A new investment site launched yesterday at the TechCrunch Disrupt conference seems like a really crazy idea. Betterment.com bills itself as a “replacement for the traditional savings account,” and it claims to be a “Better way to save money.” But it looks to me like a better way for consumer to lose their savings!
“Deposits are invested seamlessly in a user’s chosen blend of Betterment’s two investment options—a diverse basket of stocks and a portfolio of ultra-safe bonds,” says Betterment’s marketing copy. ”Users can easily change their allocation between these two options, and all transactions are free.”
Call me crazy, but why would you want to put your savings—your emergency fund—in stocks?
Yet the site sounds like a consumer’s wet dream.
“Opening an account takes just five minutes, there’s no minimum balance, and transfers are free and easy,” says Betterment’s marketing copy.”Everything is included in an annual advisory fee of 0.9% and securities in customer accounts are protected up to $500,000.”
The site features an endorsement from Bruce Greenwald, a Professor of Finance & Asset Management at Columbia University. So maybe I am missing something because Greenwald is no slouch.
To me, however, marketing a combination stock and bond fund as a replacement for a traditional savings vehicle, while saying that the bonds are “ultra-safe” and making it sound like you’re investment will be insured against loss is asking setting up a bunch of suckers for losses.
What do you think?