Meet our writer
Relationship Manager, Betterment
Bobby Glotfelty is a Relationship Manager on Betterment's B4A team. He graduated from the University of Wisconsin - Milwaukee with a master’s degree in financial analysis and investment management and bachelor’s degree in economics and mathematics. He holds his Series 65. Prior to joining Betterment, Bobby was a senior investment products specialist at Northwestern Mutual.
Articles by Bobby Glotfelty
What Are The Most Effective Deposit Settings?
Choosing the right deposit strategy is an important step towards helping you reach your ...What Are The Most Effective Deposit Settings? Choosing the right deposit strategy is an important step towards helping you reach your goals. We recommend setting up your auto-deposits so that they occur right after each paycheck. You’ve set up your account, prioritized your financial goals, and you’ve linked your checking account. Now you’re ready to start making deposits. Automating your deposits helps you to “pay yourself first” by quickly separating your savings money and spending money. It also reduces the amount of idle cash you hold, which could be earning more value if it was invested. More importantly, regular deposits help protect you from trying to attempt the impossible: effectively timing the market. Deposit Types There are multiple ways you can deposit into your Betterment account. You can make a one-time deposit or you can set up recurring deposits. One-Time Deposit A one-time deposit is an ad-hoc type of deposit where you choose a specific dollar amount to transfer from your checking account to any of your investment goals at Betterment. They can work well when you have cash on hand that you’re ready to invest, right now. A major downside of a one-time deposit is that you must initiate it manually. You’ll need to log in to your account every time you want to make a deposit. Even though we have a convenient mobile app for both iPhone and Android, we know you’re busy and likely have a lot on your to-do list already. Recurring Deposits Auto-deposits eliminate the manual process required for a one-time deposit, and instead, allows you to schedule recurring future deposits for a specific dollar value. The set amount will be transferred from your bank account on a repeating frequency that you designate—either weekly, every other week, monthly, or on two set dates per month, making it a great option for anyone who likes to know exactly how much will be transferred and when, on an ongoing basis. We’ll email you the day before a scheduled recurring deposit so that you can make any necessary adjustments before the money is withdrawn from your bank account. The email will provide you with an option to skip the auto-deposit if you need to. Many people utilize the auto-deposit feature as a way to dollar-cost average into the market. Auto-deposits help you stay on track and are the preferred deposit method for any of your goals. What are the most effective recurring deposit settings? The most behaviorally effective auto-deposit strategy is to set up your recurring deposits so that they occur right after each paycheck. Choosing the day after you get paid as your auto-deposit date allows time for your paycheck to completely settle in your bank account before we start the transfer to Betterment. The principle of having recurring deposits set up for right after you get paid is something you actually may already be doing in your employer-sponsored 401(k) account. Your 401(k) contributions come right out of your paycheck, and never actually reaches your bank account. With other investment accounts that aren’t provided to you by your employer, like IRAs or individual taxable accounts, it’s generally not possible to move money directly from your paycheck to those investment accounts. Instead, the next best thing you can do is to schedule auto-deposits for the day after your paycheck hits your bank account. Optimize Timing You may have heard of the saying “pay yourself first” when it comes to saving money. Setting up your auto-deposits for right after you get paid allows you to do this by separating your paycheck into two categories: savings and spending. From a behavior standpoint, this protects you from yourself. Your paycheck is immediately going towards your financial goals first, and any leftover cash in your checking account can then be used for your other spending needs. Avoid Idle Cash Delaying your deposits for any period of time after you get paid allows your cash to sit in your checking account—which can be problematic. Cash that sits in a traditional bank account is likely earning either no interest or very little interest at best. This means that over time, your cash is effectively losing value due to inflation. Letting the cash sit may also tempt you to try to time the market, which might lead you to ultimately hold on to your cash for even longer because of market activity. Not investing that cash could cause you to miss out on dividend payments or coupon income events that you otherwise would have received. Reduce Taxes Another perk of using auto-deposits is that they can help keep your tax bill low. Regular and frequent deposits and dividends help us rebalance your portfolio more tax-efficiently, which keeps you at the appropriate risk level without realizing unnecessary capital gains taxes. We do this by using the incoming cash to buy investments in asset classes that you might be underweight in, instead of selling investments in asset classes that you’re overweight in. Even little amounts help, because we can use those small amounts to invest in fractions of investments. How much should I deposit into each goal? Not sure how much you should be saving in each of your goals per month? We’ll tell you. You can see our recommendations on the Plan tab of each of your goals. We’ll calculate how much you should be saving towards each goal using information such as how much you already have saved, how long you’ll be saving for, and the expected growth rate of your investments. For more information on how our recommendations are determined, please see our goal projection and advice methodology. Ready to put your savings habits on auto-pilot? If you’re already a customer, setting up your preferred deposit type is easy. On a web browser, simply head to New Transfers and choose the deposit option. If you’re using the mobile app, simply log in and choose the Deposit button that will appear at the bottom of the screen. If you have any questions about how to schedule your auto-deposits, we have a team of customer experience associates available to help with any questions or concerns you may have.
