Betterment fees lowered
Lowered isn’t the word, slashed is more like it. Originally their fees started at .9% for beginning investors – now that fee is only .35%!
Here’s the entire fee structure:
Fees are prorated across the entire year and charged at the end of each calendar quarter, meaning every 3 months Betterment charges 0.0375% to 0.0875% (.15 divided by 4 and .35 divided by 4 respectively) based on your average balance for the period. If you close your account and withdraw all your money before the end of a quarter you will be charged a prorated fee for only the days your money was in the account.
As an example, if you invested $10,000 today and earned a flat 10% all year you will pay just $27.50 in fees and have a final fund balance of $10,972.50 a year later. Would you consider the $27.50 annual expense a worthwhile cost for a fully managed, diversified, and secure 9.75% return on your money? Only you can answer that question.
If you cannot afford to invest $10,000 and do not automatically fund your account with at least $100 each month the 0.35% annual fee is replaced by a $3 monthly fee. To easily avoid that simply set up an automatic deposit of at least $100 each month. The automatic deposit is a no-brainer since you’re committed to growing your investments anyway, and there’s no point to investing if you don’t fund and grow the investments.
If this sounds like an investment solution you’d be happy with you can read more about Betterment and open an account if it suits you.
Did I mention they give you a $25 bonus for opening an account with at least $250! The bonus just about nullifies that annual fee used in the above example.
It’s a great deal for hands off investing.
Betterment now offers Traditional and Roth IRAs
An IRA is a savings vehicle for retirement that offers significant tax benefits. The Betterment IRA has all the benefits of a regular Betterment account – diversification, re-balancing, automatic deposit, and simplicity – plus the tax advantages that come with an IRA.
They offer both a Traditional and a Roth IRA option and make rolling over your 401k effortless.
More international diversification
In addition to lowering fees and offering tax-sheltered IRAs, Betterment also increased their international fund offerings.
This is their updated stock market fund basket (new international ETF funds bolded):
- 25% VTI: Vanguard Total Stock Market
- 25% IVE: iShares S&P 500 Value Index
- 25% VEA: Vanguard Europe Pacific
- 10% VWO: Vanguard Emerging Markets
- 8% IWS: iShares Russell Midcap Value Index
- 7% IWN: iShares Russell 2000 Value Index
And here is their bond fund basket:
- 50% TIP: iShares Barclays TIPS Bond Fund
- 50% SHY: iShares Barclays 1-3 Year Treasury Bond Fund
If you want, you can read more about their investment diversification on their website.
Betterment now offers lower fees, a more diversified portfolio, and tax-sheltered IRA accounts – what’s not to love?
If you’re looking for diversified, low-cost, hands off investing that works then Betterment may be perfect for you – especially now that their fees are so low and they offer tax-advantaged IRA options. It’s the perfect one-stop-shop for a hands of investor.
(Don’t forget about the $25 bonus for new accounts.)