Easy Investing With Betterment.

Photo Credit: SalFalko

Betterment is an investment platform that all newcomers to the field of investing in stock markets can feel safe about. You may be worried about the type of trading that is being done, whether your investment is being made through a broker or not and many other things that may not be totally clear to you.

There are many pros and cons about making investments with the help of Betterment which you should keep in mind before committing yourself.

Pros

• The platform helps you to invest in both bonds and stocks and the software developed by the company calculates the percentage of rewards and risk so that you get the maximum amount of returns from your investments. The calculation is done automatically by the software and decisions to minimize the risk are taken in a split second.
• The money in your account is divided into smaller portions, which are connected, to different goals like retirement benefits, money for buying property, education for your children and many more. You are also able to set up an IRA account or a traditional account for making investments. All these various goals to maximize your returns on your investments.
• The platform allocates the assets which can help you to achieve your goal. It recommends how money is to be paid like contributions done monthly or lump sum deposits. All this helps you if you are too busy to spare any time for taking these decisions.
• The money you invest is spread out on hundreds of companies so that the risk involved by choosing one company is minimal.
• The platform does not charge any fees depending on per trade basis, which sometimes becomes very difficult to calculate. The fees vary from 0.15% to 0.35% depending on your account type and the amount of money you have in the account.

Cons

• The cost of automation has to be considered when you invest with Betterment. The returns from the investments may be high but so are the costs related to automation which is used to get higher returns with as low a risk as possible.
• Seasoned investors already know what they are doing. For seasoned investors and brokers Betterment is not a platform to use because they can easily save on the automation costs.

Operation

The process used by the Betterment platform is simple and easy. The first thing that needs to be done is to set up an account with Betterment. The account is free which has to be linked to your checking account. You can set up a monthly withdrawal scheme so that money gets automatically transferred to your Betterment account thus saving you from remembering the dates when your monthly contributions are to be made. Betterment allows you to invest in either the stocks, in bonds, depending upon which basket you want to invest in. By diversifying the baskets containing either the bonds or the stocks Betterment helps you to minimize the chances of incurring a loss.

Investment Options

Investments are diversified into stock EFTs, which are 6 in number. The first 25% of your investment will be made on “Vanguard Total Stock Market”, the second 25% on “iShares S-P 500 Value Index”, the third 25% on “Vanguard Europe Pacific”, the next 10% on “Vanguard Emerging Markets”, the next 8% on “iShares Russell Midcap Value Index” and the last 7% on “iShares Russell 2000 Value Index”. In the case of bonds, it is split 50/50 between “iShares Barclays TIPS Bond Fund” and “iShares Barclays 1-3 Year Treasury Bond Fund”.