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If I can invest $100 a month, is it better to choose Vanguard S&P 500 ETF or Betterment?

I can put down a max initial investment of $1000, and may pull out the investments when the market looks like its going down really hard, and reinvest again when it looks like its recovering.

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    Does your broker do fractional shares of the ETF? The current trading price for VOO is $187.23 which means that $100 isn't even one share for the $100 you are using here.
    – JB King
    Jan 12, 2015 at 5:31
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    Be aware of trading fees. ETFs usually incur a commission ($8-10), while mutual funds often trade commission-free. If you're putting in $100/mo, don't blow close to 10% on commissions. You might be better of with an index fund instead of an ETF. Also, avoid trying to time the market.
    – Rocky
    Jan 12, 2015 at 5:55
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    @Rocky I'm thinking of using Vanguard brokerage for Vanguard ETFs, so I think theres no commission fee, but do not meet the min. of $3000 initial investment.
    – Athena Wisdom
    Jan 12, 2015 at 7:41
  • @JBKing Looks like Betterment is the better choice for $100/mth and no initial investment
    – Athena Wisdom
    Jan 12, 2015 at 7:41
  • @AthenaWisdom - It is wise of you if you wish to protect your capital when the market looks to be starting to fall. If you learn about technical analysis there are some simple techniques you could use to time the market over the long term. Good luck with it, as protecting your capital and current profits is the key to long term wealth building.
    – Victor
    Jan 12, 2015 at 20:45

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Vanguard requires a $3000 minimum investment and minimum 1 share for their ETFs; see their ETF Fees and Minimums for more details.

As such, with $1000 initial investment and $100 a month, this would be a poor choice; while some brokers might allow you to buy fractional shares, with ETFs I don't think this is common unless you're paying a decent bit of overhead (which negates the point of the ETF).

Note that Betterment is going to charge you 0.35% plus the ETF fees (which average 0.14% or so), so you're going to be charged around 0.50% in total. That's probably not the worst thing in the world for such a low balance, but be aware of it. Once you can get over the $3000 level, I'd suggest transitioning to Vanguard or someone else who won't charge you the extra 0.35%.

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    Also, don't jump in and out of the market - no one can predict the future. If you can, I don't think you'll have any money problems. Instead, pick a good fund, sock your money away, and forget about it for a while.
    – JAGAnalyst
    Jan 12, 2015 at 18:19
  • @JAGAnalyst - "...sock your money away, and forget about it for a while." - and what about if when you go to access your funds the value has halved? By the way timing the market is not about predicting the future - it is about acting on current price activity.
    – Victor
    Jan 12, 2015 at 20:33
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    If the value of VOO is halved, well, most of us probably will be out of a job...
    – Joe
    Jan 12, 2015 at 20:53
  • @Victor Victor, if you can make money in the market by acting on current prices, that's fantastic. You can probably make $500K a year on Wall Street. I can't, so I don't try. If a trader is clearing 4-5 figures a year, it's probably just luck, and luck doesn't last.
    – JAGAnalyst
    Jan 12, 2015 at 23:30
  • @Joe - well the S&P500 has dropped by 50% or more twice in recent history - at the end of 2000 and the end of 2007. So since the S&P500 can drop by 50% so can the VOO, and I feel that day will not be too far away!
    – Victor
    Jan 13, 2015 at 5:20

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