But at least in my portfolio (90% stocks 10% bonds), it has hardly ever beaten the S&P 500 either up or down cycles. You're absolutely right about the lower fees. These three robo-advisors are all low-fee, relatively low-minimum investment robos. Annualized time weighted return is 6.1% vs 11% for SPY the same period. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Betterment. However, you do pay a 0.25% managing fee on top of all the expense ratios inherent to each etf. 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. I wanted to compare how I'd do against Betterment. Is true. I did not know/do that but if you did, I'd love to hear how your portfolio is doing. I searched this subreddit and found another user who had a similar experience. I will miss the projection charts, but they are not worth the %0.5/year Betterment charges IMO. We make money from merchants when you use your Visa debit card. I decided to stop using Betterment and instead of having a tax implication by selling, I initiated a transfer of my betterment balance to my Vanguard account, in kind. My Roth IRA is just a random compilation of stocks, mostly large-cap US-based and tech-leaning stocks and also SPY for balance. But it's far from being just a cold algorithm. I especially liked the charts that project how much you will have in a given timeline. Wealthfront Review Wealthfront also came onto the scene in 2008, but its current iteration didn’t exist until about 2011, giving Betterment a three-year head start in the robo-advising space. 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. Betterment. I tried Betterment for two years also and my 90/10 taxable account had similar returns. I'm a little skeptical about their claims with TLH, but I plan to test out that feature this year with ~$100 of fun money. I think I hit a total of two buttons to sync my Betterment account with TurboTax and it took care of everything. The biggest win for me though is the UI; both online and on the app Betterment is ridiculously easy to use. If you're looking to invest your money, but don't know the first thing about investments, try a robo-advisor. We use it to budget for stuff: retirement, college for the kids, vacations, emergency savings, new vehicle, etc. I have an IRA and taxable individual account with them. https://www.betterment.com/tax-loss-harvesting/. For Investing and retirement accounts, Betterment LLC charges one low, … That being said, their fees aren't exorbitant and they do have a lot of nice features, so I'd say it's fine. It puts all your retirement accounts into one group to show how much in retirement money you have altogether. Betterment has risen to the forefront as one of the biggest Robo-investing platforms in the industry. I closed my Betterment accounts and moved them back to my brokerage. A unique Betterment feature is the opportunity for all clients to text questions to and receive answers from a human financial advisor. New comments cannot be posted and votes cannot be cast, Press J to jump to the feed. Betterment prides itself on its ability to give retirement advice as a fiduciary, as well as its sterling customer service record. 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. It's nice to use if you're hands-off about investments. I thought betterment took care of all this for you, that was the whole point of using them? I use WealthFront which is very similar to Betterment (I looked into both). 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). I originally signed up to test the waters last November. Write to Kyle Schurman at email@example.com. Where's your risk adjusted return data? I know 2 years is very short-term in the scheme of things. It's returned around 10% in the last two years and two weeks including reinvested income (M* total return chart). Plus, you have the annual charges. I see Betterment as a hands-off investment. I can see "at this savings rate, I'll have between $X and Y in N years" at a glance. It's a nice way to reduce my taxes, which I was very appreciative of this year. But at least in my portfolio (90% stocks 10% bonds), it has hardly ever beaten the S&P 500 either up or down cycles. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. I switched to Betterment in 2014. Betterment Cash Reserve, offering a higher yield, launched in April 2020 and replaced the previous savings product. I should be getting around a $1k refund from overpaying something and I think I am going to throw that in there and see how it does for another 6 months. Unless otherwise specified, all return figures shown above are for illustrative purposes only, and are not actual customer or model returns. 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. Plus, you have the annual charges. Then you can't really compare it to a pure indexing approach, which could be much more diversified and lower risk than your stock-picks. A $23,993.25 gain (+37.9%). If you sync your betterment account with your other accounts (checkings, savings, 401k), it will also make suggestions based on those accounts. --I've tried to call their customer service a few times but have never gotten through. Your own picks did great this time, but tech did great in the late 90s too before it all fell apart. It wasn't necessary to enter every transaction manually. --They charge a fee on top of the fund fees. Has anyone used any or all of these investment platforms? My current take is that Betterment/Weathfront are OK, but M1Finance is cheaper if you want a little more DIY but still automate as much of possible. Like others have mentioned, the international equities component of the Betterment portfolio dragged down the returns compared to S&P500, etc. I've noticed international funds have done better than US funds over the past couple months. modified length of experiment to 2 years and 18 days. Just wondering if anyone else has had better luck with Betterment. Emerging markets aren't doing great, hence the underperformance. If Tax Loss Harvesting is enabled on your Betterment account, you may wind up with dozens of taxable transactions over the course of a year depending on how many "bumps" the market takes along the way. Customers gain access to a number of special features including tax-optimized portfolios, goal-based investing, and their retirement planning suite, which provides investment guidance before and after retirement - or whenever you hit FI. Betterment's 100% stock allocation would be at 6.2% for the same period. 7% looks lower than the Vanguard portfolio, but maybe taxes took off some return (tax loss harvesting sounds great but could just be a gimmick). Betterment's 100% stock allocation would be at 6.2% for the same period. Betterment does TLH on taxable accounts, if you so choose. Get a new accountant. 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). 