About a year and a half ago I wrote a review of Betterment, a new investing startup company I had encountered through their personal finance community outreach (Disclosure: As a customer and blogger, I have written several articles for the Betterment blog).
Betterment, which bills itself as “The simple way to invest” was a refreshing new take on low cost investing. Basically you just open an account, fund it and then choose how you're going to invest within the account.
Unlike accounts with traditional online brokerages or mutual fund companies, you don't have a lot of decisions to make about what you're going to invest in. You just decide what percentage you want to have in stocks and how much in bonds, and then Betterment will do all the behind the scenes work for you.
When they first launched I thought Betterment was a good idea, but I thought the fees they charged may have been on the high end for many people.
A short time later they announced that they were lowering their fees across the board, to the point where they are now a good option for most investors. Can you find a more affordable way to invest with index funds/etc? Sure. But if you want a company to do all the dirty work for you, and regularly re-allocate your funds, Betterment is a great option to consider.
This week Betterment announced that they were making some changes to their site. Among the changes were improvements to site performance and improved, personalized advice to help you stay on track for your investing goals. Here's what they had to say on the Betterment blog:
Today we’re excited to announce enhanced advice to better help our customers reach their life goals. The feature lets users know if they are on or off track to achieving their goals and makes a number of recommendations to improve the likelihood of success. The advice can be customized and executed with the click of a mouse.
When we think of our investments, what we really want to know is “am I on track for the life I lead and the future?”. We shouldn’t be concerned with market movements or the minutiae of our portfolio. With Betterment’s enhanced advice you will know the answer to this question, fix any issues in two clicks, and get back to living life. We hope you like it!
Let's take a look.
Summary And Advice Page Update
When you first login to your Betterment account, the first thing you're going to see is a summary of your accounts. In my account, for example, I have two accounts setup. I have a regular taxable investment account, and then I have a tax advantaged Roth IRA account. Each account summary line item will show how much you have in the account, what your allocation is (stocks vs. bonds), and what your returns are over time.
After the update this week we now have a new piece of information on the summary. Next to each account for which you have an investing goal setup, it will now tell you whether you are on track to meet that goal or not. If you mouse over the information icon it will pop open a window to tell you just how off track of your goal you are.
To get more details about how far off you are of your goal you can just click on “off track” or “on track” links and it will take you to the advice page.
On the advice page you'll get more details about just how far off of your goal you are. It will give you projections of how much you will have in your account given the time horizon you've set up in your goal, the investments you have chosen, historical performance, as well as the amount you were hoping to have saved.
Once you see just how far off your are of your goal, Betterment will give you advice on how to get back on track. In most cases that's going to mean adjusting how much your monthly deposits are, changing your stock/bond allocations, increasing retirement age or making a big one time deposit to increase your savings and give you a better chance of seeing long term gains.
When you're viewing your personalized advice you can actually take action on the spot to get back on track. You can increase your monthly auto deposits, make a one time deposit, or even adjust your time horizon or allocation to be more aggressive.
Like with everything Betterment does they've done their best to keep it simple, easy to understand and effective.
Updated Allocation Page
The allocation page on Betterment has also seen some updates. Previously the page didn't have a lot on it besides a graph showing potential earnings, and a slider allowing you to change the percentage that you put in stocks vs. bonds, and another one changing your time horizon.
Those things are still there, but you'll now have a bit more transparency into what investments are in your account. There is now a pie chart on the left hand side showing total investments, along with what those investments are held in. If you want, you can get even more detailed information by clicking on the “details” button, and then get a look at your holdings by dollar amount, percentage of your total portfolio or by number of shares you hold. You can also view details for each holding in the account by clicking on links to external websites for each investment.
If you change anything as far as your stocks vs. bonds allocation, retirement age or how much you contribute, you'll get real time feedback on how those changes could affect your future earnings. It'll also show you what your holdings will look like if you change your allocations. Very cool stuff.
Other Site Updates
There are other less visible updates to Betterment that they pushed this week as well. Among the changes:
- Faster loading site and UI, better site performance.
- Better access to betterment from mobile devices.
- Additional performance history available to help you analyze how you're doing.
So there you have it. More data, better reporting and advice and a faster loading site. Nothing to be unhappy about there!
What do you think about the changes to Betterment.com? Tell us your thoughts on the changes, and anything else about Betterment in the comments!