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Betterment is one of the most well-known robo-advisors, and for good reason. Investing with Betterment is easy – they are an established, modern robo-advisor that features an extremely easy-to-use platform. At a high level, Betterment features:
- Best in class fees / expenses:
- 0.25% management fee ($25 for every $10,000 invested)
- Expenses ratios as low as 0.03% on ETFs (and as high as 0.25%)
- A wide variety of ETFs available
- An easy to use online platform
Not to mention, getting started with Betterment is easy, and we’ll walk through exactly how to open an account and start investing below.
Ready to start now? You can jump straight to Betterment here.
3 Steps to Start Investing with Betterment
- Answer a Few Basic Questions
- Select a Plan and Goal
- Connect Your Bank
1. Answer a Few Basic Questions
The beauty of robo-advisors like Betterment is that they take all of the work out of investing. They don’t charge huge fees to do it, either.
Betterment has a best-in-class user interface and makes it easy to get started. Below is what their home page will look like if you head over there.
So, from there, you click one of the two dark blue buttons:
- “Start Investing” in the bottom left corner, or
- “Get Started” in the upper right corner.
You’ll then be redirected to answer a few basic questions, like the one below.
Overall, the survey is short and sweet. They keep it as simple as they can, which is great for beginner investors.
The purpose of this one-time survey is to gather basic info so that Betterment can invest on your behalf. Besides asking if you are retired, they will also ask your age and income.
Then, later on, some necessary contact information too (like what you see below).
Note, as part of this survey, you will need to input some sensitive information – such as your social security number, income, and investable assets, among other things. Betterment uses this info to open and manage accounts on your behalf, as well as provide relevant recommendations.
2. Select a Plan and Goal
As part of this set-up phase you will also have to select a plan and high-level investing goal(s).
Select a Plan
Betterment offers two pricing structures – or plans.
For most new investors, the digital plan provides everything you need, including:
- Personalized financial advice.
- Low-cost, globally diversified investment portfolios.
- Automatic rebalancing.
- Advanced tax-saving strategies.
- Everything in one place.
- Reliable customer service.
The premium plan, on top of offering everything above, provides some additional personalized benefits:
- In depth advice on investments outside of Betterment.
- Unlimited access to CFP professionals for guidance on life events.
How Pricing Works
Betterment’s management fee is one of two fees that you will pay when using the platform. The other fee is the expense ratio associated with each ETF:
- Management fee: 0.25% – 0.40%
- ETF Expense Ratio: 0.03% – 0.25%
So, for every $10,000 you will pay $25 – $40 per year in management fees depending on what plan you choose.
Plus, you’ll pay an additional $3 – $25 per year on the same $10,000 depending on which ETFs you are invested in.
This brings the total fees to anywhere from $28 – $65 per year for every $10,000 invested.
The management fee is the extra “robo-advisor” fee. It’s much, much less than what most investment professionals charge, but still more than what you pay when investing on your own. For example, if you were investing on your own through Charles Schwab, you would only pay the ETF/Index Fund expense ratios. No management fee because you are the manager.
More details on this later, but that management fee does come with some benefits:
- Hands-off management – you can sit back and let Betterment do the work for you.
- Automatic rebalancing.
- Advanced tax strategies.
Select a Goal
Once you know what plan you want to select, you’ll also need to provide some guidance on your investing goals.
Betterment works off an easy-to-understand goal system. In general, you’ll have the 6 options you see above:
- Safety Net: Building an emergency fund.
- Retirement: Planning for life after work.
- Major Purchase: Savings for something, like a wedding or a house.
- Education: Savings for a child’s education.
- General Investing: Building wealth over time.
- Everything Else
For example, you probably don’t want to have your savings for a major purchase tucked away in an IRA that has restrictions on when you can access your funds.
Similarly, having your entire retirement portfolio allocated to bonds within an individual brokerage accounts is probably not a wise strategy for a young investor.
Betterment uses your survey answers as well as your investing goals to ensure they put together the best plan for you. Plus, you can have multiple goals within your Betterment account, making it easy to tackle multiple investing strategies.
3. Connect Your Bank to Start Investing with Betterment
Last but not least, you need to fund your Betterment account.
The simplest way to do this is to link your bank account to your Betterment account. You can then make a one-time transfer of funds to get started. Plus, you can set up ongoing transfers to automatically add funds to your account on an ongoing basis.
Betterment Does the Rest
From there, the real benefits of Betterment kick in as they manage your accounts and investment portfolio on your behalf. Below are some of the major benefits that Betterment provides.
Account and Portfolio Set Up: Betterment gets everything set up and started for you, so there is no need to go out and research individual ETFs or index funds.
Adjusts Your Asset Allocation over Time: Based on your previously selected goals, Betterment adjusts your investments over time to make sure you are always on the best track possible.
Practices Advanced Tax Strategies: This primarily takes two forms for Betterment. First, they invest smartly across your portfolios, putting high taxed investments in tax free accounts, and vice versa. Second, Betterment also employs tax loss harvesting, saving you money when your investments drop in value.
Ongoing Customer Service: Betterment also offers ongoing customer service if you should have any questions. Though, if in the basic plan, additional financial advice does come with a fee.
Start Investing with Betterment Today
You can get started with Betterment today and start investing in your future here: