If you are tired of your bank account paying you almost nothing in interest, you may want to consider Betterment.com.   I decided to open an account with them to kick the tires and test out their service after writing a Blog post in June 2010.

Betterment wants to replace your savings accounts with an investment account that is less complex and hassle free compared to a traditional investment account.

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 www.sipc.org).  This means you can be assured that Betterment has the same protections as you would with a larger financial institution.  The company was started in 2008 by Jon Stein, with a $3 Million series A financing round from Bessemer Venture Partners (lead) and Anthemis Group.

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.

Betterment.com is currently offering $25 when you open a new account.

Review of Betterment

Signing up with Betterment is fast and easy. You supply your typical information when opening account. You then have to link your account with your bank to transfer money to and from your Betterment account. Linking to your bank takes about 3 days. Once it’s linked and money transferred, when your log into your account, you first see a summary of your account. I opened an account with $2,500 and allocated 74% in stocks and 25% in treasury bonds. See screen shot below.

You can easily add funds to your account and set up an automatic savings plan to make regular ongoing deposit to your account. See screen shot below.

Betterment allows your to play with your allocation of stock and bonds over years (1 to 40 years) to get an estimate (based on historical data) of how your investment will perform.  See screen shot below.

One unique feature of Betterment is that if offers advice of how to invest based on your goal.

Step 1 is Goal & Planned Investment where you enter your goals. Your are given goal options which includes:

• Retirement / Build wealth

• Major Purchase

• College / Education

• Wedding

• Vacation

• Kids / Baby

• Emergency / Rainy Day

• Other / Various

Step 2 is Risk Tolerance in 1 Year where you pick a scenario you are comfortable with. Options include:

• Conservative

• Moderate

• Aggressive

Step 3 is Risk Tolerance in 25 Years where you pick a scenario you are comfortable with. Options include:

• Conservative

• Moderate

• Aggressive

You are given projections of how much money you will make based on your choices and recommendations of your allocation in stocks and bonds. Choosing conservative will allocate less money in stocks, while choosing aggressive will allocate all of your money in stocks.

You can also compare your allocation with your peer. See screen shot below.
 

One very interesting feature of Betterment is that you can compare your account performance based on percentage allocation to stocks.  Per the graph below if I had invested in 100% stock, my account value would have fluctuated more when compare to 50% stock and 75% stock. See screenshot below.

Conclusion

If you are looking for a very easy way to invest in the market (stocks and bonds) and place it on auto pilot, Betterment is the way to go.  If you want to adjust the allocation of stocks and bonds it’s a matter of just logging into your account and using a slide bar to change your allocations.  You can set up automatic investments to deposit money in your account every month. The money is then automatically allocated to your investment choice. You pretty much, set it up and forget about it, similar to your company’s 401K plan.

If you are saving long-term for items such as your child’s education, this is very good tool to use. However, keep in mind that your money is being invested in stocks, so there are always risks. Historically, stocks have done well, so it’s a good idea to think long-term.

Visit Betterment (Get $25 to open an account)

I Bonds are a low-risk, liquid savings product that earns interest which resets twice per year to keep up with inflation.  Currently, I Bonds are paying an amazing 4.6% annualized because of the recent increase in gas prices.

I Bonds are sold at face value, meaning, you pay $50 for a $50 I Bond.  You purchase in amounts of $25 or more.  If you redeem I Bonds in the first 5 years, you’ll lose the 3 most recent months’ interest; after 5 years, you will not be penalized.

If you purchase an I Bond before rates are adjusted in November 1, you’ll receive a 4.6% interest rate for the next 6 months. Even if you take into account the penalty for cashing in the bond before 5 years, you will earn a minimum of 2.3% if you withdraw your money out after 12 months.  Additionally, if the new rate is higher that 0, you will earn more.

I Bond Restrictions

Keep in mind that you can’t redeem I Bonds for at least 1 year.  Your investment is limited to $10,000 annually.  You can invest $5,000 at TreasuryDirect.gov and $5,000 at a bank.

How to Purchase I Bonds

To purchase I Bonds check with your bank or visit TreasuryDirect.gov.

If you are an expert on a topic or even have a passion for a certain topic that you think people would love to learn, then write and sell an eBook to make money.  There are many people doing this and making decent money with it.  Some people hit it out the park by making a significant about of money.

People sell eBooks about the most mundane things such as “Worm Farming” to “How to Pick up Women” and believe it or not, people buy these products.  The great thing about an eBook is that there is little to no overhead.  No need to pay a printer to make hard copies or a distributor to distribute your books.  eBooks can be purchased and downloaded to your computer within seconds.  No need to find an agent or publisher.  You can do it all yourself!

Take for example Jacob Hiller who wrote an eBook called “The Jump Manual” which is a very simple guide on how to increase your vertical jump mostly for volleyball and basket ball players.

Mr. Hiller has sold over $1 million worth of this book and has been featured in Sports Illustrated, ESPN and Men’s Health.

Mr. Hiller’s success really started out by luck.  He first posted a video on YouTube on giving tips on how to jump higher.  The video responded well to viewers and as a result Mr. Hiller created a website and then the eBook.

He initially gave the eBook away for free until he realized how well people liked it and started selling the eBook for $15 via PayPal.  He then placed the eBook on ClickBank, increased the price to $67 with an option for jump coaching services for an additional $9/month.  Currently, the eBook sells between 500 and 1,000 copies per month, grossing up to $75,000 per month. (FYI: ClickBank is an online retail for digital products which about 100,000 active affiliate marketers who help sell these products for commission.)

Below is a video of how Mr. Hiller got started with a very simple idea and made it into a million dollar business.  If you have an idea, you too can do it!

Since I’ve been “trying” to make significant money online (starting seriously in 2008) I’ve had my fare share of failures!  However, I’ve been able to gross several hundred thousand dollars over the years with very little risk, which is what attracts me to making money online.  You can try “stuff” fairly inexpensively and fairly fast if you have the skills to develop and market websites which I still struggle with.  

Trying to make money online is hard work, but at times for me can be extremely frustrating.   The ups are great but the downs can be disappointing and annoying.

The Internet is extremely dynamic. The rules are constantly changing.  I have to deal with suppliers, affiliate companies, advertisers, web hosts, and customers to conduct business which is a dynamic event.  Things don’t stay the same.  Although business is conducted on the Internet, I still deal with people who are all looking out for their best interests. 

Over the years I’ve had numerous problems / failures that I’ve had to overcome, which include:

• Spending hours on numerous sites (ecommerce, Blogs, affiliate campaigns, forums) that have failed miserably!
• Sites from time-to-time being down and/or running extremely slow due to web host issues.  Many times paying to advertise the site, thus losing money!  Had to transfer 2 sites to new hosts because problem couldn’t be resolved.
• Web hosting company disabling site without notification because of complaint about copyright material on the site.
• Websites hacked with malware and into administrative account.
• Suppliers constantly running out of products, thus having to refund thousands of dollars (lost sales).
• Suppliers constantly adding, changing and deleting products which are difficult to keep up with.
• Supplier offering 10% discount for months and then suddenly stopping resulting in significant reduction in earnings.
• Fraudulent purchase on ecommerce site losing over $600 (not bad considering).
• Replacing customer purchased product lost in the mail. (only happened once).
• Customer complaints (defective products, product returns, products not shipped on time, wrong quantity shipped, etc.)
• 2,000/day unique visitor site disappears from Google search and takes months to return fully after requesting re-inclusion.  Google search accounts for 80% of traffic and results in loss of a few thousand dollars.
• Google disabling (1 temporary, 1 permanent) advertising accounts because of account was hacked and policy infringement (losing about $4,000).
• Google dropping quality score of successful ad campaign to 1 thus permanently killing traffic and earnings.
• Google decreasing page rank from 4 to 0, thus turning away advertisers.
• Lawyer threatens lawsuit and wants to negotiate payment because of use of a copyrighted picture on site. (Never paid after claiming no profit/damage made from picture).
• Affiliate company holding approximately $40,000 for an additional 3 months before paying. (Had to take $20,000 from personal savings to cover advertising costs).
• Having affiliate/advertiser decrease payout by thousands of dollars claiming traffic sent was junk.
• Having a successful $300-$400/day profitable campaign for several months and then one day receiving an email from affiliate company stating that same day is the last day the offer will be live and to kill all traffic to the site.
• Having a successful campaign go from making $30/day profit to almost $100/day profit and then back to $30/day after several months.  Tried desperately to fix with no success.
• There are many more to mention! And the problems will continue…..

Although there have been numerous problems/failures, I realize the path to ultimate success is being able to overcome problems/failures,  to keep going and to not let it get you down.  I realize it’s just a part of the game and don’t want success in my niches too easy because every Tom, Dick and Harry would be competing with me.   

At times when I’m disappointed that things aren’t going well, my wife kicks me in the butt and reminds me that I went from $0/month profit to $X,XXX/month profit and at times have reached $XX,XXX/month profit!  It’s great to have someone to remind you that the glass is half full!

So what failures have you had to overcome to become successful?  Would love to read your comments below!

Related Post:

• Do You Have the 3 D’s for Success?

I recently watched the documentary “Hot Coffee” on HBO Demand about Tort Reform in the U.S.  One case that was highlighted in the documentary was about Stella Liebeck, a 79-year-old woman from Albuquerque, New Mexico who burned herself by spilling hot coffee on her lap purchased from a McDonald’s drive-through restaurant (1992).  As a result, she sued McDonalds and was awarded over $2.86 million (later reduced to $640,000).  The media reported the news as our legal system running amuck.  Many people demanded Tort Reform to get rid off these frivolous lawsuits. I recall hearing about the lawsuit and thought it was crazy that someone would be awarded that kind of money for spilling coffee in their lap.

