Jon Stein had a problem. Okay, calling it a problem is a stretch.
Stein was getting married and he and his bride-to-be didn’t want or need to register for toasters, blenders, bed linens or a bunch of other stuff they already had.
But asking for cash gifts is gauche. “I had friends say, ‘We returned all the gifts that we got for cash,’ says Stein. “That sounded like a lot of trouble and sort of dishonest. We really didn’t want anything.”
What about gift cards? “Everybody loses gift cards,” says Stein.
Cash registry gift sites solve this problem by allowing you to register for items like “one dinner in Hawaii on our honeymoon — $50.”
The problem? They’re horrendously expensive. Stein and his fiancée found one site charging $40 plus 3% of every transaction—-and that was the best price they found.
Faced with this problem, you or I would probably shrug and register at Target or pay the exorbitant cash registry fee.
Stein, however, is the CEO of the investment company Betterment.com (a Mint Ways to Invest partner) and has a crack team of programmers at his disposal, so he built his own cash registry site, Betterment Gifts.
The revolutionary feature of Betterment Gifts is the price: FREE.
Free to set up a registry and free to give to a registry using any major credit card. The only charge is the underlying cost of a Betterment account.
How it works
I’ve written before about Betterment, which seeks to simplify investing for the average person.
When you open a Betterment account, the company invests your money in a portfolio of low-cost exchange-traded funds; the only choice you make is how to split your money between stocks and bonds.
All of the other hair-tearing investing decisions (such which funds to choose and when to rebalance) are taken care of.
Since my first report on Betterment, the company has lowered its prices; the entry-level account now charges 0.35% per year if you set up an automatic investment of $100/month or more.
They’ve also released a goals feature, where you can divide up your pot of money into sub-accounts for specific goals, each with a different investment mix.
For example, you might have a conservatively invested “house down payment” goal and an aggressively invested “retirement” goal.
Betterment Gifts augments the goals feature by letting you funnel your gift registry money into a specific goal.
For each requested gift, you set an amount and an optional photo (beautiful people relaxing on a beach, a plate of spaghetti for your Italian honeymoon dinner, etc.).
You can also split a large gift into smaller pieces: if you’re asking for a $1500 dining room set, for example, you can allow people to contribute in $50 increments.
Low prices and short-term goals
Givers can use any major credit card and Betterment eats the credit card fee.
Stein is very up-front about the fact that they built the feature to bring in new customers. If you want to take advantage of the snazzy interface and low price of Betterment Gifts, you have to sign up for a Betterment account.
Givers will, of course, also see the company logo and the prominent “What is Betterment?” link. (Visit an actual registry and you’ll see what I mean.)
I gave Stein a hard time about two issues. First, plenty of financial services companies charge low introductory rates and then hike prices later on.
“Because we have a real product, I don’t think we have to charge for those transactions,” he replied. “They’re not expensive.”
He said they never intend to make money on the gift registry directly, although he allowed that they might ask customers to share in the cost of credit card fees in the future.
Second, I asked whether it’s wise to use an investment account for short-term goals.
I recently spent two years saving up for a major vacation in Tokyo this summer.
I didn’t invest the money in stocks or bonds; despite near-zero interest rates, I used a regular online savings account.
I didn’t want to put my money—and my vacation of a lifetime—at risk.
Stein agreed and said that Betterment is introducing a money market account feature for this purpose.
Unlike the company’s stock and bond portfolios, the money market account will offer a stable balance: very low interest, but almost no chance of losing money. (No Betterment account, however, is FDIC-insured.)
Stein got married in August and he his wife are still receiving gifts through the software his team built. No one has complained that the couple failed to register for blenders and toasters.
“If we look at the things we registered for. It’s specific nights at specific B&Bs and we actually stayed at all those places,” he says. “You really are giving gifts.”