Betterment Reviews


Betterment
Average Rating: 9 reviews

Summary

Betterment builds you a customized and efficient portfolio comprised of widely diversified, low cost ETFs. It's easy to use, even if you're new to investing, but it also has a robust feature set to satisfy more advanced investors. If you don't want to manage your own portfolio for automatic rebalance or hire a financial advisor, Betterment is tough to beat for the very low price especially for smaller accounts.

If you sign up through InvestmentZen, you'll get a free month when you make an initial deposit of $10,000 or more up to 6 months free depending on initial deposit amount!

Quick Facts

Minimum Deposit
$0
Assets Under Management
$7.3 Billion
Year Founded
2010
Number of Users
200000

Fee Structure

Limited Time Offer!


Get up to 6 months of free investment management with this limited time offer from Betterment.


Initial DepositFree Investment Management
$10,000-$24,9991 month free
$25,000-$49,9992 months free
$50,000-$99,9993 months free
$100,000+6 months free
Account TypeAnnual Fee
Digital - tax efficient algorithms, digital advice0.25%
Plus - Digital product with annual planning call from team of certified financial planning professionals and licensed financial efforts who monitor accounts throughout the year0.40%
Premium - Plus product along with unlimited access to certified financial planners0.50%

Features

Single Stock Diversification
Direct Indexing
Tax Loss Harvesting
Fractional Shares
Human Advisors

Supported Account Types

Taxable Accounts
401k Plans
IRA Accounts
Roth IRA Accounts
SEP IRA Accounts
Trust Accounts
529 Plan Accounts

Expert Walkthrough

Amanda Abella Amanda Abella

Betterment is an automatic investment firm that boasts some of the lowest fees in the industry (including up to 6 months for free when you sign up through this link) and makes life easier by giving you the ability to automatically rebalance your portfolio without exorbitant payments to financial advisors, yet also more control than a target retirement fund like Vanguard which makes all the decisions for you.

What is Betterment?

Betterment is a service known as a robo advisor. In other words, it’s an automated investing service. You tell them what your goals are, how much money you make, and how old you are.

Once they have this information they create a strategy that works for you and invest your money accordingly. For example, if you're early on in your career, most of your money will be held in growth oriented stocks with a small percentage in bonds, and as you mature, your assets will slowly shift to more stable stocks and a greater percentage in bonds to help reduce volatility.

They also give you and savings plans and goals so you know how much money you should be investing each month. There are three product offerings:

  1. Betterment Digital: Access to award-winning technology that helps automate investing with tax-efficient algorithms and digital advice, at a flat 0.25% fee.
  2. Betterment Plus: Get the Digital product along with an annual planning call from a team of certified financial planning professionals and licensed financial experts who monitor accounts throughout the year, for a flat 0.40% ($100,000 minimum balance required).
  3. Betterment Premium: Get the Digital product with unlimited access to a team of certified financial planning professionals and licensed financial experts who monitor accounts and give advice and financial planning throughout the year, for a flat 0.50% ($100,000 minimum balance required).

To get you started, Betterment is offering up to 6 months free with a $10k minimum deposit.

Betterment Is Easy To Use

Getting started is easy and flexible; you can open a standard account or a tax advantaged account such as an IRA or Roth IRA, and you're able to move funds from an existing account to Betterment in less than a month. All you have to do is fill out a form online to authorize the funds transfer.

They provide an intuitive interface to set up automatic deposits, a customized investment strategy based on your unique financial situation and preferences, along with the ability to automatically invest extra funds from your checking account within minutes.

You can begin the sign up process here to see for yourself. It's very quick and painless, even (especially!) if it's your first time doing any kind of investing.

Betterment Summary Page Preview
This image is illustrative only and may not be a current representation or fully representative of an actual client experience.

Betterment Gives You Access To Services Young Investors May Not Be Able To Get

One of the reasons it’s so hard for young people to invest is because few people want to take us on as a client. You know how the saying goes - "you need money to make money".

One of the great things about Betterment is that you get access to services that would have otherwise been impossible for young or beginning investors to get their hands on. For example, the custom asset allocation functionality that Betterment offers was traditionally only provided by financial advisors who would charge you a hefty fee.

Betterment also helps you figure out and reduce your taxes through two features: one is Tax Coordinated Portfolios and the other is Tax Loss Harvesting.

