How to Invest in an IRA With Little Money

Betterment
Investing can be complicated, and Betterment aims for simplicity

While many may already be investing in 401(k)’s through work, others may not have that option and still want to get investing in an IRA, be it Traditional or Roth.  Certainly if you are not investing at all, then now is as good a time as any to start.  You may be asking, but don’t I need thousands of dollars to start investing?  Not at all.  Betterment makes it extremely easy to be able to both start and accelerate investing.  Read on for more.

Betterment can offer better returns

According to their Overview, the Betterment portfolio is designed to achieve optimal returns at every level of risk.  Utilizing features like diversification, automated rebalancing, better behavior and lower fees, their approach to investing can help investors generate 2.9% higher returns than the usual go it alone investor.

One of my favorite features is that they also offer Tax Loss Harvesting.  This can find systematically embedded capital losses that can help lower your investment taxes and increase after-tax returns.  Granted if you’re looking for an IRA investment opportunity, this might not mean as much anyway due to your individual tax situation, but if you are looking for a separate investment account with them, then this feature could potentially help.

The company mentions that most people do not receive good and trustworthy investment advice.  Generally many financial advisors are paid to recommend certain investments so they recommend them – EVEN if it’s not in the best interest of their client – resulting in a huge conflict of interest.  Betterment also is not paid to recommend any funds – resulting in no hidden fees.  They only choose recommendations that they feel are best for each individual and their respective goals.

History is on their side when it comes to results

Generally the company doesn’t try to best the stock market, but with the goal of lowering costs and minimizing taxes, they strive to optimize your portfolio for the best-expected investor returns possible.  Looking at their page, they more often than not would have outperformed the average client investor in almost all periods over the last decade.

How Much Will This Cost Me?

Ah the million dollar question.  If you’re looking to get started with your IRA investment, Betterment let’s you get started with NO MINIMUM BALANCE, and you can cancel at any time!  The annual fee is only 0.25%.  You get automated portfolio management, tax-efficient investing features, advice across your investments and their award-winning customer support.  There are also no trade fees for buying and selling securities, no transfer fees for depositing or withdrawing from your account, and no rebalancing fees for when you want to change things up in your stocks/bonds allocation.

That said, we have had success with Betterment, and feel it is a great way for individuals and families to get started with their IRA retirement saving.  While one can never predict the stock market, surely it would have to beat today’s interest savings rates with the proper allocations selected.

So what are you waiting for?  Get to saving and investing today – you can’t afford NOT to.

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