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Betterment: Make Your Money Work Harder for Freelancers


Studies have shown, that if you can picture your future-self, it’s easier to increase savings – so how do you see yourself in the future?

People always have the mindset of working hard for money to secure their future or retirement but in these uncertain times where inflation, high cost of living, economic crisis and other mitigating factors, just working hard may not be the solution for a comfortable life in the future. This is especially important for freelancers where a fixed salary is often impossible. So you would want to make your money work harder, but how?

Well, you could try your luck on the lottery or gambling but this is definitely not recommended as the risk is high and the returns are unreliable. So the next thing you can turn to is investment, but are you undecided about which type of investment portfolio suits you? Do you lack the knowledge of what type of investment product to invest in? Do the terms, stocks, options, futures, bonds, mutual funds, certificates of deposit, money market investments, ETFs, Unit trusts and annuities confuse or even intimidate you?

That is where Betterment comes in.

What is Betterment?

Betterment is a smart, simple way to invest, especially for freelancers and designers. Betterment allows freelancers to enjoy the investment benefits that their corporate counterparts receive, without having employer-sponsored retirement or investing benefits. This is because they can open both regular investing accounts to save for things like a house or more education, as well as IRA accounts to get some tax-advantaged retirement savings.

Well, let’s look at the idea behind Betterment. By shouldering the complexity of various investment products and removing lots of unnecessary choices, it’s investment made easy with Betterment.

Here’s a video run-down of how Betterment works:

Why Betterment is Great for Freelancers

Betterment is a perfect investing product for freelancers and designers because:

It has a sleek and simple UI – Signing up takes less than a minute, and determining how much money you want to invest in stocks versus bonds (your asset allocation) is as simple as moving a slider. Betterment is quick and easy to use. Freelancers are busy with their projects and clients and do not have time to constantly check and manage investment accounts. Everything with Betterment is a matter of a quick click or slider. Moreover, customers do not have to spend time picking the stocks or bonds in which they’d like to invest since Betterment has already done the work of creating a diversified portfolio (representing over 3500 companies in the US and abroad through 8 ETFs) for all of their customers. You can even access your Betterment account online or on your iPhone. Freelancing/design work can often be unpredictable as far as income is concerned, so freelancers often need to have quick access to their cash in an emergency. Most investment accounts come with minimums and withdrawal penalties, but with Betterment, there are no minimums and you can access your money at any time without a fee or penalty. Betterment combines the ease of online banking with the higher returns of investing in stocks and bonds. Many designers, freelancers, and entrepreneurs are already using Betterment! You can check out some of them here. Betterment was built by some of the best developers and designers in the financial technology space, so they understand how designers think! They won Best NY Startup at Tech Crunch Disrupt in 2010 and Best of Show at Finovate Fall 2010. Aside from those details, the way Betterment works is simple: You sign up, link your bank account, and set up investing goals, whether those goals are retirement, a vacation, a house, etc. They will recommend the right asset allocation and monthly contributions to make in order to achieve those goals, and you can always go back to the Betterment platform for more advice. Betterment takes care of important details for you: you are automatically diversified across the 8 ETFs, they automatically re-balance your account, and you can set up automatic deposits so you can regularly invest without lifting a finger. Pricing

The only fee Betterment customers ever pay is an annual management fee, which is 0.15% to 0.35% of your balance. You can see more details on pricing here.

Great Features

Betterment is very different from a traditional brokerage. After you open a Betterment account and connect a bank account, you will then choose your investing goal and timeline followed by your asset allocation.

After that, Betterment basically goes into autopilot mode and handles the rest. You are free to move on and let Betterment do their work. Betterment will invest your money in a mix of six stock Exchange Traded Funds (ETFs) and/or two Treasury bond ETFs. If you set up an automatic investing transfer (highly recommended) then Betterment will pull the money each month and invest it using the original asset allocation.

They also periodically re-balance your investments so that you maintain the proper asset allocation. For the management of your investments, Betterment charges a fee of 0.15% to 0.35%, depending on your account balance. There are no others fees that Betterment charges and no hidden fees, and there are also no minimum balance or investing requirements.

Free Allocation and Visualization tools

Betterment offers free allocation and visualization tools that they have available. The tools make it easy for the average investor to see what kind of returns they might project (given historical returns) if they invest with a 5, 10, 20 or even 30-year time horizon. Once you decide upon an allocation and time horizon that you are comfortable with, simply hit the button to change your allocation, and within a few minutes your changes are made!

You can check out their online demo here.


Investing could be a very tedious and time-consuming chore. That’s why Betterment comes in to take over your investment woes so you can concentrate on other more immediately important stuff. Betterment is very easy to use and simple to get started in less than 5 minutes. They strongly encourage automated investing and offer retirement investing through IRAs.

The best part is that they are highly liquid so you can move your money in and out of the brokerage without any fees or lock-in requirement. With the transparency of their fees and their sound knowledge of fund choices to broad index-based ETFs, Betterment could be well worth a try for anyone.

Disclaimer: Please note that Betterment is only for customers in the US.

PS: The opinions and views presented in this article on Betterment are solely those of the author and do not necessarily represent those of the company. We strongly encourage you to try the recommended product/service to experience it personally.

Read the Original Article

This article originally published May 15th, 2012 on One Extra Pixel


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