Every day we get the same plea from readers: "I have a little money to invest, but where do I start?"
Betterment, which offers online investing accounts with built-in portfolios, is an interesting solution for the getting-started crowd.
Here's how it works
You link your checking account to a Betterment investing account (it's registered with the SEC). There are no minimums to start. But bear in mind that Betterment operates with the simplicity of a savings account—but it's still an investment account, not an IRA.
"We want to be the one-stop investing answer to the question, 'What to do with my money?'," says CEO Jon Stein.
Where does your money go? Betterment has two options: a diversified basket of stock mutual funds, and a bond fund. That might sound minimalistic, and it is. Although many investors are embracing similar, so-called "lazy portfolio" methods, such limited offerings aren't for everyone.
However, you can set your own asset allocation, using a tool that looks like a speedometer: 60% stocks and 40% bonds, 50-50—it's up to you.
It's like DIY, but not
The investments are all listed on the site, so you can vet them yourself. Heck, you could even buy them yourself from your own broker.
But you probably won't, and that's one part of Betterment's appeal. The founders are promising to do what most average investors are too lazy (or nervous) to do on their own: Create a balanced, profitable portfolio that Betterment regularly rebalances for you.
Betterment is clearly in its start-up phase, but Stein says they will be adding an IRA soon, as well as more investor advice sections.
Penny for your thoughts. Would you let a website pick your investments?
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