Betterment is an investment company that claims to help make your life easier by enabling you to rebalance your portfolio automatically without paying outrageous fees.
Its fees are some of the lowest in the industry.
It allows you more control than other similar firms that make all the decisions for you.
But Is Betterment Legit or is it a fraud company to make a fool out of you?
Before we begin with the review, I want to congratulate you and tell you that I’m glad that you do your research.
That means you are serious about finding something legit and avoid any scam.
Betterment Review Summary
Product Name: Betterment
Price: Read “Betterment Pricing” To understand it better
Betterment builds you a competent and custom-made portfolio that contains low-cost ETFs, which are extensively diversified. It is very simple to use even for new investors, but it also offers a sturdy feature to satisfy more advanced investors. There is no minimum investment and no charges on deposits & withdrawals.Betterment also offers different advice packages to suit your needs. It allows you to communicate one-on-one with their financial advisors via secure text messaging on their app or even a direct call depending on your plan.
In my Betterment review, I’m going to reveal everything about this company to help you make the right decision regarding it.
I will show you how it works, its investment portfolio, fees, benefits, cons, and all other information that you need to know.
Keep reading to find out everything about Betterment.
What Is Betterment
Betterment is a growing financial company that provides a robot-advisor app to help you invest your money in investment collections known as Exchange-Traded Funds (ETFs).
It uses an algorithm series to adjust your investments appropriately so that they can keep earning you money.
This company is unique in that it focuses on many other things besides the robot-advisor app.
These include the financial planning tools, individual retirement accounts (IRAs), trusts, and an advanced learning section to help you understand saving, retirement and investing, among other personal finance topics.
Jon Stein and his colleagues in the financial services world founded this company in 2008.
Their company aims to help you manage your money.
Its products have been improving in numerous ways to make it a full-service financial company.
Now, the above nice story don’t show you whether Betterment is a legit company or not.
Therefore, there is a need to explore beyond the “Why” to know what Betterment offers, its fees & charges, as well as other users’ opinions regarding this firm.
This will help you to know if Betterment is a safe company to invest your money.
How Betterment Works
Betterment is very simple and easy to use for newbies in the investment industry.
It’s free to download the app and register an account with Betterment.
It requires no account minimum for the Betterment Digital offering with a 0.25% management fee, and a minimum balance of $100,000 for the Betterment Premium with a 0.40% management fee.
This is where it’s different from other robo-advisors such as:
• Stash App
The investment philosophy for this company is based on modern portfolio theory, focusing more on the advantages of diversification.
Depending on your risk tolerance and goals, Betterment uses ETFs that constitute up to 12 asset classes.
You can choose a Socially Responsible Investing (SRI) portfolio that stresses on specific social causes.
It uses negative screening, which means that you’ll only invest your cash into firms with no negative records on environmental problems.
This is aimed at guaranteeing investors that the money they invest supports companies with positive social ethics.
Each time cash flows in or out of your account (in the form of dividends, withdrawals or contributions);
Betterment automatically rebalances your portfolio.
It uses algorithms to determine when rebalancing is needed.
It purchases fractional shares to prevent your portfolio from containing un-invented money.
Financial advisors will monitor your account if it’s a premium one.
Betterment features SmartDeposit, which is an automated cash investment tool.
This moves your extra cash from your bank account into your Betterment account depending on the limits you set.
You just need to establish the maximum amount of money you want to have in your bank account, and then Betterment will move the surplus money into your investment account.
Depending on your plan, you’ll get financial advice and support from Betterment financial experts.
Betterment Digital allows you to communicate with financial advisors through text messaging built-in in their app.
If you have a Betterment Premium plan, you’ll get access to financial advisors through unlimited emails and calls.
Both methods are reasonably priced.
Their customer support team is available on the phone and Live Chat from 9:00 am to 8:00 pm ET (Eastern Time) during weekdays (Monday-Friday).
Most of the users are happy since the sign-up process of Betterment helps them to define their goals.
The company asks for your annual income and age and then suggests various goals depending on your answers.
It also provides you with a retirement savings target and the estimated amount for your investments to meet your goals.
According to many users’ reviews, the app provides you with numerous useful recommendations regardless of your goals.
Betterment Investment Portfolio
The investment portfolios on Betterment are built from seven Bond EFTs and six Stock ETFs.
Some of the Bond Funds are from Vanguard while others are from iShares:
• Short-Term Treasuries (iShares).
• US Corporate Bonds (iShares).
• Inflation-Protected Bonds (Vanguard).
• Emerging Market Bonds (iShares).
