The Worst Possible Way to Save

This Is the Wrong Way to Save

Moreover, Betterment has a different way of charging for its services than most brokers. Rather than charging commissions, Betterment simply takes a 0.9% annual management fee from your assets.

Betterment simply takes. What more is there to say? You know I'm not going to end here though. I'm just getting started.

Invest once. After 30 years, that 0.9% annual management fee would have taken 24% of your assets. Here's the math.

0.991 ^ 30 = 0.76

On the bond side, the service offers a single investment: iShares Barclays TIPS Bond (NYSE: TIP). That's also a useful fund, although it's unfortunate that the service doesn't offer at least one ETF with traditional rather than inflation-indexed bonds in its portfolio.

Oh oh. I feel the need to offer some profanity here. I apologize in advance because here it comes.

WTF!!

Here are your choices.

1. You can buy TIPS directly from the government for free. There are no fees to purchase. There are no annual fees to maintain your account.

2. You can buy TIPS through Betterment. They will serve as your primary middleman. They will take 0.9% for themselves per year. They'll take that money and invest it in the TIP bond fund. The bond fund will serve as your secondary middleman. TIP will take 0.2% for themselves per year. The TIP bond fund will then buy TIPS on your behalf.

Which plan do you really think is the "better" way to save?