BETTERMENT REVIEW 📈 Should You Use Robo-Investors? #Best Education Page #Online Earning

- How's it going today guys?

I hope you're having a fantastic day.

In this video here we're going

to be doing a full in-depth review

of the investme
nt account Betterment.

I've had a lot of people reaching out

to me asking about these robo-advisors

whether or not you should be investing in them

or be cautious about them.

And I'm going to be giving you guys my full opinion

on the investing account Betterment.

If you guys have any other accounts out there

that you want me to do a review of,

possibly Wealthfront down the road,

some of the robo-advisors

or different investing mechanisms altogether,

drop me a comment down below and I will be sure

to include them in a future video.

Now I do have a link down in the description below

where you can join Betterment

and start an account with them.

This is an affiliate link.

You do not have to use it

but understand that if you do use it,

it does help me out, it helps support my channel here

and allows me to make more videos like this.

So that link is down in the description below,

if you wish to use it.

But let's go ahead and get into this video now

and talk more about Betterment

and hopefully this will help you decide

whether or not this investing account is for you.

So to explain it very simply,

Betterment is an automated investing platform.

It is 100% passive so what's going to happen is

when you open an account with Betterment,

they're going to basically give you a risk tolerance survey

to understand whether you have a large appetite for risk

or you're more on the conservative side of things.

And they're also going to look at how old you are,

what it is you're saving for,

and based on that they're going

to figure out your asset allocation

or what investments you should be putting your money into,

and they're going to figure all this out

for you via an algorithm.

Now traditionally this is what a financial adviser would do,

they would take a look at your financial landscape

and they would figure out a collection of assets

that would fit your specific needs.

But what these robo-advisors figured out is

that they could do a pretty damn good job doing this

with robots and doing this with computers,

taking that whole human element out of it,

and passing on a huge savings advantage

to the customer at the end.

So traditionally financial advisors are reserved

for wealthier people,

you have to have a certain amount of money just

to sit in the office of a financial adviser

and have them be willing to manage your money

or if this is a fee-only financial advisor,

you're gonna be shelling out a couple hundred bucks

for that consultation.

Betterment has made it so anybody can go out there,

invest their money and get some insight

onto where they should be putting their money,

using that algorithm with a $0 account minimum.

If you go into a traditional financial advisor's office

and tell them you have a hundred dollars to invest,

they're gonna laugh you out of the office.

It's just not worth their time to sit down with you.

But if you go open an account with Betterment

and you're using their robo-advisory service,

they'll be able to help you manage that money,

even though it's not a substantial amount of money,

because it's all automated

with their algorithms and technology.

So with Betterment you have the advantage

of getting that expertise and that insight

on what you should be doing with your money

without shelling out a lot of money for a financial adviser

and the barriers to entry are significantly lower

where you don't have to have tens of thousands of dollars

to start investing with a traditional financial advisor.

So that is essentially the niche

that these robo-advisors are operating in,

is they're trying to serve the younger customers

or people who don't necessarily have tens

of thousands of dollars to invest.

Or they're looking to serve people who want

to cut down on their fees

and they're tired of shelling out high commission costs

to their in-person financial advisor.

Now, I should also mention I broke this review up

into eight different parts

so if you guys wanna skip ahead,

I'm going to include a pinned comment down below

with the timestamps, so if you want to skip right ahead

to a certain section of this review,

feel free to do that.

That is down as a pinned comment below.

So second of all let's go ahead

and talk about what are the investments,

what are you investing in

when you put your money in a Betterment account.

You're going to be investing in ETFs

or exchange-traded funds.

And an ETF, very simply tracks a collection

or a pool of different assets.

So there's ETFs out there that track the S&P 500,

the 500 largest companies in the United States.

And if you invested in an ETF,

it would be a fund that replicated the performance

of the S&P 500 as closely as possible.

Now the reason why people invest in ETFs is

because most people understand,

it is almost impossible to beat the market

on a consistent basis.

So they say, why not just hold the entire market?

Invest in the entire stock market

rather than trying to pick the winners,

and this is a great strategy that works for people

that don't want to be actively picking their investments.