Rolling Over Your 401(k)
Have 401(k)s from old jobs lying around? Moving them to Betterment means a common ...Rolling Over Your 401(k) Have 401(k)s from old jobs lying around? Moving them to Betterment means a common approach for all of your retirement savings. Plus, we make rolling over simple and easy—whether to your 401(k) account or a Betterment IRA. Let’s say you have a 401(k) account at Betterment, but you also have a 401(k) from a previous employer. What should you do with it? You have four choices with respect to 401(k) account from a previous employer: Keep it in your previous employer’s 401(k) plan (assuming previous employer’s plan allows) Roll it over to your current 401(k) plan at Betterment Roll it over to an Individual Retirement Account (IRA) to Betterment or elsewhere Take a cash distribution It’s important to consider all of your available options and to understand the implications of each. Only the first three options keep your money working for your retirement, so taking a cash distribution should be a last resort. Even if you don’t have a huge balance today, thanks to the effect of compounding, your account could grow into a nice chunk of change by the time you retire. Plus, taking a cash distribution is a taxable event, meaning you’ll owe taxes now and might be hit with an early distribution penalty on top of that, courtesy of the IRS. Let’s look at the other alternatives. Keeping your money with your previous employer’s plan Although there are times where it can make sense to keep your 401(k) where it is, doing so may not be in your best interest due to high fees, poor user experience, and a lack of tools and resources. In addition, having a 401(k) account that’s invested in different funds than the 401(k) plan you’re currently contributing to can make it difficult to have a unified investment approach. Rolling over your 401(k) The two remaining choices are either to roll over your old 401(k) to an IRA or to your active 401k at Betterment. Choosing between an IRA or 401k can come down to many factors, such as: fees, investment options, certain tax planning considerations, etc. Choosing to rollover your old 401k to an IRA or to your active 401k is generally the best option for most individuals. Furthermore, you could rollover your old 401k to an IRA provider other than Betterment, but we believe there are lots of reasons why choosing Betterment as your IRA and/or 401k provider is the better choice. At Betterment, it’s different. Simple, efficient, transparent, automated, individualized processes. In just a few clicks, you can start the rollover process to Betterment, whether you’re moving your money to your Betterment 401(k) account or a Betterment IRA. This means you’ll be set up with the appropriate investment strategy, and instantly receive a personalized set of rollover instructions via email. There is zero paperwork required from Betterment, though your previous provider may require paperwork to initiative the rollover. Consolidated investment strategy. By having all of your retirement assets at Betterment, you’ll be able to invest in the same funds and a single, coordinated strategy. This makes it easy for you to monitor your progress and to rest assured that your investments are not competing or cancelling out one another. Low cost with flexibility. At Betterment, our management fee covers everything and is one of the lowest in the industry. The low-cost investments (ETFs) we invest in are among the lowest available to investors. Plus, you can choose from multiple portfolio strategies, including three different Socially Responsible Investing (SRI) portfolios. Holistic view. Betterment’s investment platform allows you to see all of your saving goals in one place, making it easy for you to keep track of your investments. Advice and hands-on customer service. With Betterment, the corresponding investment strategy can align with your specific retirement plan. It can even work in coordination with the rest of your retirement funds. Not only does the website itself provide you with personalized financial advice, we also have a team of CERTIFIED FINANCIAL PLANNER™ professionals and an easy-to-reach customer support team. If you are considering rolling your old 401(k) to another institution, be aware that you may be subjected to lots of paperwork, long waits, and clunky processes. Make sure you understand the fund fees along with other fees that may apply when you open accounts, close accounts, change your allocation, make trades, etc. We automate the rollover process as much as possible. Whether you are rolling over to a Betterment IRA or 401(k), not only does Betterment make the rollover process simple and easy, we also make sure that your funds are placed into a globally diversified investment portfolio that fits your personalized retirement needs—all at a low cost. With just a few clicks inside of your Betterment 401(k) account, we will get the ball rolling for you and automatically open up new accounts (Traditional or Roth), depending