• International Developed Bonds (Vanguard).
• US High-Quality Bonds (401(k) and IRA accounts) – Vanguard.
• National Municipal Bonds (Taxable accounts) – iShares.
It’s good to note that the National Municipal Bond ETF is only applicable to taxable investment accounts and hence, it does not apply to retirement accounts.
All the Stock Funds are from Vanguard and include the following:
• US Total Stock Market.
• US Small-Cap Value Stocks.
• US Mid-Cap Value Stock.
• US Large-Cap Value Stocks.
• International Developed Stocks.
• Emerging Market Stocks.
After establishing your portfolio, Betterment will automatically rebalance the account appropriately with changes on balance.
This will depend on the deviation percentage from the target portfolio.
It’s free to download the Betterment’s app and create your account.
It’s also free to make deposits, withdrawals and even buying securities or selling them.
To cover trading and portfolio management costs, Betterment charges a yearly service fee that’s split into 4 payments depending on the average daily balance each quarter.
There are two service tiers offered by Betterment, including:
• The Digital Service (balance of $100,000 and below) – 0.25% fee per annum.
f you have a balance of over $2 million (401(k) excluded), you’ll be offered a 0.10% discount.
Are You Tired Of Scams?
Betterment Advisor Network
Some people may prefer communicating with a human investment consultant to build their robo-advisor portfolio.
Betterment knows this, and thus, it created the Advisor Network.
You get direct assistance from certified financial planners in the network.
They will know you personally and can build you a customized, complex business plan.
They can also help you to address more comprehensive and advanced financial issues.
Betterment offers one-on-one advice package for various needs at different prices:
• Getting Started Package – $149
• Financial Checkup Package – $199
• College Planning Package – $199
• Marriage Planning Package – $299
• Retirement Planning Package – $399
After selecting your preferred package, you’ll schedule a call at your own suitable time, and the Betterment staff will follow up with a link to pay and specific items to prepare in advance.
Then, you can expect an expert to provide you with recommendations based on your financial goals and situation during the call.
GOOD VS BAD
- It’s straightforward to use.
- Offers strong goal-based tools.
- Requires no minimum investment or balance.
- Uses fractional shares to limit the amount of un-invested cash.
- Offers many custom-made portfolios.
- Invests your extra funds automatically.
- Allows retirement investing.
- Controlled investment options.
- The advice packages are a bit expensive.
Who Is Betterment Meant For (And Not For)
Betterment is intended for newbies and experienced investors in the stock market.
It’s a great tool for retirement and hands-off investors, among others.
It requires no minimum balance and charges fairly low annual fees depending on your account balance. It offers automatic rebalancing and goal-based tools.
Jon Stein founded Betterment Company in 2008 and based it in New York City.
He is an MBA graduate from Columbia Business School.
Eli Broverman who is a lawyer of NYU School of Law, among Stein’s roommates and other colleagues, helped him to create this platform.
These guys realized that they were really great at managing money that belonged to their clients.
However, they were often making losses while maintaining their own money.
Therefore, they came up with this company to help you manage your money.
Is Betterment Legit?
Betterment is one of the leading self-governing robo-advisors that appeal to more clients every year.
It provides services and tools that are impressive to both newbies and retirement investors.
It also offers robust advisors to guide you on making the right decision regarding your investment plan.
Is Betterment safe?
In my opinion, YES; it’s a safe company to engage with and earn some interests on your investments.
Betterment’s charges are reasonable and highly affordable to many people.
Actually, it’s relatively cheap compared to other similar advisors.
It allows anyone (regardless of age) to invest any amount of money without fear.
It also provides financial advisors who you can contact through their mobile app at any time.
This specialist will guide you on the best investment plan to follow so that you can earn more interests from your money.
Furthermore, he/she will show you how to set your saving goals, take risks and the amount of cash to invest at a given time.
Unlike other similar companies, Betterment doesn’t specify any minimum amount that you should deposit.
This means that you don’t need to have thousands of dollars to start investing.
According to the website, you can earn 2.6% more than a typical investor if you go for long-term investing.
This is done by reducing the taxes and fees, diversifying your portfolio, as well as enhancing the investor behavior.
This company has had a good reputation online and has partnered with Goldman Sachs and Vanguard.
Betterment is best for hands-off investors, retirement investors, those with low balances, those interested in goal-based tools, and those looking for automatic rebalancing.
Most of the users’ opinions showed that Betterment is a safe place to invest your money.
This makes me recommend this company to anyone with needs to invest.
It’s my sincere hope that you’ve found my Betterment review helpful.
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