Is Betterment Worth It?

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Old man with some dollar bills in hand sitting in front of a laptop - Is Betterment Worth It?

Betterment is a financial advisory company providing digital investment and cash management services. It has three areas of business. They are:


  • Retail Investment
  • Platform For Advisors
  • 401(k) For Mid-Market Business


Betterment offers financial advice via Robo-advisor technologies. It also offers taxable and tax-advantaged investment accounts and Roth individual retirement accounts. Betterment makes investing possible for everyone. The advantages are:


  • Low Costs
  • No Minimum Investment required
  • Easy To Set Up And Monitor
  • Tax Savings
  • Portfolio Adjustments To Goals And Risks


Betterment is a good choice to make in automated investing. They are ideally suited for the following:


  • First Time Investors
  • Retirement Investors
  • Individuals With Low Cash Reserves
  • Individuals Who Prefer Goal-Based Tools
  • Individuals Who Prefer Automatic Rebalancing


How Trustworthy Is Betterment?

Betterment is registered with FINRA (The Financial Industry Regulatory Authority). This self-regulatory organization overlooks broker-dealer firms, registered brokers, and market dealings. Betterment has been a member of FINRA since 1999.

Betterment is also bound by the rules of the federal government’s investor regulator, the SEC. This provides Betterment customers firm protection in their investments. In addition to this, Betterment also offers FDIC insurance on individual cash reserve accounts.

Investment accounts are covered by the Securities Investors Protection Corporation (SIPC) up to $500,000 in securities.

From this, $250,000 is applied to cash balances. With all these security measures in place, Betterment can claim to be extremely trustworthy for your investments.


What Are The Cons Of Betterment?

Even though Betterment is a good Robo-advisor, there are a few shortcomings. They are:


  • Limited Investments
  • No Direct Indexing
  • Higher Annual Fee On Large Portfolios
  • No Margin or Borrowing
  • Premium Plan Is $100,000
  • No Customer Service On Weekends


Other than the above, Betterment still offers many perks for your investment portfolio.


Can You Lose Money In Betterment?

Investing is a risk, and you have to be prepared for losses in your investment. For example, if the market drops, then your investment loses value.

Betterment offers a few recommendations when the market does not perform well. In this way, you are able to save your investments during such fluctuations.


What Is The Average Return On Betterment?

Betterment has an average annual investment return of just 8.8% compared to other financial companies. But, of course, this all depends on the performance of your investment portfolios.

Betterment uses a diversified portfolio to reduce the risks on your investments. So you might get average returns, but it comes with less risk.

If you invest for a short-term period, then your returns will be lower. However, the longer you keep your investment intact, the higher your returns will be.


Pro Tips For A Better User Experience 

In order to have a good experience with Betterment, you first need to identify your goals. For example, are you saving for retirement, a house, or education? Once this is done, you can decide how much you are going to invest and the number of years.

Betterment has a ‘Goal Forecaster Tool’ to help track your investment progress. It allows you to adjust your savings, thus improving your chances of success.

Since Betterment uses Modern Portfolio Theory (MPT) to manage and create your portfolio, your investments are made based on targeted risk levels. This allows you to expand your portfolio once you achieve your goals.

You can also choose a portfolio strategy that you are comfortable with. Betterment has three portfolio strategies, they are :


  • Broad Impact
  • Climate Impact
  • Social Impact


This further enhances your investing experience.


Final Thoughts on Is Betterment Worth It

Betterment is a popular choice for Robo investing. It offers you a steady and safe way to invest your money. It also ensures you achieve your financial goals and advises you on adjustments.

Its wide array of automated tools appeals to a broad spectrum of people. You can create a portfolio that is catered to your interests and long-term plans. Betterment has proven to be a firm leader in the Robo investment field.