I understand you can't really compare them long-term, but a lot of FIRE/Personalfinance people say "just put everything in index funds". They have done pretty good with TLH for me. For Investing and retirement accounts, Betterment LLC charges one low, … It wasn't necessary to enter every transaction manually. modified length of experiment to 2 years and 18 days. We use it to budget for stuff: retirement, college for the kids, vacations, emergency savings, new vehicle, etc. That may not seem like a lot, but over time it translates to an extra $44,692 in portfolio gains in a taxable account. Betterment vs. Wealthfront: Which Is the Best Robo-Advisor in 2020? The screenshot below shows an interactive graph enabling you to calculate returns over various time frames, going all the way back to 2004 (which is a tad meaningless, given the platform was only launched in 2008). A $4,477.78 gain (+7.1%). Press question mark to learn the rest of the keyboard shortcuts, http://www.mrmoneymustache.com/2017/02/01/betterment-cranks-up-features-and-costs-is-it-still-worthwhile/, https://www.betterment.com/tax-loss-harvesting/. Thanks for the tip on VTTSX too. TLH is only enabled for taxable accounts. I'd actually like to hear any comments or criticisms on this plan. I wish I could have continued the experiment but I had to pull out the money to buy another house, and my accountant was sick of having to itemize the hundreds of trades Betterment tends to generate over the year. What exactly is this post about? Great interfaces, easy to use, easy way to invest if you're looking to diversify. I thought betterment took care of all this for you, that was the whole point of using them? The feature I love the most is being able to have smaller auto-deposits that immediately purchase fractional shares of their underlying ETFs. Betterment provides a historical performance tool that offers somewhat limited investment return data. Lower fees are often the better way to go, especially given that Betterment just raised its fees and Vanguard mostly only ever lowers them. --If you own other funds elsewhere, you may have to be careful to not trigger wash sales because you can't choose what Betterment is investing in and when. Actually, M1 Finance is free.They’re also all highly ranked robo-advisors on Robo-Advisor Pros and show up frequently on lists like best robo-advisors for millennials. --Keep in mind that Betterment is more or less still a startup, which means it may not yet have a long-term viable business model. Where's your risk adjusted return data? For Cash Reserve ("CR"), Betterment LLC only receives compensation from our program banks, and Betterment LLC and Betterment Securities do not charge fees on your CR balance. My current plan is to move Betterment IRA to a M1Finance IRA with 90% VTI and 10% BND that I adjust as I approach retirement (in 15 years or so at current rates). Betterment vs Wealthfront vs Acorns: Best Robo-Advisor? Annualized time weighted return is 6.1% vs 11% for SPY the same period. I was pretty upset at their recently announced fee increase. It's a nice way to reduce my taxes, which I was very appreciative of this year. I would do the retirement accounts with less risk obviously. That's the good. Has anyone used any or all of these investment platforms? It's returned around 10% in the last two years and two weeks including reinvested income (M* total return chart). Betterment is a popular robo-advisor, a class of financial advisors which uses minimal human interaction and computer algorithms to invest your money and balance your portfolio. Used them for a couple of years (not by choice), not really a fan: --I didn't like their large allocation of international funds. It does dividend reinvestment and some tax optimization as well. I did this to match my Roth IRA account on the date of deposit. Plus, you have the annual charges. I think the benefits are it's an easy interface and the returns follow the market. It has a Trustpilot page but its 3.2 out of 5 TrustScore is the result of just two customer reviews — one positive, one negative. For instance, it suggested I make a low-risk savings account in betterment and move some money over because I have "too much" in my checking account. Betterment claims that tax-loss harvesting can generate surplus returns of as much as 0.77% annually. Edit I can't do math. After the first month, I decided to transfer my relatively small IRA's (Roth and Traditional) over. I am getting a 5.43% return overall from the last 6 months, but I have it heavily stock based, 90/10 I think. my accountant was sick of having to itemize the hundreds of trades Betterment tends to generate over the year. Gotta be patient. Betterment's average fees on their ETFs are 0.10% or 10 basis points for my asset allocation (90% stocks, 10% bonds) plus the 0.25% management fee (for accounts $10,000-$99,999). Many consider this