Am I Crazy Or Is This Investment Site A Bad Idea?
- Created: Monday, 24 May 2010 19:33
- Written by Andrew Gluck
“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?