Earn Rewards: Sign up now and earn a special reward after your first deposit. See offer details

Now available: New and improved Socially Responsible Investing portfolios. Learn more

<title>Dismiss</title>

Betterment

Save, invest, retire

GET — On the App Store

View
<title>Dismiss</title>
Loading

Jon Stein: Why I Created Betterment

If there really is no better portfolio than the market portfolio, why are there so many trading sites and so much emphasis on beating the market? Why doesn't anyone help consumers invest the way they should?

Articles by Jon
By Jon Stein CEO & Founder, Betterment Published Oct. 12, 2011
Published Oct. 12, 2011
1 min read

Jon Stein, CEO and founder of Betterment

Even with this knowledge, as a novice investor, I thought that I could do better. My first stock pick? Enron. Fail.

This taught me an important lesson—I’m no smarter than the millions of other people watching the market, and I don’t have better information. The cardinal lesson of modern portfolio theory—that there’s no better portfolio to own than the market portfolio—is a lesson to live by.

If there really is no better portfolio than the market portfolio, why are there so many trading sites and so much emphasis on beating the market? Why doesn’t anyone help consumers invest the way they should?

All of these alternative sites exist because humans are predictably irrational. We tend to think we’re better than average, on average. We intuitively think we can outperform. The whole brokerage and investment industry has grown to serve these irrational behaviors—and as a result, they don’t serve the individual consumers’ best interests.

I started Betterment to re-invent the investing industry—so that it would work as we want it to. What we really want, when we consider things rationally, is the best return (factoring costs) for the least risk. So what we really need is a convenient way to invest in the market portfolio.

Betterment provides this.

I remain committed to making the best investment product for consumers. If you have ideas or feedback for Betterment, I’d love to hear them.

Leave a comment below, on our Facebook page, or Tweet us.

– Jon Stein

Recommended Content

View All Resources

Checking Rewards FAQ

Open Checking and get access to benefits like cell phone insurance and rewards like automatic cash back rewards, along with no account fees, overdraft fees, or minimum balances.

Displaying Performance to Shape Better Investor Behavior

Understanding your accounts’ performance can feel complicated. We’re advancing how we display performance to help answer your questions and make stronger investment decisions.

How To Make The Most Of Your Spending With Cash Back Offers

Betterment has partnered with Dosh to offer cash back offers for Checking customers. Learn how to make the most of your spending with cash back offers.

How would you like to get started?

Manage spending with Checking

Checking with a Visa® debit card for your daily spending.

Save cash and earn interest

Grow your cash savings for general use for upcoming expenses.

Invest for a long-term goal

Build wealth or plan for your next big purchase.

Invest for retirement

Set up traditional, Roth, or SEP IRAs to save for the golden years.

See details and disclosure for Betterment's articles and FAQs.