Author Topic: Betterment: a best-of-breed robo-advisor  (Read 3709 times)

brother7

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Betterment: a best-of-breed robo-advisor
« on: January 24, 2017, 04:18:15 PM »
My brother has four kids, all under 18. As a good uncle, I want to ensure their financial lives get started on the right foot.

We started with Lending Club custodial accounts. They're adjusted NARs were 4-5%. Better than a savings account but short of what I expected.

I began researching real estate crowdfunding opportunities. It seems the ones available to non-accredited investors are all REITs (Fundrise, RealtyMogul, Rich Uncles). Plus, either me or their dad will need to actively monitor the investments until the kids are financially responsible enough to oversee their own accounts.

Then I stumbled upon a growing area of fintech called "robo-advisors". Researching further, I came across Betterment which sounds perfect for what we want to accomplish. Basically, it uses the investor's profile (age, net worth, risk tolerance, etc) to customize a portfolio of stock and bond ETFs. The portolio rebalances on it's own. Aside from adding funds, it's a set-it-and-forget-it way to build long-term wealth.

I opened and funded my own Betterment account to experience how the whole thing works. I really like it! For a young adult with limited knowledge of investments, it's a great way to start.

As each kid turns 18, we'll halt Lending Club reinvestment and move funds into Betterment. In addition, we plan to take advantage of the annual gift tax exclusion to start shifting assets to the next generation.

To learn more about Betterment, check out Investor Junkie's in-depth review of Betterment.

Debt Free

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Re: Betterment: a best-of-breed robo-advisor
« Reply #1 on: January 24, 2017, 05:19:48 PM »
My brother has four kids, all under 18. As a good uncle, I want to ensure their financial lives get started on the right foot.

My wife and I are in our late 40's with a 7 year old and 3 year old.  We are debt free aside from our mortgage.  We are of the same mind of wanting our kids to learn financial responsibility at an early age.  But we're taking a slightly different approach.  Any cash they receive, we've been investing in LC.  Our state's 529 plan is so defunct that the state stopped allowing new accounts.  Regardless, I prefer self-management in equities rather than mutual funds.  Therefore, I opened Coverdell ESA's for college supplemented by additional LC accounts (playing the role of bonds).

I just started our 7 year old on an allowance.  As part of that, we are teaching her to use a portion of that for charitable giving, a portion to long term savings / investments / retirement, a portion to short term savings, and the remainder to day-to-day spending.  Goal of course is for them to learn to live debt free and not fall into the credit card trap.  There will be an inheritance for them, but better yet, teaching them to manage their finances at an early age I think is a FAR better gift.
« Last Edit: January 24, 2017, 05:21:31 PM by Debt Free »