Professionally managed smart portfolios designed to help you reach your financial goals.
Choosing a way to invest your money can be tough with all the options out there. And the growing popularity of robo-advisors gives you even more choices. Betterment is an online financial advisor that makes investing easy by creating a portfolio just for you, based on your preferences and financial goals. It’s a solid choice for those new to investing.
|Annual fee||0.25% on balances up to $99,999 |
0.15% on balances of $100,000+
|Minimum deposit to open||$0|
How does Betterment work?
Betterment’s investing philosophy focuses on a diversified portfolio of low-cost index funds. It targets low-cost, tax-efficient ETFs across domestic and international markets.
Your online investment account can include almost any kind of retirement account, including Roth IRA, Traditional IRA, Rollover IRA and SEP, as well as individual or joint nonretirement funds and trusts. Once your account is set up, you can manage it from your online dashboard or mobile app.
Choose from different risk profiles with a mix of stocks and bonds based on when you’ll need to access the money in your account. Plans range from low-risk profiles with 100% bonds to profiles with higher percentages of stocks for riskier investors.
And while you can’t avoid market fluctuations, up to $500,000 is insured by SIPC in the event that Betterment goes under. Plus, your account has safeguards like two-factor authentication to protect against unauthorized activity and fraud.
How much does Betterment cost?Betterment offers two plans to reach different kinds of investors. Its standard Betterment Digital plan is hands-off, with no minimum deposit and a low management fee. This plan is perfect for first-time investors who need help planning or investors who just want to set it and forget it.
The Betterment Premium plan is ideal for investors with more capital who want access to personal account management services to optimize their investments.
|Betterment Digital||Betterment Premium|
|Annual fee||0.25% + fund fees||0.15% + fund fees|
|Annual, transfer & closing fees||None||None|
*For balances over $2 million, you’ll be charged 0.15% for Betterment Digital or 0.30% for Betterment Premium on the amount above $2 million.
What are the benefits?
- Automatic rebalancing. Your portfolio adjusts daily as well as when you make contributions or withdrawals, or you receive dividends — so your portfolio is no more than 3% off its target ratios. This means your risk level stays the same.
- Diversified investments. Your money is placed in vetted ETFs, allowing for a diversified investment that maximizes growth with minimal risk. Plus, Betterment invests in fractional shares with no minimum stocks, leaving no uninvested cash sitting in your portfolio.
- Tax benefits. Betterment automates asset location and tax loss harvesting to minimize taxes and increase your wealth.
- Socially responsible investing. Choose funds with companies that do business in a way that meets your social or ethical standards.
- Deductible charitable giving. Betterment recently announced its charitable giving feature, allowing clients to donate directly to charities they support for tax deductions. This feature offers clients and nonprofits more security, fewer middleman fees and easier tax reporting.
What should I watch out for?
- Fund fees. Portfolios are subject to fund-level fees, which aren’t included in your management fee. Understand the fees associated with each fund you invest in.
- Limited options for taxable accounts. While Betterment uses tax-loss harvesting to increase tax efficiency, it doesn’t offer a direct indexing option.
- Limited accounts supported. Unlike some other robo-advisors, Betterment only offers personal, rollover, IRA, trust and smart saver accounts.
- Minimum balance on premium accounts. To get access to certified financial planners and other investment advice, you’ll need to open a premium account with at least $100,000.
- Withdrawals. Some customer reviews mention issues or delays when withdrawing money from their accounts.
Compare with other robo-advisors
How do I apply?
Applying online is quick and easy. Answer a series of questions designed to help you create your own financial goals and save for retirement. Set up savings, retirement and investing goals and start enjoying automatic investing:
- Click the Go to Site button above and then click Get started on the Betterment website.
- Click Sign up now.
- Fill in your personal information, including email, name, phone number and US mailing address.
- Verify your identity.
- Answer a few questions about your job status, investing goals, current investing strategy and how much you want to invest.
- Answer the regulatory questions.
- Set up security questions to get into your account.
- You’re ready! Create your account and pick your profile.
To sign up for an account with Betterment, you’ll need to meet a few eligibility requirements:
- Valid US address and currently live in the US.
- Social Security number.
- Comply with all regulatory requirements.
- US checking account.
When you apply for an account, you’ll be asked for the following information:
- Email address.
- Social Security number.
- Employment information.
- Investment preferences.
FundingBetterment allows customers to fund their accounts using the following methods:
- Electronic ACH transfers.
- Wire transfers for deposits over $300,000.
Case study: Amy’s experience
Betterment streamlines investing so you can drop your money in and walk away, without the need to make an appointment or plot a complex strategy. It’s a step up from a high APY savings account, but not as intimidating as walking into a regular brokerage firm. The design is clean and easy to navigate, and sometimes when I’m bored or procrastinating I’ll mosey on in just to see what’s happening.
It’s great for people who don’t operate in the world of finance, but still have a curiosity about dividends and what it means to rebalance a portfolio. It feels more hands-on than Wealthfront, but the language is still easier to digest than traditional investment lingo. I probably won’t hang on for life, but it’s useful as an entryway into a world I’d like to get to know better when I have the time.
I set up my Betterment account. Now what?
There are a few things you should take advantage of once you’ve created an account:
- Set goals. Use the online planning tools to answer questions about your financial situation, investment preferences and objectives so that your portfolio is in line with your financial and retirement goals.
- Manage your portfolio. Download the mobile app and log in to the Betterment website to monitor and manage your investments.
- Set up auto deposits. Microsavings allows you to invest your spare change automatically with SmartDeposit. Set the amount you need in your checking account or external account and let SmartDeposit move any extra cash to your investment account every week. Pause a deposit or set a limit on how much money to move at any time.
- Talk to a financial expert. Use the Betterment app to send a message to an expert when you have a financial question.
- Purchase a financial advice package. Betterment sells financial advice packages with personalized action plans, educational content and direct help from financial planners and licensed financial experts.
How can I get customer support from Betterment?
Call 646-600-8263, chat on the mobile app or email Betterment customer service Monday through Friday, 9 a.m. to 6 p.m. ET. Live chat is also available Saturday and Sunday, 11 a.m. to 6 p.m. ET.
Bottom lineBetterment makes it easy to get started with portfolios tailored to your financial goals. It offers guides, calculators and personalized advice that can help transform your relationship with money. With no minimum balance requirements and low management fees, Betterment is a good option for investors who want a customized investing plan for less.
Compare your options before choosing the right investment platform for you.