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Investing Basics

How to Set Up Your Investments Correctly at Betterment

A quick overview of getting your portfolio started at Betterment based on your financial goals.

Articles by Nick Holeman, CFP®

By Nick Holeman, CFP®
Financial Planning Expert, Betterment  |  Published: January 24, 2019

Instead of managing your money in one big bucket, you should have multiple personalized portfolios built around your specific goals.

Betterment will manage your investments, and automatically make adjustments over time (choose better funds, reinvest dividends, adjust your risk, and manage taxes) so you don’t have to.

Our system is extremely flexible, so if you don’t like our initial recommendation, you can choose from additional portfolio options, or design your own.

Is your portfolio set up correctly?

Let’s talk about how you can feel sure your investments are set up for success at Betterment.

If you’re like most investors, your investments may have previously been managed in one big bucket.

That’s the way traditional brokers work, but it’s likely not as effective for you as an investor. Instead, you should have multiple personalized portfolios built around your specific goals. Let’s take a look at how you can build your portfolios using our goal-based investment system here at Betterment.

Goals in priority order

goal priority betterment

Like most of us, you are likely saving for multiple financial goals at the same time. Your financial goals might be retirement, college, a house, and more. Each of your goals has its own time horizon, priority, and savings requirements.

If your money is lumped together, it can be hard to manage effectively or invest at the appropriate risk level. Instead, each goal should have its own portfolio and its own risk level. Some will be short-term and conservative, like a safety net goal, and others will long-term and aggressive, like your retirement plan. Some will be flexible, for instance, a vacation, and others, not so much.

For your retirement planning, we’ll help you choose the right tax-advantaged accounts to use: your 401(k) plan through work, an IRA, or a Roth IRA.

Once your goals are set up, Betterment will also manage them over time, so you don’t have to. We’re set up to invest every dollar you deposit by investing in fractional shares; we’ll reinvest your dividends, optimize for taxes, and we’ll even decrease your risk automatically as your goal’s target date approaches.

Preview of how Betterment automatically adjusts over time

automatic allocation adjustment

When you set up your goals, we will go ahead and recommend what we believe is the best portfolio for you. If you’re a more hands-on investor, Betterment has portfolio options for you to choose from, including a factor-based portfolio strategy from Goldman Sachs, bond-only portfolios from BlackRock, or you can build your own. Invest your money according to your preferences.

Choosing a portfolio strategy

Screen showing all portfolio options at betterment

 

Get started today by setting up the investment goals that will help you get on track toward a better financial future.

You're ready to get your account going.

 

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Explore your first goal

Safety Net

This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.

Retirement

Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.

General Investing

If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.

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