Betterment is a strong believer in passive investing. The majority of the evidence shows that active management, whether by individual investors or fund managers, causes more harm than good in net-of-fee returns. We invest in low-cost, passive investments which always seek to match the market’s performance.
However, like all market investments, the securities you own in your account are subject to market risk. Fluctuations in the market are normal and hard to predict over the short term, but it’s because of the volatility that you have an opportunity to seek a higher return in the long-term than you might get from a bank account.
The most important things we recommend you do as an investor are to:
- Set up your account to accurately reflect your goals;
- Use our recommended stock allocations; and
- Stay the course.
Our historical data shows that over the long-term, your investment is likely to increase.