on what type of 401(k) monies you are rolling over. We do not need any paperwork from you. Then, we’ll email you a full set of personalized instructions for how to proceed with your rollover, including the next steps to take and the information you need to complete your rollover. Some providers may have rollover paperwork that must be completed or even ask you to give them a call to complete a rollover. If so, there’s no way around that. All of the information you’ll need is included in the Betterment email, including information for how your previous employer’s 401(k) provider should make out the rollover check and where they can mail it to. We will notify you via email as soon as your rollover funds are deposited into your Betterment account. You can roll over more than just a 401(k). It’s important to note that this process does not just apply to 401(k)s. It applies to any employer-sponsored plan that you hold from past employment. This includes pensions, 401(a)s, 457(b)s, profit sharing plans, stock plans, and Thrift Savings Plans (TSPs). Ready to Roll? We designed the rollover process to be as smooth as possible. If you have any questions before or during your rollover process, we have a team of customer experience associates available via phone, email or mobile messaging to sort out any questions or concerns you may have. Betterment is not a tax advisor, nor should any information herein be considered tax advice. Please consult a qualified tax professional. This article is being provided solely for marketing and educational purposes. It does not address the details of your personal situation and is not intended to be an individualized recommendation that you take any particular action, including rolling over an existing account. When deciding whether to roll over a retirement account, you should carefully consider your personal situation and preferences. Specific factors that may be relevant to you include: available investment options, fees and expenses, services, withdrawal penalties, protections from creditors and legal judgments, required minimum distributions, and treatment of employer stock. Before deciding to roll over, you should research the details of your current retirement account, consult tax and other advisors with any questions about your personal situation, and review our Form CRS relationship summary and other disclosures. If you currently participate in a 401(k) plan administered or advised by Betterment (or its affiliate), please understand that you are receiving this email solicitation as part of a general offering and that neither Betterment nor any of its affiliates are acting as a fiduciary, or providing investment advice or recommendations, with respect to your decision to roll over assets in your 401(k) account or any other retirement account.
What is Dollar-Cost Averaging?
Although it’s not always the most optimal investment strategy, choosing to dollar-cost ...What is Dollar-Cost Averaging? Although it’s not always the most optimal investment strategy, choosing to dollar-cost average into the market has behavioral and psychological benefits that may help you over the long run. Dollar-cost averaging (DCA) is the practice of regularly investing a fixed amount of money over a period of time, regardless of market activity. For example, if you choose to invest $100 on the 15th of the month, every month for 1 year, you would be implementing the investment strategy of dollar-cost averaging. You don’t vary the dollar amount you choose to invest ($100), or the timing of the investment (on the 15th of each month), based on market activity. Types of Dollar-Cost Averaging There are two types of dollar-cost averaging: voluntary and involuntary. Voluntary DCA is when you have a specific amount of cash to invest, but are choosing to parcel it out over a period of time, rather than investing it all at once. Involuntary DCA is when your ability to invest depends on when you have the money to do so. Perhaps you set up auto-deposits, so that you can invest as you earn more money over time with each paycheck. The major difference between these two types of DCA is that involuntary DCA implies that you could not have invested sooner, while voluntary DCA is an investment strategy where you could have, but chose not to. Real Life Example Let’s pretend you have $1,200 sitting in cash that you can invest right now. You choose to invest that $1,200 by investing $100 per month for a period of one year. This would be an example of voluntary DCA. Now, let’s pretend you don’t have any money to invest right now, but through your paychecks you earn $100 per month that you could invest. You invest $100 per month for a period of one year. This is an example of involuntary DCA. Should You Dollar-Cost Average? This question really only applies to voluntary DCA and not involuntary DCA. If you don’t have any money sitting around to invest, then you’ll need to wait until you have the money to invest. For involuntary DCA, the choice becomes whether to invest that money as