A Step-by-Step Guide
The easiest way to get started investing in today’s world is with a 401(k). But what if you’re employer doesn’t have one or you’re self-employed? Betterment is a great option for people who have very little money to get started investing ($10, $50, $100).
However, this is where many people get stuck. They assume that the process of getting started investing is complicated and time-consuming. It’s not.
Disclaimer: I have no affiliation with Betterment and do not receive any compensation from them in any form (commissions, referral fees, kickbacks, affiliate income, advertising revenue). In other words – I have no conflict of interest. I recommend Betterment because I honestly believe they offer one of the best ways available for non-investors to get started.
Disclosure: I do not use Betterment for my primary portfolio. I do have a Betterment account that I contribute to each month so I can experience/test the service. I invest in similar low-expense funds at TD Ameritrade. Betterment is a good choice for beginning investors with little money to get started.
A Simple, Step-by-Step Process
In the video above, I show you how to get started investing in ten minutes or less. As a bonus, I explain how to automatically invest each month. If you don’t need this information yourself, perhaps you know someone who does. Please feel free to pass along the link to this post.
The good news is that you won’t need any technical expertise or investment broker to get started. This tutorial is simple. I walk you through the entire process, once click at a time.
If you prefer to read about the process rather than watch a video, you can do that too. I have written down all the steps here. This will also save you the trouble of taking notes as you watch the video.
Please understand: you can get everything you need just by watching the video above. The written material below is optional.
You can get started investing by following these steps.
Step 1: Gather Your Personal Information
To get started investing, you’ll need:
- Your name and address (I’m pretty sure you know this)
- Your bank checking account login and password
- How much you want to invest to get started ($1 or more)
- How much you want to automatically invest each month ($1 or more)
Step 2: Set Up Your Betterment Account
There are a hundreds of brokerage and online services available—and thousands of investment companies. However, based on my experience and research, I recommend Betterment. I believe it is the best option for most people getting started investing for the following six reasons:
- Reason #1: Ease of Use. Betterment is super easy-to-use (as you can witness in the above video). In fact, shockingly so. You’ll wonder why you haven’t invested before now.
- Reason #2: Affordability. Betterment is inexpensive—fees range from 0.35% to 0.15%, depending on your account balance. The more you invest, the lower the fees. Management fees for other mutual funds typically range from 1.5% – 2.0%.
- Reason #3: No minimums. No minimum to setup an account and no minimum monthly deposit.
- Reason #4: No transaction fees. There are no fees for depositing or withdrawing from your account – ever.
- Reason #5: No trade fees. Betterment does not charge you transaction fees to buy and sell securities.
- Reason #6: No rebalancing fees. Betterment automatically and regularly rebalances your portfolio for free.
Disclosure: I do not use Betterment for most of my investing. My investment portfolio requires more flexibility. Plus it contains similar but different funds that are not available at Betterment. However when I first started investing I invested in Vanguard index funds – the same funds Betterment will invest your money. Betterment specializes in beginning investors and is the right choice for simple set it and forget investing.
By the way, Betterment offers one month free when you sign up. So there’s really no risk on your part.
Okay, if you’re still with me, go to the Betterment home page. Click on the Sign-Up button in the upper right corner.
The sign-up process is a simple wizard.
Enter your age
On the first screen enter how old you are, what your annual income is, and where you are in your employment.
Select a goal
You have the option to go through a Standard set up or an Express set up.
I suggest the Express set up and let the computers do the work for you.
Review your portfolio
On the next page, Betterment gives you a recommended allocation for your investments based on your age.
For this example, I entered 30 years old (not my real age). Betterment put me into 90% stocks and 10% bonds. For a 30-year-old this is a great allocation. It’s weighted heavily towards stock and higher risk. This is a good thing and will earn the most money given your retirement will be many years away.
You can change your goals at any time after you sign up.
Sign up to save your goal
You can try Betterment free for 30 days.
To save your information you need to enter your name and email address to create your account.
A bit more info
On the next page, you’ll fill out your personal information – name, address, email, phone number, etc.
You’ll also pick a couple security questions in case you forget your password.
Your social security number is required to report your investments to the IRS. If you sign up for a new bank account you will supply your social security number – investment companies are no different. Your information is secure.
There are three check boxes you can leave alone unless you:
– work for a brokerage firm
– own more than 10% of a publicly traded company
– are subject to IRS backup withholding
Select a bank to link with Betterment
On the next screen, you link your Betterment investment account to your online bank. The secure link will allow Betterment to withdraw money from your bank and transfer it to your Betterment investment account.
You will need the username and password of your online bank to connect. Connecting your accounts is safe and secure.
Confirm your email address
Now is a good time to open up your email program and look for an email from Betterment. You have to do this to deposit money with Betterment.
Confirm your email address by clicking the link in the confirmation email.
Do this now or you won’t be able to continue and do the next step.
Set up your first deposit
Choose how much you want to deposit to get started investing. It’s a big deal because you’re about to become an investor saving for your rockstar retirement!
Turn Auto deposit ON
Now your account is setup – almost. The last step to building wealth is automatically moving money from your bank account to your investment account each month.
It’s another simple step to do this.
You’ve just started investing! I’m so happy you’ve taken the first step towards a secure and rich retirement.