They just wanna put their money to work,

earn a rate of return and not have

to worry about their money, or picking stocks,

or changing their money around or reallocating.

Now Betterment is going to be putting you

into both stock ETFs and bond ETFs.

And I'm gonna give you two examples

of funds that they work with.

First of all there's the US Total Stock Market exposure,

VTI, it is a Vanguard ETF

and Vanguard has some wonderful financial products

and they're known for having a very low expense ratio.

And then second of all for bonds,

there is the US Municipal Bond fund, MUB,

and that is an ICE shares ETF.

So they work with these different ETFs out there

through different companies

but what they are offering to you is

that management service for a low expense ratio.

For most people it's 0.25% but we're gonna get into that

later on when we talk about the fee structure of Betterment.

Okay moving on here, number three,

what are the requirements to open a Betterment account?

Very simple you have to be 18 years or older,

it is only for US residents

and if you want to open a Betterment Digital account

which is their basic account,

it is a zero $0 minimum account balance.

And if you're interested in Betterment Premium,

that is their higher end account offering

where you have unlimited access to a financial advisor,

you have to have at least $100,000 invested in the account.

So that is for the larger investors

who want to have someone they can call up

on the phone on a regular basis

and talk to about their investments.

But for most people, they're going

to use Betterment Digital

and there is a $0 minimum account balance

to get started with that.

Okay moving on here, number four,

what are the investment plans that Betterment offers?

First of all we have Betterment Digital,

that is their traditional service, it's at 0.25% annual fee,

and that is a fully automated service

where you're not gonna be talking to anyone in person.

They're going to use their technology and their algorithms

to figure out what assets you should be invested in.

Now if you're somebody who wants

to have someone you can call up on the phone,

you would be interested in Betterment Premium.

They have a 0.4% annual fee

and you need to have $100,000 minimum in the account

to have Betterment Premium available to you.

But with Betterment Premium,

you get unlimited access to a team

of certified financial planners

and the good thing about that is

that these people are a fiduciary,

which means they are not earning a commission

on the products they are recommending to you.

They're going to be giving you unbiased advice

because there is no sales commission involved.

So if you are interested in that service,

you have to have a $100,000 minimum in that account

and you're going to pay that 0.4% annual fee

as opposed to the 0.25% with Betterment Digital.

Moving on now, what are the pros of investing in Betterment?

First of all, diversification.

There are 12 different asset classes

that they will invest you in based on their ETFs

and what they want to put you in based on your goals,

your objectives, and your timeline for investing.

But there are 12 different asset classes

they could potentially put you in,

so you can be diversified across many different assets.

Second of all, Betterment does offer retirement accounts

so if you want to take advantage of the tax savings

of being involved in a retirement account,

you can do that right through Betterment

with accounts like the traditional IRA,

the Roth IRA, they offer SEPs,

and they offer some different retirement accounts as well

that you might be interested in.

The third pro for Betterment is

that this is 100% passive investing.

You put your money in there

and you forget that it's even in there.

Maybe you're going to continue

to contribute every single month or every single year

and they're gonna take that money that you put in,

they're gonna rebalance your portfolio,

and down the road as you get closer

to your goal or your objective,

they're going to change that blend

of assets to suit your needs.

But you don't have to do anything,

you don't have to do any rebalancing,

you don't even have to think

about your investments with Betterment

because it is 100% passive.

But again that is where some people might say this is a con

because they have no involvement in their investments

and they wanna have a little bit more say

in what they are doing with their money.

So for some people that is a pro

and for others that might be a con,

almost too passive if you will.

The fourth pro for investing in Betterment,

is that they have automated rebalancing

as you continue to add money in that set intervals

and they also have automated contributions.

So if you want to invest $100 a week,

you can set it up so Betterment goes in,

deducts that money from your account,

moves it to your Betterment account,

and then get you invested,

that way you can automate your savings and your investing.

And then the fifth pro for investing in Betterment,

is that they have daily tax loss harvesting.

If you're a beginner to investing in the stock market,

this is not going to make sense to you,

but basically what they're doing

is they are selling certain investments at a loss

and buying back similar investments,

that way they can take advantage

of recognizing a capital loss

and cut down on your exposure to capital gains.