the robo advisor that started it all. 3. But at least in my portfolio (90% stocks 10% bonds), it has hardly ever beaten the S&P 500 either up or down cycles. Other than that, I think Betterment and WealthFront are virtually the same. However, you do pay a 0.25% managing fee on top of all the expense ratios inherent to each etf. Maybe I'm giving the people who frequent here too much credit though ;). They’ve focused on providing a smarter, well-rounded platform. That's a good question, but I'll be honest, I'm not a sophisticated investor so I don't know. M1Finance is free, has Vanguard and other ETFs and stocks, and various blends you can pick from including target date funds. Could you share your thoughts and experience with them? I have ~107k in an IRA in Betterment, but am considering a move to M1Finance.com this year. Betterment does TLH on taxable accounts, if you so choose. --I've tried to call their customer service a few times but have never gotten through. --They charge a fee on top of the fund fees. The only thing you're measuring here is absolute return vs absolute return. Foreign stocks are not always as bad as this, and having them reduces your reliance on the home nation doing well. If, on the other hand, you already know exactly which etfs you'd place your money in and what your ideal distribution is, I'd just create an account with Fidelity/Vanguard (what I'm familiar with) and buy the etfs directly to save the managing fee. I don't want to have to research funds and make those type of decisions all the time. I did not know/do that but if you did, I'd love to hear how your portfolio is doing. The UI is nice, but nicer IMO before the latest redesign, which reminds me more of a CRM than a brokerage. Assets managed as of March 2020: $22 billion AUM. https://www.betterment.com/tax-loss-harvesting/. I've noticed international funds have done better than US funds over the past couple months. Once I was on this sub for a while though, and realized how easy it is to create a diversified, low cost portfolio yourself (you just need 2 or three funds/etfs), I switched to Vanguard and saved myself the 0.25% fee that Betterment charges (at least that's what it was at the time). Actually that's enough, you're comparing 2 very similar products. I tried Betterment for two years also and my 90/10 taxable account had similar returns. I especially liked the charts that project how much you will have in a given timeline. My Roth IRA is just a random compilation of stocks, mostly large-cap US-based and tech-leaning stocks and also SPY for balance. Cash Reserve offering includes spending analysis and guidance as … The Backend Benchmarking's most recent Robo Report finds that while Fidelity Go and Vanguard are the best robo options overall, Betterment and … New comments cannot be posted and votes cannot be cast, Press J to jump to the feed. There’s no account minimum, no minimum deposit, and you can get up to one year managed free. Plus, you have the annual charges. Betterment Review 2020. (They do respond to emails though.). Over 30 years, that extra % each year could earn you 38.8% more after-tax money in retirement compared to investing on your own. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. I have been very happy. When I compared the two, Betterment did not offer tax loss harvesting, but that may have changed. As others suggested, the UI is really nice. Betterment maintains that you can improve your after-tax returns by an average of 0.48% per year, or an extra 15% over 30 years. When I originally researched the ETF funds offered they were similar to those offered at Vanguard (unsure if this is still the case) and the management fees are very reasonable. I know 2 years is very short-term in the scheme of things. But at least in my portfolio (90% stocks 10% bonds), it has hardly ever beaten the S&P 500 either up or down cycles. Most tax software will do this for you automatically. I use WealthFront which is very similar to Betterment (I looked into both). Get a new accountant. I think I hit a total of two buttons to sync my Betterment account with TurboTax and it took care of everything. Charles Schwab Intelligent Portfolios Performance Review 2020: Fees, Returns, Robo Investing Services & Competitors Business Insider Intelligence 2020-01-14T15:51:00Z It's nice to use if you're hands-off about investments. A $23,993.25 gain (+37.9%). A lot of people are saying that Betterment/Wealthfront is easy to use, but I don't see much benefit of using them over just investing in a few different Vanguard indexes. Betterment is for passive, hands off investors who need some level of guidance Fidelity Go is completely free for balances under $10,000 After that, it is $3 per month for balances up to $49,999 and then 0.35% annually for accounts above $50,000 Unless otherwise specified, all return figures shown above are for illustrative purposes only, and are not actual customer or model returns. The basic idea behind Betterment is to create a portfolio from your risk tolerance and then put you into an asset allocation of exchange-traded funds (ETFs) that matches that tolerance. Betterment was founded by Jon Stein and Eli Broverman in 2008. Overall, Betterment receives a lukewarm reception from investors. After reading "A Random Walk Down Wall Street", I was confident in this approach. If you sync your betterment account with your other accounts (checkings, savings, 401k), it will also make suggestions based on those accounts. FINAL WINNER: Betterment. But it's far from being just a cold algorithm. Betterment claims that investing in a Betterment portfolio since 2004 would have produced a cumulative return of 190.6% (which is an average annual return of 7.3%).This beats out the average private client investor's portfolio, which had a cumulative return of 109.2% over the same time period.. You can play around with Betterment's historical performance chart and see the returns for … This site---and their pitch to customers---is not responsible. I can see "at this savings rate, I'll have between $X and Y in N years" at a glance. I also know that the US market has been very bullish so a chimp could probably have done just as well. This means that I don't have any idle cash sitting around after having transferred it, it's immediately put to use. If anyone can tell me how to do that, I'd be happy to share. As one of the top players in the industry, Betterment sets the standard for service. Betterment research suggests that this strategy can boost after-tax returns by an average of 0.48% each year, which amounts to approximately 15% over 30 years. What are your returns tracked against a benchmark like the SP500? Like most of the leading robo-advisors, Betterment offers investors automated tax-loss harvesting, rebalancing, and tax-efficient techniques. Betterment is a New York based robo advisor that was founded in 2008. You're absolutely right about the lower fees. Overview: Top robo-advisers in December 2020 Betterment – Best for service. Betterment's 100% stock allocation would be at 6.2% for the same period. For Checking, Betterment Financial LLC does not charge fees on your account. These three robo-advisors are all low-fee, relatively low-minimum investment robos. No complaints. Here’s Mr. Money Mustache’s review of Betterment, which is what originally sold me: http://www.mrmoneymustache.com/2017/02/01/betterment-cranks-up-features-and-costs-is-it-still-worthwhile/. Like others have mentioned, the international equities component of the Betterment portfolio dragged down the returns compared to S&P500, etc. Have anyone used Betterment before? We basically put in a "use this money on this date" (for example: vacation on July 1, 2020). I see Betterment as a hands-off investment. I switched to Betterment in 2014. I closed my Betterment accounts and moved them back to my brokerage. Join our community, read the PF Wiki, and get on top of your finances! --Their portfolio is unnecessarily complicated IMO; I really would've preferred just a simple 3-fund portfolio. There is little information that I can find. At that time, my Betterment balance stood at $67,774.03. The potential for it to drastically raise fees (or worse) is greater than for more established brokerages. Betterment has a history of providing investors with higher-than-average returns and competitive fees.. From early financial planning to retirement and everything in between, Betterment provides high-quality financial services and consultation to those looking for easy money management. I don't know what you're really looking for in an investment portfolio. For taxable accounts Betterment can provide Tax loss harvesting which Vanguard doesn’t offer. We make money from merchants when you use your Visa debit card. Write to Kyle Schurman at
[email protected]. Betterment requires no minimum balance and charges a 0.25% annual fee, or about $25 per year for every $10,000 invested, for a regular digital account. Literally turbo tax's higher versions could do this automatically. I tried Betterment for two years also and my 90/10 taxable account had similar returns. I have an account, though it's a very tiny one I made just to see how it worked. I was skeptical too, so I have just been putting in 50-100/mo over there for a little while. I like the user interface, and being able to see consolidated accounts in one place is nice (my 401k is a pain to log in to on its own). In addition, it's definitely the superior choice for accounts over $2,000,000 since their fee drops to 0% at that value. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Betterment prides itself on its ability to give retirement advice as a fiduciary, as well as its sterling customer service record. 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