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The impression I get is that the two areas where robo-advisors shine is UX and Tax Loss Harvesting. The Betterment site is pretty, which makes me more inclined
by cbhl 10y ago
The impression I get is that the two areas where robo-advisors shine is UX and Tax Loss Harvesting.
The Betterment site is pretty, which makes me more inclined to put more money into it more often. This is irrational, but for me this makes it worth more than the 0.15% I end up paying them in fees.
I'm less sure about whether TLH is worth the 0.15% fee, though. The premise is that you do some "equivalent" (to you, but not to the IRS) transactions, report them on your tax return, and lower the taxes you pay today ("basis"). In exchange, you would have to pay those taxes later on your investments when you withdraw them. Is this always the right answer (because those later taxes are in compounded-inflation dollars)? What if I think my tax rate now is lower than the tax rate in ten, twenty, fifty years?
- neogodless 10y agoThe amount I've already saved in tax dollars thanks to TLH is orders of magnitude higher than what I've paid Betterment in fees. That being said, you won't always benefit from it, and there are caveats you should read about. I've decided to take a slightly more hands on but simpler approach, and have moved all of my investments into a simple 4-fund portfolio at Vanguard.
- loeg 10y agoAs you reach the $3k max and your portfolio continues to grow, the benefit to fee ratio becomes worse.
- loeg 10y agoSort of. Ideally you're trading future long-term capital gains taxes for lower income tax today. You assume the future cap gains rate will be lower than or equal to your income tax today.