Free To Choose
In response to our post on Cutting Out Middle-Men, one reader asks: How does Betterment adjust for the varying tiers of taste for risk among different investors without individual consultation offered by middle men?
First, Betterment focuses its customers on the most important choice in investing: the allocation between Stocks and Bonds. Over a long horizon, the allocation accounts for upwards of
90% of the variance in returns (here’s one of multiple sources), which is another way of saying it’s basically all that matters. By focusing on one choice, many customers are able to make better decisions than they might if they were distracted by other, less meaningful choices.
Second, Betterment gives customers tools to help make this choice. We offer a forecast of future returns based on a customer’s investment allocation and we recommend an allocation based on a customer’s profile and preferences.
Third, we show customers the allocation decisions of others like them. That’s not only reassuring, it’s also helpful information for deciding how to invest.
All this gives customers the better outcomes they want – without middle-men.
Personal Investing Strategies Tailored For You
We’ve long tailored customer portfolios based on factors like goal type, and risk tolerance. Now, we’re further personalizing our advice at the level of the portfolio strategy itself.
What’s Inside the Betterment Portfolio Strategy?
Explore the asset classes in Betterment's recommended set of portfolios. Then, take a look at the exchange-traded funds (ETFs) underlying each part of the portfolio strategy.
Here’s How Betterment Women Are Shaping the Future of Finance
Twelve women across eleven different departments came together to talk about why they’ve chosen careers in fintech.
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