Are you searching for platform to invest with?
Or you are thinking of investing with Betterment but you are not sure if it’s a good idea? This article is for you. it contains all you need to know about Betterment before you get started. Keep reading.
What is Betterment?
Betterment is one of the popular robo-advisors. It is online brokerages that enables people hold stocks and bonds as investments through ETFs.
It is fiduciary institution that offers robo-advising, special support from agent, and basic checking and savings accounts, based on your preferred plan.
In addition, Betterment is said to be a tool that aids automate the investing process, to make the process simple for an average user, and for people that are too busy to manage the investment account.
It uses AI-based technology for investment and financial recommendations. Also, assist customers to get more on investments.
Betterment.com was founded in 2008, by Jon Stein and was opened in 2010 NYC at TechCrunch Disrupt. It offers cash management, financial planning, guided investing, and more.
The Pros and Cons of Betterment
- Several portfolio options and customization
- Strong Goal-based saving
- Fractional shares
- There’s low or no-account minimum
- Tax efficient strategies
- Premium plans have live advice
- There’s no direct index
- The customer service is not available 24/7
- A minimum of $100,000 for premium plans
Betterment is best for:
- Retirement investors
- Hands-off investors
- People who need automatic rebalancing
- Users with low balances
- Users who want goal-based tools
How does Betterment work?
How does Betterment work? The thing is most people may be too busy to go through with investment decisions, or they may just be too fearful by several investment options.
That’s where Betterment comes into play, to take away any form of confusion and help make investment process simple. The platform was created to help you manage your funds via cash management, financial planning and more.
It helps you create wealth by expanding investments in the whole market. Design a portfolio centered on risk tolerance, time horizon, and other factors.
Also, before you select any investment, you get to review the strategy’s historical performance, and track the performance related to your goal.
Hence, Betterment makes investment simple. When you set up your investment account, and after you sign up, all you have to do is to decide the following:
- The amount you want to invest
- The investment you want in stock
- Also, how much bonds you want
When you sign up, you will provide some information, and Betterment will set up your financial goals and with investment portfolios per goals.
In the case of long-term financial needs such as next year’s vacation, retirement, or a down payment, Betterment investment strategy uses low-cost ETFs, that’s exchange-traded funds, and a flexible risk profile due to the type of goal you prefer and the time frame.
Betterment provides accounts that investors search for in robo-advisor. The Betterment account types includes the following:
- IRA transfers
- Traditional IRA accounts
- 401(k) rollovers
- Taxable accounts (individual, joint, trust)
- SEP IRAs (for small business owners without employees or self-employed customers)
- High-interest cash accounts
- Roth IRA accounts
Betterment Fees and Features
Betterment offers the following plans:
Digital Plan – 0.25% annual fee:
There’s no minimum required. The digital service includes the following:
- Tax loss harvesting
- Automated portfolio management
- Sync external accounts
- Automatic rebalance
Premium Plan (over $100,000) – 0.40% annual fee
The premium plan offers all the basic features, plus the following:
- Guidance on life events and investments outside of Betterment
- Unlimited access to certified financial experts
Each of the tier provides 0.10% discount for Betterment balances more than $2 million. Just portion beyond $2 million gets the discount fee.
There are no minimums to invest, and no extra trade fee or transfer fee.
HOW TO GET STARTED WITH BETTERMENT
To begin the invest process with Betterment, follow the steps below:
- Initially, you will have to create an account. Provide the necessary details like your age and annual pre-tax income.
Also, choose your investment goal: general, retirement, or emergency investing.
Note that, each of the goal has several useful asset allocations of stocks and bonds.
- Then, select the type of account you want to open. The table below can help you choose
|Best For||Account Type|
|For retirement||Roth and traditional IRA|
|Invest with a partner||Joint account|
|To reach your investment goals||Individual taxable account|
- Lastly, connect your bank account to fund your investment portfolio. It’s that simple.
Your portfolio will be automatically funded in one working day when you deposit cash. The cash you deposit is sent to Betterment Securities, a FINRA member broker-dealer.
Is Betterment worth it?
Betterment has amazing features that makes investment simple. However, what is investment without risk? To know if investing with Betterment is worth the risk, let’s check out some reviews.
It was reported, Arielle O’Shea of Nerdwallet gave betterment five out of five stars and stated “the clear leader among the startup services, with over 150,000 clients and $6 billion in assets under management.”
Also, she mentioned that “Investors with $100,000 or more benefit from one of the lowest management fees available, just 0.15%.”
Another review from Larry Ludwig of InvestorJunkie, gave Betterment five out of five stars, and stated that “an almost perfect investment service” based on their low fees, addition of new features, and asset allocation.
I have studied investing until my head explodes and I find Betterment to be the best option under most circumstances. Now I do take issue with having to invest so much internationally but over time I find myself trusting their research. I guess it is home bias. My wife even understands it to some degree and she is someone that needs to invest her money where she feels safe and I think Betterment does that for her. Sam Pearson
Betterment also has few bad reviews, check them out below:
I run a small business and have been trying to set up our 401K with Betterment for a couple months now. The sales process was as smooth as butter. And then they sent over, as expected, extensive plan documents for us to sign before we begin. Some of the details we communicated about our plan design seem to be inaccurate. Others are inconsistent within the document. Mistakes happen, though, no big deal; that’s something we can discuss and correct. But there are also parts of the 145-page document that just aren’t clear to me, so I’d love if someone at Betterment would clarify how these specific terms play out. So, I called. And called. And called… Ginny of Dallas, TX
I was very happy, overall, with Betterment when I was using them for my IRAs and investments. However, after opening a checking account with them, I’ve had some rather major issues. Betterment Financial LLC manages your account, but they aren’t the bank, NBKC Bank is the actual bank. That said, you can’t contact NBKC Bank, as you’re a Betterment customer, but then Betterment can’t always assist you either because they aren’t the bank. You get stuck in a weird limbo.
Betterment doesn’t allow customers to speak to anyone in management, it’s all filtered through customer service representatives to have authority to do nothing. If the customer service rep decides they don’t want to talk anymore, they literally just hang-up on you. Other than that, when you’re trying to spend your money, you have to use their app to select which account you want to use and then wait an hour for them to link your card to that account, it’s ridiculous. The positives are that their website is nice, and the mobile app loads your information quickly, otherwise, they’re difficult to use or work with. Anthony of Duluth, MN
Is Betterment secure?
Yes, Betterment is safe. The company is registered with SEC and a member of the FINRA. It employs Certified Financial Planners to give advice. The company makes use of strong browser encryption and stores data on servers in a well secured facility.
Likewise, two-factor authentication is made available for protection when you log into your account, you will be asked to input a special verification code sent to your mobile app, or via a text message.
Hence, if a hacker gets your password, your account is still protected.
Also, in the case of emergencies your account is still protected because Betterment Securities is a Member of SIPC. It protected its users up to $500K, plus $250K for claims for fund.
The Individual Cash Reserve accounts have FDIC insurance of about $1M, plus the joint Cash Reserve accounts provides up to $2M in FDIC insurance when cash are deposited into the program banks.
Frequently Asked Question
Where is Betterment available?
Betterment is an online platform with services available throughout the United State. You can access the checking accounts via ATMs and include refund of fees.
Does Betterment offer traditional banking services?
Betterment is not a bank. Though is provides checking and savings account for its customers alone.