You’re reading this for various reasons, one of which is to gain some financial knowledge. It would be best if you acquired financial expertise to be able to multiply what you already own.
One of the major platforms that can help you invest for a brighter future is Betterment. The US-based investment company offers diverse investment portfolios. Also, their platform has an automatic feature that keeps trading even without your input.
Here is everything you need to learn about Betterment.
Overview: What is Betterment?
Betterment is a financial platform that is at the forefront of the Robo-advisory business. It is a fintech startup established in the United States.
It’s one of the first to use technology to create a portfolio recommendation and automate your investment activity. Its automatic goal-setting feature, which is employed in investments, sets it different from other fintech firms in the region.
This feature enables you to manage your portfolio automatically. This way, you can focus on your other business while the platform handles all of your biddings passively.
Passive index-tracking stock and fixed-income exchange-traded funds are used in this function. The organization employs a global diversification strategy based on a Nobel Prize-winning asset-allocation system— the Modern Portfolio Theory, developed by renowned economist Harry Marowits.
Other tools at your disposal are:
- Retirement planner
- Goal tracker
- All-in-one dashboard
- Robo-advisor comparison
- Refer-a-friend program
To use the platform, you can first synch all of your financial accounts and get a comprehensive overview of all your assets even without investing. Betterment then uses its resources to help you set financial goals and set up investments for each plan. Then the second option to use the platform is creating a portfolio investing in it.
Lastly, you can create a Flexible Portfolio, adding some of your uniquely added ones. Or go with the already structured portfolios in Betterment.
What Do They Offer
Betterment provides tax-loss harvesting as well as a rebalanced portfolio regularly. It offers goal-setting and a variety of planning tools and helps at every stage of the journey. They provide you with low-cost management fees based on your unique risk profile.
Betterment entered the market in 2008. Since then, it has grown to offer more assets and cash management services to its clients after more than a decade in operation.
With various instructional resources and an intuitive and user-friendly layout, the platform is easy to use. As a result, it’s an excellent brokerage company for people who are just getting started with investing.
In April 2020, they replaced the savings product with the Betterment cash reserve that offers higher-yielding returns. This new cash reserve offers a spending analysis plus guidance. It also aids better transfers between accounts in the platform.
In October that same year, Betterment added two additions to its socially responsible Portfolio. A climate impact portfolio and a Social Impact Portfolio.
Betterment also has equity allocations for the Safety Net goal uniquely created to beat and mitigate inflation. It cuts to 15% from a whopping 40% in risk reduction. An alternative to Betterment is Webull.
You can use Betterment both on their desktop website and the mobile app.
Can You Use Betterment in the UK?
Unfortunately, Betterment is not available for investors and users in the UK or any other European country. But you can access and open an account if you reside in the United States of America, Virgin Islands, and Puerto Rico.
Plans to advance and expand into the EU are still unclear; thus, the only people who can fully reap the fruits of this fantastic platform are solely in those three geographical areas.
Assets and Markets
Since it is an investment platform that offers money management options, here are some of the accounts that you can find under Betterment:
- Investing account
- IRAs and 401(K)S
- Roth IRAs
- High-yield cash
These are a blend of both short and long-term accounts. Here is a breakdown of each:
The main goal is to multiply what you already have when it comes to investing. So, whether you are working towards buying a new home, car, or working towards getting your child’s education, investing is the way to go.
Betterment helps users make an informed investment decision based on the goal of the investment. The plans set are built on smart tax strategies.
You can open an investment account for Safety Net, retirement, major purchases, education, trusts, and general investment.
IRAs and 401(k) Account
Betterment strives to make savings for retirement easy and optimized for all their client’s needs. The different IRA types offered by Betterment have a distinct tax advantage, and the team will advise on the best after accessing your finances.
The first is the Traditional IRA, an accessible and tax deductable account that adds to your retirement funding.
The second is the Roth that takes advantage of tax-free earnings and withdrawals. Next, there is the SEP that is an ideal retirement planning account that is for the client that is self-employed and self-reliant.
Lastly, the Roth conversion makes money exchange easier from the Traditional into a Roth IRA within the app.
Roth IRAs Account
A Roth IRA lets you save and invest for retirement and withdraw the funds later on tax-free. When you open this account, Betterment promises personalized investments, trading managed on your behalf, and socially responsible investing options.
This account is flexible with no tax penalties for withdrawals, and you can use up to $10 000 of your earnings on a house down payment. You may also switch the Traditional IRAs and 401(k) into a Roth IRA account.
High-Yield Cash Account
The High-yield cash account is built for cash that you save daily. Once you open this account, your money is insured by FDIC up to $1 Million.
You can move money freely at no fees and earn a 0.03% APY on your cash, five times the national average.
The Checking account is a no-fee account, and you get a Visa debit account to use. There are no ATM fees or overdraft fees. And in case foreign costs are incurred during a withdrawal, the amount is reimbursed to your account.
This account is also FDIC insured up to 250k per depositor. The Checking account has incentives like cashback rewards from notable brands like Adidas, Walmart, Philosophy, Sam’s club, and Dunkin.
When you want to secure a future for your kids, the best way is to open a trust for them. And you can open one in the Betterment app.
The signup is straightforward, the cash flow management is innovative, and the portfolios under Betterment Trusts are very diverse with risk adjustments. Also, the returns are handsomely paying using graphical and visualization tools that help you understand and see the level of growth over time.
All the transactions are transparent, and statements are clear and precise. You can access your account activity online to view the quarterly and annual information and annual tax reports.
Betterment also has five portfolio types, namely:
- The Standard Betterment Portfolio with globally diversified stock and bond EFTs.
- Broad Impact, Climate Impact, and Social Impact Portfolios. The three socially responsible portfolios. On an environmental and social level, Broad impact stocks are tightly managed and stored. The Social Impact portfolio focuses on companies based in the United States and is committed to diversity. The Climate Impact Portfolio aims to combat climate change by identifying businesses with the lowest carbon impact and using EFTs to avoid companies that employ fossil fuels. Climate Impact includes Green bonds.
- Next is the Goldman Sachs Smart Beta Portfolio that attempts to outperform the market.
- The income-focused all-bond Portfolio is made entirely of BlackRock EFTs.
- Lastly, there is the Flexible Portfolio that is constructed based on the client’s assets.
Deposits and Withdrawals
Both deposits and withdrawals on Betterment take an average of 1 to 2 business days for completion. Here are some of the rules when it comes to transfers between some Betterment accounts:
Transfer Between Cash Reserve Betterment Checking Accounts
The daily transfer limit between these two accounts stands at $10,000. Same-day transfers are completed on the same day of application. The cash reserve has no transfer limits, so you can withdraw as often as you want.
However, if you withdraw shortly after depositing, there might be a hold on your withdrawal for up to five business days. Within that time, Betterment staff will get in touch to get extra information from you.
Transfer Between Cash Reserve and Investing Accounts
The limit of transfers between these two accounts stands at five times per day. One transfer may take up to 2 days of approval. Some terms and conditions apply depending on the type of joint investing accounts you hold.
Transfers Between Checking and Other Accounts
Moving money from one Checking account to another also takes a maximum of 2 business days. This is when you are funding an investment goal or moving money to a Cash Reserve.
If the transfer is aimed at a Cash goal account, the daily limit stands at $10 000, and the cash will be available on that same day.
- Daily ATM withdrawals: $500
- Daily Debit card: $2000
You can reach the customer service team via mail and phone from 9 am to 6 pm Eastern Time, Monday to Friday. Contacting them via email is limited to 11 am to 6 pm.
You can also engage the team via online chat, but that is a privilege only the existing clients get to enjoy. You access the online chat after you have logged in to your account.
You may get financial assistance from the Finacial planners, but it costs $199 to $299. These consultation sessions take place via Zoom through informative video conferencing feeds.
Is My Money Safe with Betterment?
The security features of the Betterment platform are sufficient in that both the site and app are encrypted. The mobile app has two-factor authentication.
Betterment does not have Securities Investor Protection Corporation (SIPC) insurance, but Apex Clearing handles all trades.
As long as you don’t have more than $500 000 in accounts and $250 000 in cash, your money is safe. If you do, you might consider transferring the excess to a firm that offers supplementary insurance.
Is Betterment a Good Broker?
Its features have been centered around technology and Robo-advisory early enough. And this has scored Betterment credibility as a trusted platform that you can invest in.
One of the selling points that would convince you to use Betterment is that the minimum balance is $0. The Checking account reimburses you whenever you use the Debit card when the extra fees are charged on the card. You get FDIC insurance on your cash up to $250.
The Cash Reserve is a high-yield account with an earning variable of 0.03%, which offers bucket money for individual goals and plans. You also get FDIC insurance of up to $1 million of your cash in this account.
For these reasons, Betterment is an excellent broker for people who are looking for a platform to help them manage their retirement funds. Regardless, it is cherished by people who are looking to invest and track their financial moves.
The numerous portfolios plus the accounts can accommodate different people looking for a brokerage partner.
Betterment ranks among the top Robo-advisors in the money market, meaning they meet all the requirements of a spectacular platform. You can access them via email and phone.
Their transactional fees are very accommodative for any money-minded person. That said, you should give them a try as they deliver as they have promised. Investors already on the platform attest they made a good decision.
Unfortunately, the company does not operate in the UK, but you can still utilize their services in the US, Virgin Islands, and Puerto Rico