In a saturated market of robo-advisors, Betterment consistently rises as one of the top options on the market. One of its best features is how well it scales its services to suit both micro-investors and big investors. In this Betterment review, we’ll share what we love about Betterment and the downsides you should keep an eye out for.
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It’s true that Betterment shines the brightest when accessed via its mobile application. The app provides easy-to-use tools for getting a snapshot of your financial investments. Here are some specific features that might catch your attention:
- Allows users to automate deposits
- Allows users to set financial goals
- Analyzes connected accounts to determine when investors may have extra cash to invest
- Provides a snapshot of your total net worth based on the balances of accounts connected to the platform
- Makes it easy for you to designate beneficiaries to receive your Betterment assets
- Provides access to multiple investment vehicles, including socially responsible investing options
Betterment Reviews and Ratings
Forbes identifies Betterment as one of the very first robo-advisors. Betterment came on the scene with one primary goal: to make investing more accessible to everyone. To achieve this, it offered fractional shares. This made it possible for its algorithm to put every penny an investor deposits to use on the person’s behalf.
While Betterment does have a strong offering, some financial professionals have questioned the company’s investment formula. This comes down to personal preference and investment style as opposed to an objective problem with the platform. Some financial professionals also believe Betterment should have paid interest on its newly launched checking account.
Because of its strong foundation, Betterment consistently scores between 4.4 and 5 stars. Some of the companies that ranked Betterment highly include Forbes, Investopedia and NerdWallet. Based on the very low management fee for all the perks provided, we agree with NerdWallet’s five-star rating.
Why Choose Betterment
One of the biggest appeals compared to its competitors is how low the management fees are. Regular accounts pay fees at a rate of just 0.25% per year. A staff writer tested the Betterment platform from February 2019 to the present. At the time of writing this article in October 2020, she had paid only $3.66 in fees on her investment, which was just shy of $1,500. Investors with $100,000 or more to invest and who want personalized advice can get this for a slightly higher rate of 0.04%.
The account has also aged well in the past 20 months. The writer earned $33.96 in dividends on that investment, plus $141.65 in market changes. This is almost a 12% return on investment, which is higher than the industry average of 10%.
Betterment also makes an excellent all-around solution to centralize your finances because of its diverse account offerings. It is also constantly growing and has steadily begun to find its philanthropic voice.
When To Consider Its Competitors
Betterment has two main competitors in the robo-advisor market. Wealthfront offers an almost identical product but targets a more elite customer base, while Acorns targets micro-investors.
The company does not have as robust an online experience compared to Betterment. However, it also offers good investment options and a wide range of options. Like Betterment, the management fees are only 0.25% per year. To help ensure it appeals to bigger investors, it has a minimum account balance of $500. Betterment has none.
Acorns appeals primarily to new investors who struggle to find the self-discipline to save. It squirrels away pennies for investing by rounding up purchases on connected cards and investing the difference. Users may also automate additional deposits. Unfortunately, Acorns has fees of $1 to $3 per month. Using the writer’s investment as an example, compare a range of $20 to $60 in fees to $3.66.
Betterment Review, The Bottom Line
For this Betterment review, it’s worth noting that the company’s mission was to shake up the investment market — and it did. It continues to attract young investors who are becoming increasingly serious about planning for the future. For more in-depth reviews of its competitors, check out our blog.