However, when I learned the details I understand why the jury awarded the money to the plaintiff.  This woman suffered 3rd degree burns on both her inner thighs requiring painful skin graphs.  Initially, she only wanted McDonalds to pay her medical bills and loss of income ($20,000) but McDonalds refused and only offered $800.  Additionally, it was discovered that about 700 McDonald’s customers reported being burned by hot coffee and the company did nothing to resolve the problem.  McDonald restaurants kept the coffee at 180 degree Fahrenheit which caused serious burns.

The documentary is about how Tort Reform was pushed by big business to limit payout in lawsuits and how big business used the media to manipulate society in believing that Tort Reform would benefit everyone.  When it reality it only benefited big businesses.  As an example, Tort Reform was sold in Texas as reducing healthcare cost by reducing awards in malpractice suits.  However, since Tort Reform was enacted in Texas in 2003 healthcare costs has skyrocketed.  

The documentary had me thinking about 2 things; the first is how people are easily misled by the media and the second is how the rich and powerful really run the United States although we are suppose to be a democracy.  

Fact: People are quick to judge which makes it easy for the media to mislead and manipulate them.

The recent not guilty verdict in the Casey Anthony case is an example of how people are quick to judge without having all the information.  People blasted the jury for finding Casey Anthony not guilty in the death of her child.  However, many of these people don’t know all the details.  They were not sitting, listening and reviewing all the information the jury was presented with.  They heard snippets of news from the media and jumped to conclusions.  When in reality, if they were on the jury they may have reached the same decision.

Another example was when Shirley Sherrod, a USDA official, was quickly fired for a speech she gave at a NAACP event.  A blogger took her speech, edited it and made Shirley Sherrod sound as if she was a racist.   The media jumped on the story, people were outraged, even the President couldn’t believe it and as a result she was immediately fired.  However, as soon the entire speech was viewed, everyone discover they were duped.  Shirley Sherrod was not a racist and she was immediately offered her job back.

As I’ve grown older and wiser, I’ve learned to not jump to conclusion without knowing the full story.  Whenever I see political commercials giving snippets of information about a political candidate I’ve learned to not believe any of it.  Most of the information is “half-truths” or downright lies.  However, I’ve often wondered what percentage of the American public realizes that these commercials are not factual.  I’ve often believed that these commercials should be banned from being aired.  Politicians should not get elected by spewing false information about their opponents.  Isn’t that just plain common sense!

Research has proven that these commercials are effective at manipulating elections.  The candidate who can afford to show the most negative ads about this competitor wins 90% of the time.  This is extremely unfortunate.

As a result, the rich and powerful use the media to influence elections.  The biggest threat to the rich and powerful is the fact that the common man has 1 vote just like them.  The common man can band together to elect people to represent them and their interests.  However, the reality is that the rich and powerful use the media to influence the common man to vote for things that only benefits the rich and powerful.  

And it’s Getting Worse

Last year the  Supreme Court decision to roll back campaign contributions by companies is simply wrong.  This just hands control of elections to big business and the rich.  The people who can afford to use the media to manipulate society wins. I’m certain the founding fathers of the United States didn’t intend for only the rich and powerful to control the country.

If you’re looking for a credit card, you might be aware of the fact that credit card providers can offer certain ‘extras’ with their cards to help you get started.

In this short guide, we’re going to look at some of the most common extras offered with credit cards to help you make your mind up when it comes to deciding which card to go for.

Rewards for spending
Some credit cards are advertised as offering ‘rewards’ when you make purchases using them. This usually means that whenever you make a purchase with your credit card, you will be given a certain number of ‘points’ (how many will depend on the amount you spend).

These points can then be redeemed against items in selected stores. In some cases, for example, you’ll be able to purchase shopping vouchers or get money off your supermarket shopping. Other cards may allow you to donate your accumulated points to charity by buying things for a community in need.

Cashback
A lot of credit card providers offer cashback deals with their cards. This basically means that you will receive a percentage of the money you have spent on your credit card back. Deals like these might only last for a set period of time – so make sure you check how long the deal runs for before opting for a card offering this extra.

0% balance transfer
If you want to transfer the balance from one credit card to another, some credit card providers offer this service for a fee (often around 3% of the balance transferred). This basically means the debt you’re moving across won’t grow while the interest-free period lasts.

0% interest on purchases
If you’re planning on making some big purchases with your credit card, this particular extra could be helpful. 0% interest on purchases basically means that any purchases you make on your card won’t have interest charged on them. However, these offers tend to have a time limit – so make sure you look into this before applying for your card and making your purchases.

Useful credit card guides and information:

• FederalReserve.gov
• ThinkMoney.com