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Makes sense, is there any data from 2017?
Betterment has $8B as of March 16, 2017: SEC form ADV page 8, "Regulatory Assets under Management" https://www.adviserinfo.sec.gov/IAPD/content/ViewForm/crd_ia... edit: Wealthfront $5B https://adviserinfo.sec.gov/IAPD/content/ViewForm/crd_iapd_s...
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Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard
The one advantage with these robo advisors, or any broker for that matter, compared to a mutual fund is tax loss harvesting. By having a separately managed account of ETFs or stocks, you can sell and exchange similar stocks when they lose value and harvest the tax losses to use at a later date.
IE: IRAs and Roth accounts instantly don't give a care, because they're not taxed. Soooo, no benefit to tax-loss harvesting.
IE#2: Any security that actually makes money will be unable to be tax loss harvested. (You need a LOSS to benefit from the tax loophole)
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Could you explain a bit more? Are you making a better ROI? I currently have a Betterment account and would consider switching if there's a good reason.
If you moved your money to Vanguard and invested in the same funds Betterment currently invests in for you, and you rebalanced as often as necessary, you would get a slightly higher ROI at Vanguard because Vanguard has lower fees. However, all of the things Betterment does for you now would be your responsibility, including asset selection, rebalancing, thinking about how to manage taxes, etc. The bottom line is that…
Vanguard Target Date funds rebalance automatically.
> including asset selection
Vanguard's asset selection is "literally buy everything on the market". Its a dumb strategy, but it seems to work. In particular, Vanguard's total market index will perform by definition the average (minus Vanguard's very low fees).
> how to manage taxes
Its no harder than Betterment. You get a 1099-DIV next year, and then fill out your taxes. Since Vanguard Target Date funds automatically rebalance and everything, its unlikely that you get any benefits from Betterment.
If you want a good robo advisor with no fees, check out Wise Banyan. I'm a client, but a happy one and that's my only relationship with them.
Why can't I buy VTI and dividend reinvest? I compared that to Betterment since 2004 and it wins handily. What am I missing? Tax loss harvesting sounds fancy but what's the actual bottom line benefit after fees?
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What are the fees on those? Edit: looked it up, the 2050 is 0.16%, not bad. I usually see much higher fees on those target date funds.
if you're willing to handle the allocation yourself, you can just see what vanguard is putting into their 20xx fund, and buy the corresponding funds as ETFs (or their admiral shares funds if you've got enough money in there) and get even lower expense ratios. as a general note, anyone interested in this should take a look at the bogleheads site, starting with their wiki: https://www.bogleheads.org/wiki/Main_Page
Earlier quoted context omitted.
Could you explain a bit more? Are you making a better ROI? I currently have a Betterment account and would consider switching if there's a good reason.
If you moved your money to Vanguard and invested in the same funds Betterment currently invests in for you, and you rebalanced as often as necessary, you would get a slightly higher ROI at Vanguard because Vanguard has lower fees. However, all of the things Betterment does for you now would be your responsibility, including asset selection, rebalancing, thinking about how to manage taxes, etc. The bottom line is that…
Just felt like pointing out that you'd have to rebalance the same way Betterment does, which isn't the way I believe normal people do it. Betterment uses portfolio optimization techniques that can be hard to implement yourself: https://www.betterment.com/resources/investment-strategy/por...