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- Wants to Replace Your Saving Account

June 5, 2010 | Investing | Videos | 1 Comment (a new startup) wants to replace your bank’s saving account, which pays almost nothing; to an investment account that promises to pays more.  (See video below).

Savings accounts are simple and low risk with low interest rates.  Investment account may promise higher returns, however, they can often be complex and confusing.  Betterment has created a new category that offers the returns of investing with less complexity or hassle.

When customers deposit money in their Betterment account, the money is invested in their chosen blend of diverse stocks or a portfolio of US Treasury bonds.   Customers can allocate funds between these two investment options, setting the level of risk they’re comfortable with. Opening an account takes about 5 minutes, there’s no minimum balance, and transfers are free.

When customers deposit money with Betterment, their money is transferred to Betterment Securities (their broker-dealer), with instructions to buy ETFs (exchange-traded funds, similar to mutual funds) based on their desired allocation between stocks and bonds. Customers own shares in the ETFs, while Betterment recommends and manages buying and selling.

Betterment charges an annual fee of 0.9%, based on a customer’s average balance which is a quarter percent lower than the average mutual fund fee and much less than the average amount banks make off of customer deposits.

Betterment is a Registered Investment Advisor and Betterment Securities is a broker-dealer regulated by FINRA and the SEC. Betterment’s SIPC coverage means that the securities in user accounts are protected up to $500,000 (for more information, visit

Since Betterment invests customer’s money in the stock market, they can lose money if the market goes down.  Balances will fluctuate based on market conditions.  Over the long term customers should get a much better return that their savings account.

Betterment currently only operates in the United States. is currently offering $25 when you open a new account. For more information visit





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One Comment to “ Wants to Replace Your Saving Account”

  1. Hassel Free Investment Account Review | Money Cake
    2:16 pm on September 27th, 2011

    […] I decided to open an account with them to kick the tires and test out their service after writing a Blog post in June […]

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