I've been happily using Betterment for the past few years. I started reading Bogleheads a few weeks ago and now wonder if I ought to switch to a Three-Fund Portfolio viewtopic.php?p=4472637#p4472637. There have been a lot of good discussion threads on the +/- of Betterment but I'm still wrestling with the trade offs. I'd welcome the community's advice.
I really like Betterment for the following reasons:
- Convenience - Their website has great user experience design and I can quickly access the functionality I need. For example, I find it easy to set up auto-deposits, pull meaningful reports, submit tax information to TurboTax, etc. The automatic re-balancing and tax-coordination across accounts is also nice.
- Portfolio - their portfolio composition strategy seems to be grounded in Boglehead-esque investment theories (diversify, keep costs low, take appropriate level of risk vis-a-vis goals/time horizon). I also like that I can enable Socially Responsible Investing filters for certain asset classes. Tax loss harvesting could be useful for me, but most of my money is in tax-exempt accounts. I've attached a screen shot of my Betterment holdings in case this is helpful. https://drive.google.com/file/d/1Mk9oV4 ... sp=sharing
- Switching costs - I'm already with Betterment so switching would be a hassle. Also, I want to curb my impulse to chase the next shiny thing. Like, I could see myself getting excited about factor investing or Wealthfront or something else every few years and end up not getting the benefits of sticking to a particular investment plan for decades.
- Fees - A 0.25% annual fees seems reasonable and fairly immaterial to me. However, I'm open to being persuaded otherwise.
- Portfolio - Is there evidence that the Three-Fund Portfolio might be a better composition vis-a-vis Betterment's portfolio?
- Wash sales - My intuition is that this isn't much of an issue in practice, but I could be wrong
- What if Betterment goes under? I'm not sure how much risk I'm exposed to vis-a-vis Vanguard
- Us - Late 30s, married filing jointly, one dependent, residence in high cost of living area, 24% federal tax rate, 0% state tax rate. Putting 30% of our monthly budget into paying down debt and investing (focusing on maxing Roth IRAs and building up our Emergency Fund)
- Assets - Non-taxable: $80K Roth IRA, $10K Traditional IRA (both with Betterment at 90% stocks / 10% bonds), Taxable: $0. $10K in employer 401Ks. Emergency Fund: 1mo.
- Liabilities - Bad debt: $0. Debt: $95K student loans at 3% and 4.8% interest, $10K auto loan at 0% interest.