You really don't need to worry about this

unless you're an investing junkie,

but understand it's going to save you when it comes

to the taxes that you are paying on your investments.

Okay moving on now,

what are the cons of investing in Betterment?

First of all, the main one is the fact

that this is just too passive for some people,

they wanna have more say in what they are investing in.

Now Betterment does have a flexible portfolio option

where you can decide what funds you're investing in

but you have to have a minimum of $100,000 in your account

to have that option available to you,

and for most people that is just out of reach,

most people don't have $100,000 to be investing.

And so if you are looking to have more say

in what you're investing in,

you're going to want to be exploring different options.

And if you wanna pick individual stocks,

you are not going to be able to do that

with your Betterment account.

The second con is that there are no REITs,

real estate investment trusts or commodities.

Now in the modeling that Betterment has done,

they have said that these asset classes

do not add value to your account,

but some people like to have exposure

to REITs and commodities.

You do not have that option with Betterment,

you are only investing in stock ETFs and bond ETFs.

And then the third con,

the only other con I have here for Betterment,

is the fact that you are 100% invested,

so there's no cash held within that account.

So if you are looking to have a separate savings account

or an emergency fund, that is going to have

to stay outside of your Betterment account.

Any money you put into the is going to be fully invested,

100% invested at all times.

But the good thing is, if you want to redeem

at any point in time, there are no penalties,

you can take your money out at any time,

and you should have no problems with redemption

because these are publicly traded ETFs on a major exchange

so there's always going to be a buyer on the other end

when you're looking to sell.

So moving on, who would I recommend Betterment to?

First of all, I would say long-term investors.

Betterment is a long-term investment.

This is not something where you're saying,

oh, I'm gonna be buying a car in six months,

I don't wanna leave my money in my checking account,

I'll put it in Betterment.

That is not what you wanna do.

If you're investing this money,

you should be ready to put it in there

for five or more years

because this is a long-term approach to investing.

Betterment is for passive investors.

This is for people who do not want

to worry about rebalancing their portfolio,

or asset allocations in the first place,

or tax loss harvesting, things like that.

They want someone to do it all for them,

maybe they can't afford a financial advisor,

or they don't want to pay those fees,

so they're gonna take advantage

of having a robo-advisor instead.

Betterment is great for beginner investors,

it's great for intermediate investors,

and it's great for people at any age group.

You could be 18 years old or you could be 65 years old,

and because when you open an account,

you tell them what your goals are,

you tell them what you're saving for,

you tell them how old you are,

they're going to give you an asset collection

based on your age group and your goals.

So a young person is gonna have a more aggressive portfolio

and older person is going

to have a more conservative portfolio.

So any age group, Betterment is a suitable choice.

And then finally, who is Betterment not for?

It is not for short-term investors,

it is not for traders,

it's not for people who want to hold individual stocks,

you cannot do that within your Betterment account.

So how I say this, is it's not for the DIY investor

or the active investor.

If you wanna be active in your selection of funds,

or you want to buy individual stocks,

Betterment is not the account for you.

But I do want to run one idea by you,

it's something that might be interesting.

What I know some people do,

is they have their Betterment account

as the core of their investments.

That's gonna be their more conservative,

long-term investments

and then they have a slush account

where they have an individual brokerage account

where they're buying the individual stocks,

and they're being more active with their investments.

So some people are taking higher risk investments

by picking individual stocks,

they're taking some of the profits and moving it over

to a more conservative long-term investing approach,

and so that again is a great strategy

that you might want to follow.

But anyways guys that's gonna wrap up this video.

Thank you so much for watching.

Again, like I said, if you are interested

in signing up for Betterment,

there is a link down in the description below.

This is an affiliate link and you do not have to use it

but it certainly does help me out

and help to support my channel.

But thank you guys so much for watching.

I will see you in the next video,

and I hope you have a great rest of your day.

If you are interested in learning more

about investing in the stock market,

I've created a free course just for you.

The link is in the description below.

Here are a few other videos you might enjoy as well.

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