Betterment and WealthFront

While doing research on Personal Capital I encountered a new (to me anyway) concept of online financial managers, also known as robo-advisers. Two of the more prominent are Betterment and WealthFront. At their web sites you can get a recommendation on how you should allocate your investments, based on your answers to a few questions. They will suggest what percentage of your investment should be put in each of 8-10 ETFs. These ETFs focus on stock and bond funds, both domestic and international. They use mainly Vanguard ETF’s because of the low fees.

They will ask if you want to sign up and deposit funds in your account, which are kept in a brokerage account.  They distribute the funds over the ETFs based on their allocation recommendations. Periodically they will re-balance the funds over the ETFs. You can learn more by doing an internet search for “Betterment versus WealthFront.”

These might be of interest to my “friends and family.” In particular, those of you who would like to get a higher return on the money that you have sitting in savings accounts or CD's.  These are automated processes and you won’t be dealing with any human beings. All is done with computer algorithms. They do charge fees, but they are relatively low. For those who don’t want to spend time managing your money, these are worthwhile.

I am in the process of analyzing the suggestions these two sites made for me and the returns from these allocations. I will be posting the results as I get them.