Betterment Review – A Must Read Before You Invest Comments35 Comments


Hey everyone, Josh here again for another review. I really enjoy talking about investment options, strategies, trends, etc…. So, today, I’d like to go over a new investment option that you may really enjoy. It’s called Betterment. Just in case you haven’t heard of them. Betterment is a relatively new company in the investment market and, they are really making a name for themselves pretty quickly. In this review, I plan to tell you why they are growing so quickly, inform you of the positives in working with them and of course go over the cons of working with them. So, let’s get to it…

Betterment Short Review

Betterment Pros – Betterment boasts about smarter investing for busy people and, they are really able to do that! They’ve created a platform that helps to automate the process of investing by assessing risk vs. reward and making the split second decisions that you simply don’t have the time to make. With straight forward pricing, Betterment is not only an easy choice, it’s a fairly low cost one!

Betterment Cons – Although the costs associated with investing with Betterment are very straight forward, it’s important to remember that there is a cost associated with automation. The automation Betterment provides helps to increase your investment dollars as fast as possible but, the increases do come at a cost. It’s important to decide if the added cost of automation is worth it for you.

Betterment Overview – Betterment really is a great company to work with. By providing ways to automate your investing, they have become a great start up investment for new investors that don’t have too much to work with. They give consumers the opportunity to invest very little and grow. However, if you’re a bigger investor, you may want to consider other options like OptionsXpress to avoid the added cost for automation that you don’t need.

Betterment Long Review

OK, now it’s time to get into the juicy details that I just can’t get into when it comes to a short review. Wow, there is so much…I’m not quite sure where to start. I guess I’ll start with pricing which, is pretty unique in this case. With most investment platforms, we see pricing on a per trade basis. You have to worry about what type of trade, is it broker assisted, ect… With Betterment, the pricing structure is quite a bit different. Instead of charging a per trade cost that can be difficult to calculate, they charge a small percentage based on the type of account you have and the amount of money that you have in the account. So, depending on your exact account, your fees will range from 0.15% to 0.35%.

How Does It All Work?

Betterment set out to make their platform as simple and use friendly as possible. So, the process is pretty simple. First, you sign up for a free account and link the account to your checking account. You can set up automatic monthly withdrawals so that you don’t have to think about when it’s time to invest as well. Once you account is set up, you have 2 options. Either you can invest in a predetermined basket of stock ETFs or you can invest in a predetermined basket of bonds. Either way, Betterment has done a good job of diversifying the baskets to make sure that chances of loss are pretty slim.

What Investment Options Are Available

Currently, betterment allows you to put your hands into 6 different stock ETFs. Here is how it works… 25% of the investment will grow through the Vanguard Total Stock Market, another 25% will go into the iShares S&P 500 Value Index, 25% into Vanguard Europe Pacific, 10% in Vanguard Emerging Markets, 8% in iShares Russell Midcap Value Index, and 7% in 7% iShares Russell 2000 Value Index. As far as bonds are considered, they work on a 50/50 split between iShares Barclays TIPS Bond Fund and iShares Barclays 1-3 Year Treasury Bond FUN. As you can see, Betterment does a pretty good job of diversifying your investment profile for you so that you don’t have to!

My Favorite Part Of The Betterment Platform

I have to say that the coolest feature that they have is the dashboard. When you first sign up, you will create goals that you would like to reach in a specific amount of time. Based on how your investments are performing, Betterment will show you what you need to do to reach your goals and how close you actually are. They will tell you the monthly investment that they suggest as well as other key factors that will help you to keep your goals in the cross hairs!

My Least Favorite Part Of The Betterment Platform

I’d have to say that the cost is my least favorite part. Although the account is 100% free, the cost of investing with Betterment tends to be a bit higher than the cost of investing through other platforms. However, this makes a lot of sense. With other platforms, you tend to take on more risk than you would with Betterment. So, it’s really up to you to decide if the risk is worth the reward. If you’d rather not take a big risk, the cost is well worth it!

Who Should Consider Betterment

Because of the ease of use, I would say that this is a great option for the start up investor. This is because, starters don’t generally know how to diversify their portfolios and keep them safe. To learn, they generally work with brokers which can get crazy expensive. With Betterment, all investments are predetermined baskets created with risk in mind. By cutting out much of the risk, it seems to me that Betterment created a platform to meet the needs that the newer guys will have. As far as seasoned investors, I’d strongly advise looking into my review of OptionsXpress. If you are seasoned, you will know what to and not to do to keep your investment portfolio safe. In this case, it simply doesn’t make sense to pay the added cost associated with the platform.

Betterment Review

Rating: 4.8 / 5
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Betterment Reviewed by Clarkgym on .

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By : Josh Rodriguez | 9 Aug 2013
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35 thoughts on “Betterment Review – A Must Read Before You Invest

  1. Debt Roundup

    Great review Joshua. I started with Betterment and I really enjoy it. I actually talked with a few of their employees that came from iShares and Vanguard because they like the platform so much. I know that their fees are a little higher, but I have really found some good success with them and recommend them to anyone looking to get into investing.

    1. Jeremy

      Good to hear you have had success with them Grayson. I’d definitely give them a shot but I think they might be only available for Americans. The hands free approach would be pretty convenient for many people.

    1. Jeremy

      Exactly. Not everyone has the time or desire to learn about investing and keep on top of it all. So there needs to be an option where people can let a company choose which specific investments they are purchasing.

  2. No Waste

    I was previously oblivious to their existence, so thanks for a thorough write-up.

    This could be a good set of training wheels for a beginner before they take off on their own (and can then avoid the fees/transactional costs)

    1. Jeremy

      Yes this is probably a good idea for beginner investors. Or people can use this as their option for safe investing while being a bit more risky with a separate account.

    1. Jeremy

      It does sound like a solid platform for anyone that is new to investing. Choosing funds can be quite difficult for a beginner to tackle on their own, especially knowing that you have to keep an eye on all of those selections.

  3. C. the Romanian

    Nice review! I know nothing about investing so far so this indeed sounds like something I could give a try… not sure how good of an idea would be for the future, though because probably knowing what you’re doing with your money is the best thing to do :))

    1. Jeremy

      Yes, in the long term, it may be best to learn to handle investing on your own. That isn’t practical for everyone though. For some people free time is at a premium and they’d gladly pay fees to save some time.

  4. Financial Independence

    Definitely looks like a suitable way to invest for those who don’t want to dedicate the time to learning about direct investing. The slightly higher fees make sense if the alternative was to not invest at all due to not having the knowledge.

    1. Jeremy

      The hurdle is more than just learning about direct investing. You also have to be very diligent about researching companies and monitoring those companies regularly.

  5. Thomas | Your Daily Finance

    Thanks for the review Josh! I never heard of Betterment until this morning. Fees can add up so I guess you have to find out if it makes since for you to use. From the comments seems like people have had a good experience with them. I get free trades right now so I like where I am at for the moment. But you never know.

    1. Jeremy

      Someone at your level probably wouldn’t have any incentive to switch over, especially since you get free trades. For more of an entry level investor, it’s a solid option though.

  6. Tara @ Streets Ahead Living

    I really recommend Betterment to folks who can’t put up the large starting balance for a lower fee account like Vanguard. When saving for a large balance requirement investment account, it can be tempting to use that money for something else (oh look, my friends are going on a cruise, I can postpone starting that Vanguard account…) so having that money already invested ensures it can’t be used for non-retirement fun.

    1. Jeremy

      Good point Tara. It does take a lot more money to get into something like Vanguard. By starting somewhere like Betterment, you can get your feet wet and get some returns on your money in the meantime.

  7. Katherine

    Hi Josh,

    Katherine from Betterment here. Thank you for your thorough review – it was great to see you write about us.

    I just wanted to clarify our fees – they range from 0.15% to 0.35%. We keep our costs low to help customers avoid erosion of their returns. Would appreciate if you could update the review.

    Thanks again,

  8. Scott @

    With all of the positives involved with Betterment, there are costs. Don’t get me wrong, it is a great product. However, a great deal of my investing success (not just in equities) is in minimizing costs or eliminating them completely. This product is perfect for someone with limited time and knowledge of picking stocks and ETFs.

    1. Jeremy

      Yes a serious investor should be very concerned with their investment costs. Early on though, most people just don’t have the time or expertise to properly manage their portfolio. So paying those costs could be very worthwhile in that scenario.

  9. Shobir @ Find Some Money

    This is the first time I’ve heard about the Betterment account, I love reading your reviews and this is something I’m definitely going to check out. While were on the subject of reviews have you considered review UK products? I only say this because I’m from the UK and there are a lot of people here who enjoy your reviews. Anyway, great post.

  10. Lisa J.

    Does using Betterment’s software actually aid customers in becoming more educated investors so that they eventually can transition to a more self-directed tool? Put another way, does Betterment give you fish AND teach you to fish?

  11. Sherri Lewis

    This sounds like a great option for someone like myself, who doesn’t have any experience. Thanks for the in-depth review!

  12. Mehmood

    Hello Josh,

    Great Betterment review. I’ve not heard before about it but after reading your review I’ll surely check out.

    Thanks for sharing!

  13. Steve Burgess

    As betterment sounds to be great platform for those who want to enter into investing world without much hiccups or stress. Hope there is no hidden factor with it, else it will soon lose its ground. Since everyone wants to have safer mode of investment with great future return.

  14. Aaron Hung

    I’ve decided to finally sign up and let the professional do the job. Even though there are cost with betterment. I still think it’s a LOT cheaper than leaving my money at E-trade and doing the trades myself.

  15. Bob

    With Betterment I’m consistently at 2.5% return on investment for 8
    months now 80/20 stock/bonds. But I think these are terrible results. Is it just a bad year for EFTs? What’s your take on this?

  16. DivHut

    Thanks for this review. It seems like more and more apps/companies/brokerages are looking to entice 20 somethings to invest. While I like the idea of making investing simple and somewhat automated, I think it can be easy for anyone to start on their own and build their own dividend income portfolio with the likes of Loyal3 or Sharebuilder. Easy, no/low fees and buy 20 or so solid dividend payers, reinvest and just let time compound your dividend income. Have you seen Acorns? I wrote about them on my blog. They take your excess change from everyday purchases and buy ETF’s for you.

  17. RB

    I had requested a demo via their website 3 days ago and never got a response. I called to follow up and the excuse was that they have been overwhelmed with requests and cannot keep up. I can’t imagine what customer support would be like once I pay for the product. Typical growth company; too much marketing but not enough infrastructure to handle the workload. I suggest that anyone condsidering this company hold off until the dust settles.


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