A while back I wrote about one of my favorite new investing sites in this comprehensive Betterment.com review. Betterment is an investing site that looks to make investing easier and more accessible for everyone. Betterment says their site is:
“A personal investment account that's simpler, smarter, and better. Everything you need. Nothing you don't.“
That's exactly what their site is – a simpler, smarter and better way to invest. I loved pretty much everything about the site when i reviewed it. The fact that you can set up automatic deposits and invest regularly in good low cost ETFs, all while having your portfolio asset allocations regularly balanced for you, without your intervention. You just choose your allocation between stocks and bonds and let their service do the rest. Easy investing anyone can understand.
The one thing that I wasn't super happy about were the annual fees that they were charging. Today, however, Betterment announced that they would be lowering their fees across the board. While I was using the site before, with the new lower fees I can wholeheartedly recommend investing with Betterment for just about everyone – even more so than in the past.
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Much Lower Fees For All Betterment Users
Ok, so what are the new lower fees, and what were the fees in the past?
In the past if you had anywhere from $0-25,000 invested with the service you would pay an annual management fee of 0.9%. $25,000-100,000 the cost would be 0.7%. $100,000-500,000 your fees go to 0.5%. With a balance of $500,000 or more, the fee was 0.3%. So the fees ranged anywhere from 0.3%-0.9%. Most of my readers are were most likely falling into the 0.9% annual fee bucket – and for me that wasn't a fee structure that made a ton of sense for most people.
Betterment was good about seeking out feedback from their users and from personal finance bloggers, and today they announced a couple of big pieces of news. The first and most important piece of news was that they were dropping their fees across the board.
As you can see from the chart above their fees are dropping, and the amounts you need to invest to get the lower fees has dropped.
- No minimum: You need to deposit $100/month and you'll get a 0.35% annual fee.
- No minimum, no deposit: If you can't commit to $100/month, you'll be upgraded to the “Better” plan with next day deposits, and be charged $3/month.
- $10,000 minimum: You'll get a 0.25% annual fee and next day deposits. No required monthly deposit.
- $100,000 minimum: You'll get a 0.15% annual fee, next day deposits and if you want, a custom portfolio. No required monthly deposit.
So the fees went from where most people were paying a 0.9% fee, to a situation where most people are going to be paying anywhere from 0.25%-0.35%. That's quite a drastic drop in fees, and it will save people a lot of money! I think it makes Betterment extremely attractive to newer and seasoned investors alike.
More International Exposure
Another change that happened a little while ago was that Betterment started including some international ETF funds in their investment mix. If you look below you'll see what Betterment currently invests in, with the newer international ETFs in bold.
- 25% Vanguard Total Stock Market ETF (VTI)
- 25% iShares S&P 500 Value Index ETF (IVE)
- 25% Vanguard Europe Pacific (VEA)
- 10% Vanguard Emerging Markets ETF (VWO)
- 8% iShares Russell Midcap Value Index ETF (IWS)
- 7% iShares Russell 2000 Value Index ETF (IWN)
I know a lot of folks were clamoring for them to include more international stocks in the mix, so I think it's great that they've diversified the holdings in that way.
For Treasury bonds, you get
New Roth And Traditional IRA Options For All Users
Finally, Betterment announced today that they're opening up tax advantaged IRA accounts for all users now on their site. Previously this option was only available for current customers.
You can now open up a traditional IRA or a Roth IRA, and if you're leaving an old company, you can perform a 401k rollover and use Betterment as your IRA custodian.
I loved Betterment before and signed up to use them, despite that I wasn't 100% happy about their costs/fees. Now that they've lowered their fees drastically and made them super competitive, I really don't have any major reservations about their service anymore. I can wholeheartedly recommend Betterment now, and I would recommend them to friends, family and anyone else as a great place to invest.
Betterment also announced today that there is a free 30 day trial period when you sign up, so there really is no reason to not give it a shot. Plus if you make a deposit in your account right off the bat you may be eligible for their $25 account bonus! Check it out below via the link: