If you moved your money to Vanguard and invested in the same funds Betterment currently invests in for you, and you rebalanced as often as necessary, you would get a slightly higher ROI at Vanguard because Vanguard has lower fees.

However, all of the things Betterment does for you now would be your responsibility, including asset selection, rebalancing, thinking about how to manage taxes, etc.

The bottom line is that you can do this yourself for less money, but you have to do it all yourself. Betterment offers more convenience for a higher fee.

> rebalancing

Vanguard Target Date funds rebalance automatically.

> including asset selection

Vanguard's asset selection is "literally buy everything on the market". Its a dumb strategy, but it seems to work. In particular, Vanguard's total market index will perform by definition the average (minus Vanguard's very low fees).

> how to manage taxes

Its no harder than Betterment. You get a 1099-DIV next year, and then fill out your taxes. Since Vanguard Target Date funds automatically rebalance and everything, its unlikely that you get any benefits from Betterment.

How much money do you have in Vanguard? I guarantee you will save from TLH if you have assets north of $1M. My annual tax burden has been reduced by 6 figures each year due to taking losses intelligently.

How? There's a $3000 cap on THL against regular income and capital gains is only taxed at 15%. $1M in realized capital gains is a pretty extraordinary circumstance.

The cap is on deductions from regular income if you have a capital loss for a year.

So if you have $50,000 in capital gains and $53,000 in capital losses, your gains are "free". And you can deduct the extra $3k from ordinary income.

You can also carry capital losses forward each year.

Yeah. If you have $50,000 in gains but $53000 in losses, then that's called a bad year.

You still aren't getting around the fact that you made a crappy investment somewhere to generate that loss.

Every portfolio has a mix of gains and losses if it's well diversified. I have gains that offset the losses elsewhere, but a reasonable chunk of those gains is offset by losses realized in parts of the portfolio that didn't do so well.

If you have a diversified portfolio that is all gains, I think you're probably not actually diversified.

Vanguard total market.

Diversified, but generally speaking it gains every year.

And no. Your portfolio is not as diverse as the entire market. Period.

Of course it isn't. But which market?

Anyway, we are talking past each other.

That's not really how tax loss harvesting works. You can have a portfolio that's up a total of $50k and _still_ have $50k in losses.

I know next to nothing about investing and this is exactly why I'm using Betterment. Even with the recent hikes in fees they're still cheaper than hiring a financial adviser. I really feel like I have very little choice but to stay put. However, how does one get started managing their investment account? I have more than 100K tied up in Betterment and trial-and-error type of learning could be pretty disastrous.

Read through the Bogleheads wiki, especially the pages about "lazy portfolios." There are some recommended books on that site as well.

I disagree with some of the Boglehead stuff, but the wiki is a good resource.

You don't need to do any trial and error. You just need to pick some funds and hold onto them for a long time. The funds Betterment has already picked for you are probably pretty good.

Agree with the sibling comment -- you can achieve a good portfolio allocation with 3-4 ETFs. What Wealthfront and Betterment do is pick these funds for you, then charge you 0.25% year over year for the privilege of maintaining them. It's not the best deal for the investor because the work is not particularly hard -- "managing" your investments as a Boglehead would ideally involve logging into Vanguard once a year to rebalance.

(In fairness, they do some other stuff which is more value-added like TLH, which is more work to do yourself, but again, it's hard to justify the 0.25%.)

"If You Can" by William Berstein is a good, short ebook on this subject.

Hiring an independent financial adviser was one of the best decisions I've ever made. It's an occasional check-in to support decisions I make around investments with Vanguard and my 401k. Finding an adviser is the hard part, so it's worth talking to a bunch of people so you can find someone that's comfortable with what you want to do.

I got the Wealthfront pitch when I started with my employer, but I feel much better with my current arrangement. Your comment "I have very little choice but to stay put" is never nice to hear in any context, so I hope you can move along from that place.

You must ensure that your financial planner or adviser is a fiduciary. Otherwise, they have no obligation to advise or act in your best interests.

http://www.cnbc.com/2015/06/16/is-your-advisor-a-fiduciary-c...

> If you moved your money to Vanguard and invested in the same funds Betterment currently invests in for you, and you rebalanced as often as necessary, you would get a slightly higher ROI at Vanguard because Vanguard has lower fees.

Just felt like pointing out that you'd have to rebalance the same way Betterment does, which isn't the way I believe normal people do it. Betterment uses portfolio optimization techniques that can be hard to implement yourself: https://www.betterment.com/resources/investment-strategy/por...

I would be very surprised if either wealth front or betterment has better ROI than Vanguard. One exists for the purpose of sucking you dry, the other is a mutually owned cooperative with a mission to drive down costs and a history of doing so. Unfortunately as far as I'm aware wealthfront and betterment don't provide aggregate performance information (although if it were in their favor I'm sure they would).

Betterment weights more heavily towards international allocations, so my returns have been lower than a fund more US-centric. That's not why I moved though; Betterment just raised their fees, which were somewhat acceptable before (0.15% of assets under management) but are now out of line with the value they provide (0.25%).

Those fees were on top of the ETF fees for the funds they assembled your portfolio with.

Fees are one of the main items you control in investing. Why pay Betterment when you can go to brokers like TD or Schwab and buy exactly the same funds commission free? You can then spend an hour each quarter rebalancing.

If you don't want to even rebalance, then go buy one of the target date funds from the likes of Vanguard.

TLH is extremely oversold. I don't need to repeat what is easily found in a google search though.