Lets discuss Betterment and their 2.69% savings account, and whether or not this could be worth it – enjoy! Add me on Instagram: GPStephan

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Betterment is what’s called a “Robo Advisor,” which asks you questions based on your savings, earnings, and investing goals…and then they’ll build you a portfolio tailored to your situation. This is perfect for beginners, who are often overwhelmed by all the investment options out there, and just want a simple, easy approach to making their money make more money.

In terms of WHAT Betterment invests in, it’s pretty much a broad selection of index funds through Vanguard, along with a few other ETFs.

When it comes to this, Betterment charges you a 0.25% Management Fee on your money. And I’m personally NOT a fan of 0.25% management fees. This fee is over 6x HIGHER than what Vanguard charges for their VTI fund.

Now, I will admit…Betterment has ONE advantage over Vanguard, because they can automatically do what’s called Tax Loss Harvesting. In a PERFECT scenario, the tax benefits from tax loss harvesting COULD pay for their 0.25% management fee and make it worth it.

But in terms of their savings account:
There are zero fees and zero minimum balances. Money in this account is also FDIC insured up to $1 million dollars, which they’re able to do by spreading your money throughout several partner banks.

However, in order to unlock the 2.69% interest rate, you’ll need to sign up to be on their new checking account waitlist. But for that 2.69% interest, their fine print states this is only a promotional offer until December 31, 2019. That means, pretty much by the time I post this video, you can only get about 5 months worth of this interest rate…before there’s a chance they’ll discontinue it and lower their payout.

Now of course, they make it clear this interest rate is not guaranteed and may change at any time…and in their defense, Wealthfront can chose to lower it’s 2.57% at any time, as could any other bank…so if you DO decide to go to with Betterment and their 2.69% account, just understand that it might not be permanent, and to manage your expectations.

I see this as a decent move from Betterment to increase attention to their platform, and if people move their money over to a savings accounts, they’re THAT much more likely to then invest with Betterment. And then from that, Betterment is likely to receive a .25% management fee to help offset their cost.

Really, at the end of the day, this is just about customer acquisition – and in order to gain a stronger audience, they MUST go above and beyond in order to stand out, which they’ve done with their 2.69% savings account. But just remember, in my own opinion, paying a .25% management fee is way too high compared to MANY of the other alternatives out there…and the 2.69% interest rate IS absolutely incredible, but it’s not guaranteed to last…and that small difference is something VERY important that everyone should understand, just to be able to manage your expectations of what to expect.

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com…(read more)

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The #1 Problem with Betterment Investing: The Lack of Personalization

Betterment, the popular robo-advisor platform, has gained considerable attention and popularity among investors in recent years. Offering low-cost, automated investment solutions, Betterment has positioned itself as a user-friendly option for individuals seeking to grow their wealth without the stress of managing their investments actively. However, there is one prevailing issue with Betterment investing: the lack of personalization.

One of the primary advantages of utilizing a robo-advisor like Betterment is the convenience it provides. The platform uses algorithms and data-driven strategies to automate investment decisions, taking into consideration factors such as risk tolerance, time horizon, and financial goals. These predetermined investment models work well for many users, especially those who are new to investing or prefer a hands-off approach.

However, this one-size-fits-all approach presents limitations when it comes to personalization. Investing is a highly individualized activity, and each person’s financial circumstances, goals, and risk tolerance differ significantly. What works for one investor may not be suitable for another. Unfortunately, Betterment’s algorithms may not account for these unique factors, leading to a less-than-optimal investment strategy.

The lack of personalization can become particularly evident when users have specific investment preferences or ethical considerations. Betterment primarily offers ETFs (exchange-traded funds) as investment options, which may not align with investors’ values or interests. For instance, if an investor prioritizes socially responsible investing or has a preference for certain industries or companies, Betterment’s limited investment choices may not fully satisfy their preferences.

Another drawback tied to the lack of personalization is the absence of a human touch. While Betterment provides access to a team of certified financial planners (CFPs) for an additional fee, the automated nature of the platform means that investors do not have a dedicated financial advisor to provide personalized advice and guidance. This can be a significant drawback, especially for novice investors who may benefit from expert insights and tailored recommendations to navigate the complexities of the market.

Although Betterment has introduced features such as goal-based investing and tax-loss harvesting to enhance the user experience, these add-ons do not entirely address the core issue of personalization. While these features offer some degree of customization, they are still based on preset models and may not account for unique circumstances or goals.

To address this problem, Betterment could consider implementing more robust tools and options for customization. Providing a wider range of investment choices, including mutual funds or individual stock selection, would allow users to align their portfolios with their personal values and investment preferences. Additionally, enhancing the level of human interaction, either through more accessible access to certified financial planners or the integration of live customer support, would provide users with much-needed personalized guidance tailor-made to their unique financial situations.

In conclusion, while Betterment offers an attractive and accessible investing solution for many individuals, the platform’s lack of personalization remains its primary drawback. Being an individual-driven endeavor, investing requires tailored strategies that consider one’s goals, risk tolerance, and personal values. Acknowledging and addressing this limitation would allow Betterment to offer a more comprehensive and satisfactory investing experience, appealing to a wider range of investors with distinct needs and preferences.