soon as you earn it, or to let that money build up over time so that you can invest the entire balance. An optimal strategy for involuntary DCA is to schedule auto-deposits as soon as you get paid. If you do have money sitting around to invest, the question then becomes, should you invest it all right away, or should you DCA it into the market over time? There are a couple of answers to this question. The Head vs The Heart The expected total return of markets is positive over time. Therefore, from a purely unemotional investment strategy perspective, it makes sense to invest your cash immediately and not DCA into the market. Studies show that a lump-sum investment will outperform DCA roughly two-thirds of the time and will consistently outperform DCA across global markets. Yet, we all know that leading with the head is easier said than done. Luckily, following one's heart can come with its own set of benefits. Since DCA is a fixed rule, independent of market performance, it is unemotional, diversifies your purchase price, and makes you less susceptible to the counterproductive behaviors people often have when investing. More specifically, DCA can make you less susceptible to the disposition effect, which is the tendency to sell assets that have increased in value, while keeping assets that have dropped in value. People significantly dislike losing more than they like winning, which is more formally known as loss aversion. This goes hand in hand with helping to reduce your susceptibility to anchoring bias, which is when you attach yourself to an irrelevant stock price and begin making investment decisions based on that irrelevant stock price at a later date. Additionally, DCA can prevent you from trying to time the market—which is generally a losing investment strategy over the long run. It also minimizes your chances of feeling regret and may reduce any potential anxiety that you “bought in at the top.” Maybe most important of all, DCA can help you establish good investment habits. After all, choosing to DCA into the market is better than never investing your cash at all. Make A Decision To recap, if you have a pile of cash sitting around to invest, studies show that investing it all right away is the optimal decision the majority of the time. However, choosing to voluntarily DCA into the market has many behavioral and psychological benefits that can have a positive impact on your investing behavior. The most important thing is picking your approach and getting started. It’s better than doing nothing and leaving your cash out of the market completely.
How To Roll Over A 401(k)—We Help Make It Easy
Have 401(k)s from old jobs lying around? Betterment makes rolling them over into a ...How To Roll Over A 401(k)—We Help Make It Easy Have 401(k)s from old jobs lying around? Betterment makes rolling them over into a low-cost IRA account simple and easy. Let’s say you’ve got a 401(k) from an old employer and you’re interested in rolling it over to an IRA. You can roll over your old 401(k) to any IRA provider, so why choose Betterment? At Betterment, not only do we make the rollover process simple and easy, we also make sure that your funds are placed into a globally diversified investment portfolio that fits your personalized retirement needs—all at a low cost. You have a 401(k) from an old employer—now what? Once you no longer work for an employer, you have a few different options when it comes to what you can do with your old 401(k). The possibilities include: Keeping the 401(k) where it is and doing nothing. Rolling over the previous 401(k) to your current or future employer’s 401(k). Rolling over the 401(k) to an IRA. Taking a cash distribution to your personal checking account. It’s important to consider all of the different options you have. Although there are times where it can make sense to keep your 401(k) where it is, or move it to your new 401(k) plan, doing so may not be in your best interest due to high fees, confusing investment selections, and a lack of holistic financial planning options. Taking a cash distribution to yourself can be especially harmful because it’s a taxable event and you may be hit with early distribution fees by the IRS. Note that rolling a 401(k) into either an IRA or another 401(k) is not considered to be a taxable event. At Betterment, it’s different. Many larger, more traditional financial institutions and 401(k) providers require lots of paperwork, long waits, and misleading and clunky processes. Additionally, when you actually complete the rollover to an IRA, they likely will charge you lots of hidden fees, charge high fees, or put you in investments that don’t align with your actual retirement goals. Other 401(k) and IRA Providers May Have... Betterment Offers... Slow, confusing, misleading processes. Many larger, older, legacy 401(k) providers allow you to roll over to IRAs within their system. To do so may include lots of paperwork that’s typically confusing. It can take weeks to actually open up the IRA and complete the