01 May What is Goals-Based Investing?
Goals-Based Investing With My Robo Adviser™
Goals-based investing is a more “client-centric” process that is focused on measuring progress towards your goals rather than a focus on generating the highest possible return or “beating the market”. The process requires investor involvement because you determine your desired tangible outcome and then take the required actions necessary (how much you need to start saving and investing today) to help you achieve your goal. Tracking progress towards your goal and making adaptive changes based on market behavior or your personal financial circumstances is also a critical part of the process. This involvement helps set your expectations about what behaviors are necessary both now and along the way to help reach your desired outcome. By having a determined goal to which you have a tangible outcome, you are more likely to work towards success than you would otherwise if you were just accumulating savings.
How does goals-based investing work?
There are four main aspects to goals- based investing.
1. Defining your goal or goals (i.e. what are you saving and investing for?)
2. Determine what savings or income are available to invest
3. Select appropriate strategy to help attain the goal
4. Tracking progress and adapting behaviors to help remain on track towards success
Setting goals with My Robo Adviser™
My Robo Adviser™ uses a technology platform provided by Betterment for Advisers to help us serve our clients. When you set up your investing goal at My Robo Adviser, you will primarily obtain two pieces of advice- a suggested allocation based on your time horizon, and the second is how much you need to deposit or invest now, or on a recurring basis that will help you reach that goal. You can always make changes to the allocation and the amount you invest. The platform is simply providing you with recommendations- you are making the ultimate decisions if an allocation is right for you.
Opening your account and setting new goals
After you have opened your general account, you can create a new goal from the Summary page. Simply click on “Add Account” and enter the type of account (Individual Taxable, Joint Taxable, SEP IRA, Trust, etc.) that you will be opening. Depending upon your account type, you will be given a selection of questions to help determine your goal. For example, if you are opening an IRA, you could either be saving for retirement, or, perhaps you are already retired and will be looking to make regular withdrawals. For taxable goals, there are currently five types of goals you can select from:
- Retirement Savings – for those saving for retirement
- Retirement Income – for retirees making withdrawals
- Safety Net – for growing an emergency fund
- Major Purchase – for making a future expenditure
- General Investing – for investing when you’re not sure of the specific future expenditure.
Remember, you can set up one or more of these goals. When setting the goal, the system will generally request the amount and time frame of your goal. For any existing goal, you can change your goal type in the Advice tab of your account. You will see an option that reads “Manage Goal” that leads you to the option to update your goal type.
Projected outcomes on the Advice tab on the Betterment LLC website are based upon Betterment’s algorithm derived from data with respect to 2-dimensional (stock and bond) portfolios designed by Betterment. These projections do not directly reflect outcomes based on data derived from the 3-dimensional portfolio allocations recommended by My Robo Adviser™. As such, you should use the platform information as a general guide and understand that you may receive different results. If you have questions about setting your goal and a recommended portfolio please give us a call and we will be glad to help.
If you have any questions about setting goals or your recommended allocation, you can contact us directly at 920.785.6012 or email us at firstname.lastname@example.org. For more information on setting up your account or site navigation while setting up a goal, Betterment for Advisors maintains a support line you can call at 800.400.1571.
Last updated May 1, 2018
Disclosures: MyRoboAdviser.com provides investment recommendations based on a goals-based platform. Investments are not guaranteed, not bank insured, and may lose money. Investment Advisory Services provided to clients of MyRoboAdviser by ETF Model Solutions, LLC, an SEC registered investment Adviser (registration does not imply any particular skill or training). Sub advisory services provided to clients of MyRoboAdviser by Betterment, LLC, an SEC registered investment advisor. Brokerage services provided to clients of MyRoboAdviser by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC. Certain content on the Betterment, LLC website, including projected returns, may not apply to MyRoboAdviser.com’s investment recommendations. Clients must agree to provide and maintain accurate and current information with respect to their goals and financial circumstances. MyRoboAdviser.com does not provide financial planning or tax advice.