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. That may not seem like a lot, but over time it translates to an extra $44,692 in portfolio gains in a taxable account. A $4,477.78 gain (+7.1%). Cash Reserve offering includes spending analysis and guidance as … 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. Research has shown that even after factoring in Betterment's fee, switching to Betterment will increase returns by up to 1.48% for the average investor. The Backend Benchmarking's most recent Robo Report finds that while Fidelity Go and Vanguard are the best robo options overall, Betterment and … This means that I don't have any idle cash sitting around after having transferred it, it's immediately put to use. ... Retrieved 12/14/2020 ^ Betterment, Explore Betterment's Historical Performance, Retrieved 12/14/2020 ^ Betterment Advice Packages, Retrieved 12/14/2020. Betterment provides a historical performance tool that offers somewhat limited investment return data. 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. IMO, anyone in this sub has probably already advanced past the stage of needing/using Betterment. I don't know what you're really looking for in an investment portfolio. I don't know your start and end dates for the Betterment investment so I can't compare the performance of the two directly. Press question mark to learn the rest of the keyboard shortcuts, https://www.reddit.com/r/investing/comments/5dwsi3/two_years_with_betterment/. About Betterment. Betterment is a clear leader among robo-advisors, offering two service options: Betterment Digital has no account minimum and charges 0.25% of assets under management annually. For a more detailed breakdown of Betterment's returns, check out our guide. I'd actually like to hear any comments or criticisms on this plan. 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). Advertiser Disclosure This article/post contains references to products or services from one or more of our advertisers or partners. Many consider this the robo advisor that started it all. I have been very happy. Betterment is a New York based robo advisor that was founded in 2008. And I know that Betterment diversifies internationally and the rest of the world has not recovered as quickly as the US. As one of the top players in the industry, Betterment sets the standard for service. There’s no account minimum, no minimum deposit, and you can get up to one year managed free. 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. 12 Best Robo-Advisors of December 2020 Andrea Coombes , Alana Benson December 22, 2020 Many or all of the products featured here are from our partners who compensate us. Edit I can't do math. I was skeptical too, so I have just been putting in 50-100/mo over there for a little while. Still, Betterment's fees will be higher than just buying the Vanguard fund in a Vanguard account: https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=1691. I did this to match my Roth IRA account on the date of deposit. 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. Then betterment suggests how risky to make the portfolio and auto adjusts it as time goes by. (I do not know exactly how much I paid in taxes over the two years, though Betterment has tax harvesting strategy to minimize taxes). They have done pretty good with TLH for me. Most tax software will do this for you automatically. If we wanted a certain amount of money for vacation, it will suggest how much to contribute per month to reach the goal. I am getting a 5.43% return overall from the last 6 months, but I have it heavily stock based, 90/10 I think. --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. 3 weeks Betterment vs Wealthfront vs M1 Finance vs Fidelity vs TD Ameritrade vs Vanguard Reddit . The potential for it to drastically raise fees (or worse) is greater than for more established brokerages. Betterment was founded by Jon Stein and Eli Broverman in 2008. Nerdwallet does great reviews of similar services. It does dividend reinvestment and some tax optimization as well. Other than that, I think Betterment and WealthFront are virtually the same. For Checking, Betterment Financial LLC does not charge fees on your account. https://www.reddit.com/r/investing/comments/5dwsi3/two_years_with_betterment/ I just wanted to add another sample data point. My Roth IRA, which I reallocated from time-to-time, stood at $87,289.50. Join our community, read the PF Wiki, and get on top of your finances! My Betterment portfolio did rather poorly. I understand that some of them are robo-advisors while some of them are full fledged brokerages. 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. Annualized time weighted return is 6.1% vs 11% for SPY the same period. Betterment Review. 3. The correlation between the two return series makes a big difference when evaluating whether the difference is significant. For taxable accounts Betterment can provide Tax loss harvesting which Vanguard doesn’t offer. The short answer is Betterment is the only choice if you have less than $500 since Wealthfront requires a $500 minimum deposit that Betterment does not. 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). It was lower when I first started with Betterment. The foreign stock portion has only returned 4% in the last two years, this is the source of most of the bad performance, while the total US stock portion is up around 17%. I don't want to have to research funds and make those type of decisions all the time. Great interfaces, easy to use, easy way to invest if you're looking to diversify. I use H&R Block tax software and it imported everything electronically from Betterment. I'm happy with Betterment, and happy to let them do the legwork for me. I think the benefits are it's an easy interface and the returns follow the market. Two completely different investing approaches and risk appetites resulted in two completely different results. I tried Betterment for two years also and my 90/10 taxable account had similar returns. I am astounded that they can get away with with burying negative returns. They’ve focused on providing a smarter, well-rounded platform. (They do respond to emails though.). 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. 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. That's a good question, but I'll be honest, I'm not a sophisticated investor so I don't know. --Their portfolio is unnecessarily complicated IMO; I really would've preferred just a simple 3-fund portfolio. --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. After reading "A Random Walk Down Wall Street", I was confident in this approach. That's the good. 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. My Roth IRA is just a random compilation of stocks, mostly large-cap US-based and tech-leaning stocks and also SPY for balance. 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/. Have anyone used Betterment before? I might roll my 401k there if all is well. 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