Hello everyone, this is Mrs. Moneyseed, welcome to my debut post!

First, a little insight into my knowledge of investing, or rather, lack there of. I am in every sense of the word, a beginner. I also consider myself very easily distracted, which often eliminates my drive to ever get into the specifics of how to begin investing. Allow me to introduce you to Betterment.com.

If you can relate to any of the above, you can thank me later…

Betterment LLC

If you are debt free and looking for “a great, big, simple idea” for what to do with your extra cash, and don’t feel comfortable venturing into the realm of personal investments alone, it might be worth your while to check out Betterment.com.

Betterment.com is a broker-dealer Registered Investment Advisor with the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC), so rest assured, they are legit.

CEO, Jon Stein, has an extensive background in consulting big financial institutions, but decided to switch his focus toward helping out the average consumer. His team has diverse experiences in financial services to help a beginner investor make the best decisions about his/her money to best achieve his/her own personal goals.

Modern Portfolio Theory (MPT)

The method that Stein and his team uses, to maximize a customers expected return for a given amount of risk, is known as the Modern Portfolio Theory (MPT). Further information about this technique can be found at Investopedia.

Account creation is simple, and takes all of 5 minutes. You can customize your account by deciding how much you are able to invest and choosing what percentages you want to allocate in equities (stocks) and in Treasury bonds (TIPs).

Each category is comprised of a variety of exchange traded funds (ETFs), investment funds traded on the stock exchange, giving you the diversification that allows for your optimal return, aka. the MPT. The current list of ETFs can be found here, which does include international ETF options.

Betterment.com offers non-retirement accounts, as well as traditional, Roth and roll over IRA choices.

Fees

Their fee structure makes it extremely affordable to utilize their services.

The current fee structure is based on your account balance, ranging from 0.15% – 0.35%, prorated every quarter. (This fee decreases as the money you have invested increases. At amounts less than $10,000, you would pay 0.35%, on a balance of $10,001 – $100,000, the fee would be 0.25%, and anything over $100,000 would carry a 0.15% fee.)

Betterment Investment Fees - Johnny Moneyseed

A breakdown of Betterment.com’s fees vs. The Other Guys

Although there is no minimum balance requirement, a fee agreement pertains to customers that have a balance of less than $10,000, at a minimum deposit of $100/month. Customers with more than $100,000 invested gain further investment opportunities and options not included in the standard portfolio.

Another perk of being a Betterment.com customer is there are no hidden fees, including no transaction fees, no deposit fees, no withdrawal fees, no re-balance fees, and no maintenance fees! (However, ETF managers commonly have underlying annual fees, which are usually low, but shouldn’t be forgotten.)

Re-balancing

If you are a “newbie” like me, you may be unfamiliar with the term re-balancing. This simply means that if you had set your original allocation to a percentages of 80/20 into stocks and bonds respectively, Betterment will periodically re-balance your portfolio to maintain these figures.

Depending on how assets perform, allocations can drift over time. As often as every quarter or as soon as your portfolio drifts by 5%, Betterment will automatically re-balance your allocation composition.

Although the “hands-off” approach may be criticized by some do-it-yourself investors, Betterment.com‘s mission is to help those who don’t know where to start or aren’t comfortable with making their own investing decisions, no matter what the reason might be.

Check it out!

Well, what are you waiting for?! The extremely user friendly website makes it at least worthwhile to take a peek. If you like what you see, but need a chance to play around with the site, there is also an option for a free 30 day trial!

So now for the experiment…

Since I am a beginner investor, I signed up for a Betterment.com account on February 14, 2013. Our plan is for me to be a guinea pig, to see how easy it really is! Our starting deposit is $1,000 and we will be making monthly contributions of $500 to our 100% stock allocation.

We have also received the free $25 account activation bonus, available for all first time customers. If you are skeptical, know that I plan to post periodic updates to compare our established investment portfolio to our new Betterment portfolio.

Betterment Build Wealth - Johnny Moneyseed

$1000 starting balance + a free $25 for signing up!

This way you can see Betterment.com in action, and perhaps feel that you can make a more informed decision as to whether it is worth it compared to more traditional methods of investing.