It’s time for your questions. We’ll cover brokerage accounts, car payments, and credit card fraud. You know where to come for the answers.
1. Why us Betterment over Vanguard S&P 500 for index funds? Betterment has a much lower minimum for investing. To get into that Vanguard fund, the minimum is $10,000.
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2. Is it worthwhile to have more than one brokerage account? It depends on your goals and how involved you want to be. Betterment is the hands off option. A good reason to have multiple accounts is SIPC protection. Each account is guaranteed up to $500,000. If you have more than that in an account, you could lose that amount. Spreading the money out in $500,000 increments is safer.
3. Why is Matt investing when he has a car loan he’s paying interest on? Matt’s interest rate is 2% so he’s making more in investments. As long as your interest rate is very low, keep the money invested.
4. If I have fraud on my credit card and have to receive a new account number, does that negatively impact my credit score? It doesn’t impact open or closed accounts or age of accounts. It’s not the account being closed, just a number change. If someone has fraudulently opened a card in your name, this will impact your score and takes forever to sort out. Most cards are chipped now and are more secure. Just call the credit card company and request the chipped version of your current card. Chip and pin is still a distant dream for Americans but you can get a chip and signature card.
5. What was the name of the fund that allows you to choose your proportion of stocks to bonds depending on your age and how much risk you want to take? This is a Life Cycle Fund. The fee is higher than other funds because it is much more actively managed. Andrew wrote an article on investing and there is information about Vanguard’s Target Retirement 2050 Fund.
Thanks for the questions guys, keep e-mailing them in.
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Betterment: The hands off way to invest.