In this Betterment review, we’ll analyze and compare Betterment’s investing features, platforms, robo-advisor software and more, so you can decide if it’s the right investing account for you.
Simply put, Betterment is an online financial advisor that simplifies investing for you by offering goal-oriented investment choices as per your requirements. It utilizes algorithms and automated investment patterns to help you make the right choice for your investment. It has a large user base of more than 400,000 people and handles billions in investments making it one of the largest Robo-advisors in the world. It is already one of the industry leaders when it comes to investment platforms due to its high efficiency and transparency.
Why Choose Betterment?
How important is it for your money to be well invested? There are a lot of people who prefer that their savings remain safe in their checking accounts. But is it really a viable long-term solution? No, it is not. An unstable economy and unpredictable trends have led to an increasing rate of inflation each year. Even though you earn interest annually from your checking account, you can actually end up losing money due to the rising inflation levels. Instead, why not invest smartly that can actually help to increase your savings in the long run.
There are a number of minimal risk options available today for you to choose from. However, a majority of the people still prefer to play it safe with their money and leave it in their checking accounts. What is the main reason behind it? Lack of knowledge. Lack of experience. Or both. This is exactly what betterment hopes to solve. It has many goal-oriented tools and money saving strategies that make it a perfect match for all kind of investors. Whether you are looking to just start off investing your money safely, or you are already a seasoned investor, this website can help you get closer to your money management goals.
Let’s check out some of the features and benefits of Betterment investing software, so you can see if it’s right for you and your investing goals.
Is Betterment Investing the Best Robo-Advisor?
What makes it different from the other Robo-advisors or financial advisor platforms on the internet?
Betterment offers highly tailored investment options for you by taking into account a number of factors such as the purpose of investment, investment type, associated risks, your annual income, and much more. Whether you are a new investor who is not familiar with the available options, or an experienced investor who does not have the time to handle his/her portfolio, Betterment is the perfect solution.
Betterment Pricing and Fees
This is undoubtedly the best part of using Betterment services. To get started, you don’t have to pay any subscription fee or hidden costs. Based on the available balance in your account, you have to pay a low annual fee of 0.25%.
Additionally, there is no minimum balance that you have to maintain in order to use their services. There is also a premium plan available that costs 0.40% of your available balance annually and offers premium services and benefits.
Additionally, you have to maintain a minimum of $100,000 in order to be eligible to use the premium services. Apart from this, you don’t have to worry about any trading fees, platform fees, or any other hidden charges or costs.
How Betterment Investing Works
Betterment offers an easy to use interface for its users through which they can manage their portfolio and make the investment choices easily. How exactly does it work? Firstly, Betterment understands what exactly your goal and expected returns is. Are you saving for your retirement? Are you planning your child’s future? Are you saving up for a big commitment? Depending on your needs and purpose of investment, Betterment first understands how much money you are looking to save and the expected time frame. It then automatically builds a personalized portfolio for you with a mix of investment options that match your goals and risk levels.
You also have an option to customize this mix and add your own inputs. Next, Betterment helps you understand how much you need to invest as per your goals and expected returns. Finally, state-of-the-art technology and algorithms automatically maintain and rebalance your portfolio to match the preferred risk levels and keep it on track for consistent growth. Betterment also reinvests the money from your dividends in order to avoid cash drag.
These features are perfect for new investors or people who do not have much knowledge or experience with investing. Betterment also offers a premium package for which the user needs to maintain a minimum balance of $100,000. What do you get from the Premium package? Apart from all the features and benefits of the Basic plan, you get in-depth advice about investment options outside of Betterment. Additionally, you get unlimited access to CPFs (Certified Financial Planners) who can give you expert guidance for your upcoming life events or investment plans.
Betterment Features
Here are the key features of using Betterment services:
Reliability – It is an SEC-registered firm and is also a member of FINRA and SIPC. Additionally, all your investments are regulated at a federal level and each account type is insured to up to $500,000. It is also one of the industry leaders in Robo-advisors making it a highly trustworthy and reliable service.