rollover. Simple, efficient, transparent, automated, individualized processes. In just a few clicks, you can open up a Betterment IRA with the appropriate investment strategy, and instantly receive a personalized set of rollover instructions via email. There is zero paperwork required from Betterment. Higher fees, extra fees, poor disclosure. Providers will often find ways to charge you for everything. They have fee schedules, which include fees to open accounts, close accounts, change your allocation, make trades, take withdrawals, etc. The list goes on. The investments themselves may carry high fees on top of the other fees you’re already paying. These providers typically love to bury their hidden fee information in lengthy disclosure documents. Low cost with transparency. At Betterment we have one fee—our management fee—which covers everything and is one of the lowest in the industry. We don’t have a fee schedule or hidden fees. We don’t charge you to open or close accounts, make withdrawals, change your allocation, etc. The low-cost investments (ETFs) we invest in are among the lowest in cost of funds available for investors. Little or no guidance. Many companies will give you paperwork to fill out to move your 401(k) into an IRA. Once it’s moved to the IRA, the guidance—if there ever was any—ends. Either you will have a self-directed IRA where you do everything yourself, or, you can be put in a managed account where they will charge you lots of fees with little to no transparency. Many times there is no holistic planning around the different financial goals you have. Advice and hands-on customer service. When you set up a Betterment IRA, the corresponding investment strategy aligns with your specific retirement plan. It can even work in coordination with the rest of your retirement funds. Not only does the website itself provide you with personalized financial advice, we also have a team of Certified Financial Planners™ and an easy-to-reach customer support team. We automate the rollover process as much as possible. With just a few clicks inside of your Betterment account, we will automatically open up either a Traditional IRA or Roth IRA, depending on what type of 401(k) you are rolling over. We do not need any paperwork from you. Then, we’ll email you a full set of personalized instructions for how to proceed with your rollover. The instructions will lay out the exact next steps to take and the information you need to complete your rollover. This includes your unique Betterment IRA account number, how your provider should make your rollover check payable, and where they can mail your rollover check. Some providers may require you to either fill out their rollover paperwork, or even ask you to give them a call to complete a rollover. If so, there’s no way around that. Using the personalized email that Betterment sends you, you can give your 401(k) provider a call and you’ll have all of the information they’ll ask you for right at your fingertips. Lastly, we will notify you via email as soon as your rollover funds are invested into your Betterment IRA. You can roll over more than just a 401(k). It’s important to note that this process does not just apply to 401(k)s. It applies to any employer-sponsored plan that you hold from past employment. This includes pensions, 401(a)s, 457(b)s, profit sharing plans, stock plans, and Thrift Savings Plans (TSPs). Ready to Roll? We designed the rollover process to be as smooth as possible. If you have any questions before or during your rollover process, we have a team of customer experience associates available via phone, email or mobile messaging to sort out any questions or concerns you may have. When deciding whether to roll over a 401(k) account or other retirement accounts, you should carefully consider your personal situation and preferences. Relevant factors may include that: (i) 401(k) accounts may offer greater protection from creditors than IRAs. (ii) In some cases, the ability to take penalty-free distributions at an earlier age or to defer minimum required distributions. (iii) Some 401(k) accounts may also allow for loans or distributions in a broader set of circumstances than IRAs. (iv) Some 401(k) plans may also offer specific educational and advisory services to participants that are unavailable to some IRAs. (v) Some 401(k) plans may have lower fees and expenses than some IRAs. (vi) Some IRAs may offer a broader range of investment options that some 401(k) plans. (vii) Special tax rules may apply to the rollover of employer securities. You should research the details of your 401(k) and speak to a tax and other advisors about whether the features of your 401(k) are relevant to your personal situation. The rollover process is currently automated for rollovers from select providers. If you have a provider that is not part of our automated process, you will receive an email with a checklist for completing your rollover to Betterment. In processing you rollover request, Betterment will be acting at your direction.