Since I wrote my last post about the online trading firms that I use, I decided to cancel one (E*Trade) and open a new account with Betterment.
Merrill Edge and E*Trade
Since I currently qualify for 30 free trades per month with Merrill Edge, it doesn’t make sense for me to do any trading using my E*Trade account at $9.99 per trade. That’s too much money for me to pay on small $100 trades. So, today I opened a Rollover IRA account with Merrill Edge and I will transfer all of my stocks/cash from my E*Trade account to this new Merrill Edge account. So far, it looks like an easy process of just filling out an online form. The transfer time could up to 8 days.
To my knowledge, there isn’t a close-out fee with E*Trade, but I may be wrong. There may be some fine print hiding somewhere. Even so, I’m willing to pay it to save on future commission fees. One reason why I haven’t placed many trades with that account is because I didn’t want commission fees eating up all of my savings.
I read about Betterment yesterday when I was doing online investment research. After reading several online reviews and taking a look at their website, I opened up a Roth IRA account with them. Why? Because their fees are low, their website interface is very easy to understand and they make investing simple.
I don’t know about you, but for me, investing is very complicated. Sure, opening an online account, transferring money over and pressing the “buy” button is easy. However, researching companies and figuring out which investments will give me a good return are activities that I’m not good at and don’t enjoy doing.
Betterment differs from the other companies that I used because after I fund my account, they invest my money for me in their portfolio of ETF Stocks and ETF Bonds. This means I don’t have to do any research or stock picking on my own and I never have to press the buy and sell buttons. Rather, I concentrate on defining what my goals are. For example, my goal for this IRA is to save $50,000 for retirement. I would like the money when I turn age 69. I’m committed to contributing $100.00 per month towards this goal. Since I have over 20 years to go, I’m choosing to invest most of my money in stocks instead of bonds. Betterment analyzes the data and says that I have a 90% chance of reaching my goal and if all goes well, I may end up with $82,000. With their simple website interface, I can easily try different scenarios until I find a goal that is realistic based on my time frame, budget and risk level. Also, I can change my numbers/risk level at any time – these inputs are not set in stone.
I realize that at this point, I should write more about the features of Betterment. But, there really isn’t much more that I can say that isn’t shown on their website. So, if you are interested in learning more about them, I recommend that you visit their site and decide if their strategy works for you. Below is my referral link. At the time of this writing, Betterment has a promotion going on that if you open a new account and meet their qualifications using a friend’s referral link, you will get a $25.00 bonus.
When I opened my account, I didn’t use a referral link. I’m kind of mad at myself because I like free money. Anyway, I still went ahead and opened a ROTH IRA with them using an initial deposit of $100.00. I also setup an automatic contribution of $100.00 per month. I have it set that 90% will be invested in ETF Stocks and 10% in the ETF Bonds. I estimate that my monthly fee (paid quarterly) will be 3.5 cents for every $100.00 in my account. Once I have a few months of investing done and have a record of my actual fees, I plan on writing a post about my personal experience with Betterment.
What investment firms do you use and why do you like/dislike them?