Tax Loss Harvesting is a practice where investors sell off a security that has experienced a loss in order to get a tax write-off, which can make a significant difference in your investment returns. You'll also get the benefit of Tax Loss Harvesting across multiple accounts for spouses. If you enable TLH on your Betterment account, you'll be asked for your spouses’ Betterment account information so that they can help optimize your investments across you and your spouse's accounts and help prevent wash sales.

Tax Coordinated Portfolios on the other hand places assets that will be taxed highly into your IRAs which have big tax breaks, while placing assets that have lower taxes in your standard taxable accounts. This strategy can boost after-tax returns by an average of 0.48% per year which adds up to an impressive ~15% savings over 30 years.

Of course, these benefits were also once just the domain of the filthy rich, but now all Betterment users have access to it automatically!

Betterment Has No Minimum Deposit

Like many people in the personal finance space, you're probably a fan of Vanguard funds for their profitability and low fees.

But you may have encountered a problem where it wasn't always easy to meet the minimum deposits required to invest in some of the funds you want, which means that the end result was oftentimes that you'd have a portion of your money sitting in a money market fund instead of your desired ETF.

With Betterment you're able to deposit into any sort of ETF or fund with whatever money you have available. You don't need to have $3,000 to $5,000 up front in order to invest in what you want. If all you have in a given month is an extra $20, you can still throw it into your Roth IRA without an issue. Plus, Betterment and Vanguard share a similar philosophy and investment strategy, so you know you'll still get many of the same benefits.


Retirement-Plan-Strategy-Suggestions

This image is illustrative only and may not be a current representation or fully representative of an actual client experience.

Betterment Fees Are Affordable

So just how much does it cost to use Betterment? Betterment boasts some of the lowest fees in the industry and they are extremely straightforward at just a flat 0.25% for all assets managed.

Betterment's low management fee includes all rebalancing, transaction and trade fees; these are all things that might be killing your target date fund returns.

Betterment Is Getting A Thumbs-up From Well-known institutions

At this point you’re probably saying, “That all sounds great, but is Betterment legit?” This is usually followed by “Is Betterment safe?”

The answer is an emphatic YES on both fronts. In fact, they are even getting approval from well-known financial institutions. In 2014, Betterment and Fidelity joined forces in an effort to connect registered investment advisors with the automated services Betterment provides. They're also partnering with Vanguard and Goldman Sachs to diversify their offerings.

Uber has partnered with Betterment to provide retirement planning services for their drivers.

Finally, Betterment now has over $5 billion in assets under management, so you're in good company!

Bottom Line

Betterment is a good place to start for young or beginning investors. It’s easy to use, has low fees and takes a lot of the guesswork out of investing. If you sign up through this link, you can get up to 6 months for free to start.



Betterment Reviews

NerdWallet

Betterment is a strong option for fans of automated investing who are looking for customized portfolio allocation, hands-off rebalancing and innovative automatic deposit solutions. Investors with $100,000 or more will save money on management fees by choosing Betterment over the competition.

CashCowCouple 2015-11-16

Betterment will build you an efficient portfolio comprised of widely diversified, low cost ETFs. If you don't want to manage your own portfolio, or hire a financial advisor, Betterment is tough to beat for the very low price.

FrugalRules 2015-10-19

What makes Betterment so unique from other brokerages is that you do not trade individual stocks or mutual funds, but you invest in a bucket of Exchange Traded Funds (ETFs) that are personalized to your specific goals.

PTMoney 2015-06-02

If you aren’t investing at all, consider Betterment. If you don’t have an IRA, consider Betterment. If you’re looking for a place to Rollover your 401K or existing IRA, consider Betterment. If you’re already doing passive investing with ETFs, compare your expenses with the fees Betterment has.

ModestMoney 2013-08-09

Betterment really is a great company to work with. By providing ways to automate your investing, they have become a great start up investment for new investors that don’t have too much to work with. They give consumers the opportunity to invest very little and grow. However, if you’re a bigger investor, you may want to consider other options to avoid the added cost for automation that you don’t need.

MoneyUnder30 2012-02-01

Betterment is a new investing platform that takes index investing and actually makes it simple.

InvestorJunkie 2015-11-19

Betterment is a perfect starting point for young investors. They make investing easy for beginners by focusing on simple asset allocation, goal setting features, and low-cost portfolio management.

MoneySmartGuides.com 2014-04-21

Betterment is an excellent choice for investors by making investing easy - after the 10 minute set up process you never have to do anything again! This helps you focus on the long-term aspect of investing through automation.