betterment-investment

Man, the year is flying by and things are looking up in my Betterment investment. I am officially four months into the Grow Your Dough Challenge with Wealth Hacker Jeff Rose. The challenge for me has been pretty simple. I have invested $1,000 with a robo-advisor called Betterment. And so far, the payoffs have been pretty sweet.

 

Why I do not work with a financial advisor

I’ve had financial advisors reach out to me recently. They either want to manage my portfolio, or they want to partner together so that we can refer people to each other. At the time that I am writing this, I have no financial advisor. I manage all of my assets independently. And Betterment has been a great way for me to test the waters with a robo-advisor.

 

Here’s why I love DIYing my investing:

#1

I have a strong interest in personal finance. (Duh, that’s why I created Debt Free Millennials.)

#2

I continue to educate myself on investing strategies that grow my money and keep my expenses low.

#3

I consistently check my investment accounts and financial news to look for opportunities to buy low and hold forever. Thank you, John Bogle, for teaching me your ways!

Speaking of John, founder of Vanguard, Betterment recently emailed me to let me know that some of my Vanguard stocks have decreased their fund fees. Here’s what changed:

Vanguard fund fees that decreased
Fund Fee Change
VEA 0.07% >> 0.05%
VTI 0.04% >> 0.03%
VTV 0.05% >> 0.04%

I’m a huge fan of low-cost index funds from Vanguard. And I like that Betterment offers these funds on their platform. If you were to directly invest with Vanguard, you would need a minimum of $3,000 to invest. You can get started with Betterment with any amount.

Disclosure: Links contain affiliates. When you buy through one of my links, I will receive a commission. This is at no cost to you and helps support my channel!

By the way, if you want to learn more about low-cost index funds, I highly suggest the Little Book of Common Sense Investing by John C. Bogle. Surprisingly, it’s a quick and easy read when so many investing books can be dense. Even Tony Robbins book, Money Master the Game, was like, 1,000 pages too long. Give me something that I can get through in a week or two so I can start taking action.

Enough with your Bogle nonsense. How did I do in April with my Betterment investment?

Are you ready to grab a drink to toast with me?! General investing was at a cumulative 14.7% return. By riding out the stock market over the past month, I was able to increase my return by +3%. Booyah, friends! Betterment has been really easy for me to invest and do so with minimal effort.

My overall balance is $1,146.89. This is up from March by $36.12. That’s huge considering I have not added anything to this account. It’s kind of fun to compare how my investment has grown since January. Here are my ending balances since I started:

How my $1,000 investment has grown since January 2019
Month Amount
January $1,080.72
February $1,103.74
March $1,110.77
April $1,146.89

What are my total fees and expenses with my Betterment investment?

Okay, so the reason why I choose to invest on my own instead of through a financial advisor is this: expense fees. Kyle and I used to invest with a local financial advisor in Manhattan, Kansas. He was great and all, but one thing he glossed over (and maybe I just wasn’t paying attention) was how my investments were charged.

Collectively, we were paying 5% in annual fees for our investments with this financial advisor. Insane. Anything over 1% is generally a bad idea. What I like about my investment with Betterment is that it charges just 0.25% annually for using their platform. Keep in mind, I also have to pay fund fees which are currently at 0.06% per year. That’s the difference between 0.31% and 5% in expense fees. I think I know what I’m going to be sticking with.

How to rollover an old 401(k) or old 403(b) to Betterment

Another great way to start a Betterment investment is to rollover an old 401(k) or 403(b) from a previous employer to a Betterment Traditional IRA. There are two things you don’t want to do with retirement accounts from a company you no longer work for:

  • Withdraw and use to buy jelly beans and cases of vodka
  • Leave it with your old company and shrug your shoulders

A true debt free millennial would spend one lunch hour setting up a Betterment investment account and clicking on the 401(k) Rollover button right here:

Just select how much your existing retirement account has in it and which company is managing it. Then, Betterment will give you step by step instructions on how to work with that particular company.

I would suggest doing a rollover IRA for any amount that you have in an inactive retirement account. A rollover traditional IRA works just the same as a 401(k). You don’t pay any penalty fees when you do a rollover, and the money is under the same rules as a 401(k).

What my investment strategy is for May

Here’s what I plan to do with my Betterment investment strategy for May: sit with Sam Elliott around a campfire and listen to him tell stories. My strategy feels like him at times. Slow, methodical, calming. I’m perfectly okay sitting and letting it ride.

Pin It on Pinterest

Share This