High security – To prevent unauthorized access and misuse, Betterment implements an easy-to-setup two-factor authentication that helps you log in securely.
Smart Rebalancing – Betterment automatically rebalances your portfolio to maintain the preferred risk levels and ensure that your investment goals are on track.
Auto-Deposits – Planning to save up money. Set up an auto-deposit feature that helps you to seamlessly transfer money into your investment accounts on a periodic basis.
Reinvests your dividends – Want to avoid cash drag? Don’t worry. Betterment automatically reinvests your dividends to ensure maximum returns.
Reduces your tax bills while ensuring that your returns are optimal.
Who is Betterment Investing for?
Are you looking to save money for your future? Are you planning to optimize and maximize your savings? Are you looking to invest smartly with minimal risk options? Then Betterment is the right option for you. It doesn’t matter what type of investor you are. The highly customizable options and investment goals make it an ideal choice for all types of investors.
It’s simple and intuitive interface makes it an ideal solution even for new investors who do not have much knowledge about market strategies and choices. Even if you are an experienced investor who does not have the time to maintain your portfolio, Betterment offers tailored solutions that can suit your needs. The premium plan even offers Certified Financial Planners (CFPs) who provide researched solutions and plans for you.
Betterment Investing Pros & Cons
Pros
There are many benefits that you can enjoy when using Betterment such as:
No minimum balance to be maintained – Unlike other financial advising platforms, you don’t have to maintain a minimum balance at Betterment to continue using their services. However, to use the Premium plan and services, you need to maintain a minimum balance of $100,000. However, for a new user who does not have $100,000 to invest, he does not have to worry about minimum balance.
Goal-Based tools – Rather than providing generic investment plans for you, Betterment understands exactly what your goals are. It then builds a portfolio with robust goal-based tools that help you make the most of your time and money.
Automatic rebalancing, reinvestment, and diversification – Once you set up your Betterment account, the Robo-advisor automatically maintains and rebalances your portfolio. You don’t have to worry about any cash drag or diversification problems. You can also set up auto-pay to periodically transfer money into your investment accounts without your involvement.
Highly competitive fees – Betterment does not charge any platform fee or hidden costs. To use their services, you just have to pay 0.25% of the available balance in the Basic plan and 0.40% of the available balance in the Premium plan. These charges are applicable annually making them one of the most affordable solutions.
Cons
No Direct Indexing – Though this can help investors with taxable income save a significant amount of money, Betterment does not offer this feature.
No 24*7 Customer support – Though customer service reps are available 7 days a week, they are not available round the clock. What does this mean? It is not possible to get an immediate response to your query. However, there are comprehensive help pages and support docs that can help you with general queries.
Not very easy to part ways with the company – For some reason, if you are planning to stop using their services, it requires a lot of paperwork and mails before you can complete the process. The entire process is quite slow and cumbersome.
Have to opt for the premium package in order to get personalized guidance – If you are planning for a life event and want personalized advice from an expert, you must be a premium user. This means that you have to maintain a minimum of $100,000 in your Betterment account. This service is not available for Basic users.
Summary
All things considered, Betterment is one of the most robust and efficient choices if you are looking for a financial advisor. The goal-based approach in determining your investment choices ensure that your money is in safe hands and that your expectations are met.
Betterment also offers competitive pricing plans and tools that make it one of the best solutions in the market.
Common Betterment Investing Questions
Here are some of the most common investor questions about the Betterment investing platform.
Is Betterment good for Beginner Investors?
Betterment offers personalized goal-based investment solutions as per your needs.
How much does Betterment cost?
Betterment services are available at a low, one-time, annual fee of 0.25% of your available balance in the Betterment account. The premium services come with an annual fee of 0.40% of the available balance.
What is Betterment’s minimum balance requirement?
The basic plan does not require you to maintain any minimum balance. However, the premium plan requires you to maintain at least $100,000.
Does Betterment offer retirement plans?
Yes, according to your needs, you can start saving and planning your retirement using Betterment. You can also set up auto-pay to have funds automatically transferred into your investment accounts periodically.