I read the article and immediately wanted to find out the actual holdings they allocate in their stock-based and bond-based portfolios. However, I couldn't find any information on the actual holdings, which is information that I consider to be pretty important. Do they just buy broad market index based ETFs? Would I be exposed to domestic, international, and emerging markets?
The experience is "dumbed down" to make it dead simple, but I feel that it's missing certain power-user features that would help convince people more in touch with their finances to make the switch to their solution. 0.9% is also a pretty high expense ratio. I'm guessing it's to offset redemption trades, fees, and what not. In comparison, passively managed Vanguard-style mutual funds/ETFs that also invest in broad indexes have expense ratios that are an order of magnitude lower.
DIAMONDS Trust Series 1,
iShares S&P 500 Value Index,
iShares S&P 1000 Value Index,
iShares Russell 2000 Value Index,
iShares Russell Midcap Value Index, and
Vanguard Total Stock Market.
Bonds:
iShares Barclays TIPS Bond Fund.
So not only do you get to pay them 0.9%, you also get to pay the (much more reasonable) fees charged by Vanguard and iShares.
A savings account that charges a management fee, can't advertise a return rate, takes twice as long to move money through, has more complicated tax implications, and isn't insured against market movements.
So it's passive investing with a pretty interface and a 0.9% fee. No thanks.
Users would be better off just deciding how much they want to risk in stocks vs bonds, and moving it into Vanguard. The major difference is that Vanguard doesn't try to fool you into thinking that a mutual fund is really a savings account.
Anyway, good luck to 'em, but I hope consumers are smart enough not to be interested. Then again, I doubt anyone has ever gone broke betting against the intelligence of the average American consumer, particularly when it comes to finance and investing.
They charge 0.9% to put the money into Vanguard and iShares ETFs.
This is not professional advice but I can't understand who needs this product. For investment, most people should be trying to max out their 401(k)/*IRA options, and the people who still have a lot of money left after doing so would likely benefit from more thoughtful investment and wealth management strategies.
If somebody needs some emergency cash, it's unlikely they want to keep it in an instrument that can lose value, since that defeats the point of emergency cash.
And frankly, if they don't want to be thoughtful, there are already products that are even easier to use. The Vanguard Target Retirement funds, as an example, require only that you pick your planned year of retirement, then the asset allocation is automatically handled for you. Added bonus: it's cheaper than betterment.
"Ultra-safe" bonds? "Ultra-safe"? Seriously? They have their own rating system now? Treasuries are "AAA", but they're holding "AAAA", aka "Ultra-safe" bonds.
And I love the .9 percent they charge for allocating your money in unmentionable ETFs. Let's see...SPY charges .1 percent, so if you manually have 50/50 savings/stocks, your expense ratio is a whopping .05 percent. Definitely preying on the ignorant--
The fee is too high, the investment choices too few (I don't want to be exposed to Treasuries right now, thanks), and it's still separate from my checking account. Fix those things and I'm there.
In principle, I am a huge fan of mutual fund banking:
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[ 3.1 ms ] story [ 16.8 ms ] threadThe experience is "dumbed down" to make it dead simple, but I feel that it's missing certain power-user features that would help convince people more in touch with their finances to make the switch to their solution. 0.9% is also a pretty high expense ratio. I'm guessing it's to offset redemption trades, fees, and what not. In comparison, passively managed Vanguard-style mutual funds/ETFs that also invest in broad indexes have expense ratios that are an order of magnitude lower.
DIAMONDS Trust Series 1, iShares S&P 500 Value Index, iShares S&P 1000 Value Index, iShares Russell 2000 Value Index, iShares Russell Midcap Value Index, and Vanguard Total Stock Market.
Bonds: iShares Barclays TIPS Bond Fund.
So not only do you get to pay them 0.9%, you also get to pay the (much more reasonable) fees charged by Vanguard and iShares.
But it has a slider. Sign me up.
Users would be better off just deciding how much they want to risk in stocks vs bonds, and moving it into Vanguard. The major difference is that Vanguard doesn't try to fool you into thinking that a mutual fund is really a savings account.
Anyway, good luck to 'em, but I hope consumers are smart enough not to be interested. Then again, I doubt anyone has ever gone broke betting against the intelligence of the average American consumer, particularly when it comes to finance and investing.
This is not professional advice but I can't understand who needs this product. For investment, most people should be trying to max out their 401(k)/*IRA options, and the people who still have a lot of money left after doing so would likely benefit from more thoughtful investment and wealth management strategies.
If somebody needs some emergency cash, it's unlikely they want to keep it in an instrument that can lose value, since that defeats the point of emergency cash.
And frankly, if they don't want to be thoughtful, there are already products that are even easier to use. The Vanguard Target Retirement funds, as an example, require only that you pick your planned year of retirement, then the asset allocation is automatically handled for you. Added bonus: it's cheaper than betterment.
And I love the .9 percent they charge for allocating your money in unmentionable ETFs. Let's see...SPY charges .1 percent, so if you manually have 50/50 savings/stocks, your expense ratio is a whopping .05 percent. Definitely preying on the ignorant--
In principle, I am a huge fan of mutual fund banking:
http://www.cato.org/pubs/journal/cj10n1/cj10n1-12.pdf
It sounds like you want them to be Ing. :-)