A look at Smart Saver from Betterment

I’ve been using Betterment for a little over two years now. I like it as a long term investment platform and the results have been very good so far. (Granted, it’s also been two years of a great economy. Beyond that, I like the way it works.)

To me, personal finances are broken up in three parts for planning:

  • Short term cash and expenses are kept in a checking account and are very liquid.
  • Long term investments (for me) are kept in Betterment goals lasting 5+ years.
  • Savings and possible investments is the hard part for me. Savings accounts at banks offer very little interest that doesn’t come close to inflation. In other words, by keeping the money in a savings account, you are actually losing money. Also, Savings accounts limit the number of withdrawals you can make in a month without penalty 

Introducing Smart Saver

This morning, Betterment announced a “Smart Saver” option that is a low-risk account for unused cash. For me, it’s the perfect option for my third part listed above. 

This allows me to earn good interest on idle cash while I continue to wait for more investment opportunities. It’s the perfect mix for me.

Smart Saver’s built-in portfolio is the Betterment Portfolio Strategy’s allocation at 0% stocks, 100% bonds. In our recent optimization of the portfolio, we’ve developed an ultra-low-risk yield composed of two asset classes:
U.S. Short-Term Treasury Bonds – SHV – 80% of the allocation
U.S. Short-Term Investment Grade Bonds – NEAR – 20% of the allocation

This two-fund portfolio has an ultra-low volatility profile, so we expect performance to be almost entirely comprised of income yield, rather than price changes. At present, the expected yield is 1.78%.


If you’re a current Betterment customer, you’ll see this new option the next time that you log into the service. If you aren’t yet a Betterment customers, feel free to use this link to signup and have your first 90 days of service free

I’ve already initiated the transfer of funds to this new portfolio option in my account. Just as I did in my other post, I will track the performance of Smart Saver here over time so be sure to check back.