can impact your returns significantly over the long term. It’s obviously not the largest factor, though, so ya gotta do what’s best for you, boo boo.
5. Automatic Deposit Keeps It Simple
I’ve always wished to be one of those disciplined people who can put a little bit into savings every month, but somehow that never worked out. As I said before, I’d dump a whole bunch in and then shamefully take some back out later. If I was lucky, I’d take out less than I had put in. Voilà, savings.
A more promising approach is to choose a comfortable amount and deposit it regularly. Betterment slides into my checking account two times per month to grab what I agreed to deposit.
6. It Costs Nothing to Get Your Money Back
They don’t charge fees to transfer your money or close your account entirely. For taxable accounts, they can transfer it to a new institution for you no problem. I feel like this should always be a thing, but unfortunately it’s not.
7. I Trust That They Care
Between their slick user interface and how simple they make investing, this company has my trust. I know those aren’t real reasons to trust a company, but branding and solid design do help.
Let’s talk real reasons. For one, they have to act in their clients’ best interests. The fiduciary rule finalized by the Department of Labor in 2016 means that financial institutions have to do what’s best for investors retirement accounts. Additionally, Betterment was in support of that rule while other financial entities fought against it. If that doesn’t build trust, I don’t know what does.
I can’t speak to how I like Betterment over the long-term, but I can say that Betterment is amazing for newbies who are at the beginning of their savings journey.