Betterment – Avoid the Stock Transaction Fees

I have recently discovered an investment site, which looks pretty interesting especially for beginners in terms of its ease of use and simplicity. The site is Betterment, which is an investment broker and registered investment adviser, and which has a half a million dollar SIPC insurance guarantee on the balance of each individual’s account, in case of fraud or closure. What looks particularly interesting is that if you use Betterment,you can set your investment choices and then let your investments proceed with automatic rebalancing, and without incurring transaction fees, which can be a big drain on your portfolio, especially when starting small.

Betterment invests in up to 12 global asset classes, as ETFs. Betterment charges low fees (the ETFs will also have fees associated with them), and these fees are charged at 3 different levels. The first is ‘Builder’, where you have to have at least 100 dollars a month auto-balance, charging 0.35% on the average balance, after that is ‘Better’ as 0.25% charge, when you have an account balance of $10,000. The cheapest level is ‘Best’ which results only 0.15% fees, but the balance minimum is $100,000. Overall, Betterment looks like a great way to start as small investor, and stop transaction fees eating into your gains.

Here is the Betterment CEO explaining their service on Jim Cramer’s Mad Money Show: