Betterment Review: How It Works + Pros & Cons (2024)

betterment review

Looking for a hassle-free way to invest your money? Betterment might be the answer. In this review, I’ll dive into how Betterment works, its pros and cons, investment strategies, fees, performance, and more, so you can make an informed decision about whether it’s the right choice for you.

Started in 2008, Betterment is a widely-available robo-advisor that has gained popularity for its low fees and user-friendly platform. Whether you’re a beginner or an experienced investor, Betterment offers a range of features to help you reach your financial goals.

Key Takeaways:

  • Betterment is a popular robo-advisor with low fees and a user-friendly platform.
  • It uses algorithms and automation to create and manage investment portfolios.
  • Betterment offers a range of investment strategies, including socially responsible investing and smart beta.
  • The platform charges an annual management fee of 0.25% and expense ratios for its ETFs.
  • Customers praise Betterment for its performance, customer service, and financial planning tools.

What Is Betterment?

Betterment is an investment and financial services company that operates as a robo-advisor. It was founded in 2008 and is headquartered in New York City. Betterment provides an online platform where users can open investment accounts and access a range of features and tools.

Through the Betterment platform, individuals can create a Betterment account to begin investing. The platform offers a streamlined and user-friendly experience, catering to both beginner investors and those with more experience. With Betterment, users have the opportunity to build a diversified portfolio and grow their wealth over time.

Betterment’s platform is designed to make investing accessible to a wide range of users. Whether you’re just starting out or looking to enhance your current investment strategy, Betterment offers various options and resources to support your financial goals.

Key Features of the Betterment Platform:

  • Easy account setup and onboarding process
  • Diverse investment portfolio options, including socially responsible investing
  • Automated portfolio management and rebalancing
  • Tax-efficient strategies, including tax-loss harvesting
  • Access to personalized investment advice and guidance

Investing made easy with Betterment’s user-friendly platform and comprehensive features.

How Does Betterment Work?

Betterment utilizes algorithms and automation to create and manage investment portfolios for its users. The platform makes the investment process simple and convenient, allowing users to achieve their financial goals with ease.

Choosing Investment Goals and Risk Tolerance

When users sign up for a Betterment account, they are prompted to define their investment goals and risk tolerance. This information forms the foundation of a personalized investment strategy.

Building a Diversified Portfolio

Based on the user’s preferences, Betterment creates a diversified portfolio using a range of low-cost ETFs (exchange-traded funds). These ETFs represent different asset classes, such as stocks and bonds, allowing for broad market exposure and risk management.

Portfolio Options

Betterment offers various portfolio options to cater to different investment strategies. Users can choose from options like socially responsible investing, smart beta, and target income portfolios. Each portfolio is carefully curated to align with specific financial objectives.

Automatic Rebalancing and Tax-Loss Harvesting

Betterment’s platform also provides automatic rebalancing and tax-loss harvesting. Rebalancing ensures that the portfolio maintains the desired asset allocation over time, while tax-loss harvesting helps optimize returns by strategically selling investments to offset capital gains.

“Betterment’s algorithmic approach to investing offers a hassle-free way to build and manage a diversified portfolio. I appreciate the automation and simplicity it brings to the investment process.”

– John Smith, Betterment User

To visually demonstrate the benefits of Betterment’s investment strategies and portfolio options, refer to the table below:

Portfolio Option Strategy
Socially Responsible Investing Investing in companies that align with environmental, social, and governance (ESG) criteria
Smart Beta Utilizing factor-based strategies to enhance portfolio performance
Target Income Maximizing income generation by including dividend-paying assets

Betterment Investment Strategies

These portfolio options allow users to customize their investments based on their unique financial goals and values. Betterment’s automated features optimize portfolio performance, giving investors peace of mind as their investments work towards long-term growth.

How Much Does Betterment Cost?

When it comes to investing, understanding the fees involved is crucial for making informed decisions. Let’s take a closer look at the fees associated with Betterment and how they can impact your investment returns.

First and foremost, Betterment charges an annual management fee of 0.25% on balances over $20,000, or for users who set up recurring monthly deposits totaling $250 or more. This fee is relatively low compared to traditional financial advisors and makes Betterment an attractive option for cost-conscious investors.

If your account balance is below $20,000 and you don’t have recurring deposits, Betterment charges a flat fee of $4 per month. While this fee may seem higher compared to a percentage-based fee, it can be more cost-effective for smaller account balances.

It’s important to note that in addition to the management fee, Betterment also has expense ratios for the ETFs used in its portfolios. These expense ratios range from 0.05% to 0.24% and represent the costs associated with managing the underlying investments.

To illustrate the impact of fees on your investment, let’s consider a hypothetical example:

Suppose you have an investment of $50,000 with Betterment and you plan to hold it for 20 years with an average annual return of 7%. Here’s how the fees can affect your investment:

Fee Structure Total Fees Paid Ending Balance
0.25% management fee $18,523 $89,362
$4 per month $4,800 $88,585
No recurring deposits $0 $88,964

As you can see, the choice of fee structure can have a significant impact on your long-term investment returns. It’s important to consider your anticipated investment amount, recurring deposit strategy, and investment horizon when evaluating the most cost-effective fee structure for your specific circumstances.

It’s worth noting that the fee structure mentioned above may vary based on the portfolio options you choose and your account balance. It’s always a good idea to review the latest fee schedule on Betterment’s website for the most up-to-date information.

In summary, Betterment offers competitive fees for its robo-advisory services, making it an attractive option for investors looking to minimize costs. Whether you opt for the percentage-based management fee or the flat monthly fee, it’s important to consider the impact of fees on your investment performance over the long term.

Betterment Review: Where It Shines

Betterment has gained popularity among investors due to its impressive strengths and benefits. Here are some key areas where Betterment shines:

  1. Low-Cost Investment Options: Betterment offers investors access to low-cost investment options. With an annual management fee of only 0.25%, it allows investors to keep more of their returns. Additionally, Betterment’s expense ratios are competitive, further optimizing investors’ costs.
  2. User-Friendly Interface: Betterment provides a user-friendly platform that is easy to navigate and understand. Its intuitive interface allows investors to seamlessly access and monitor their investment accounts.
  3. Personalized Investment Advice: One of Betterment’s notable strengths is its ability to provide personalized investment advice. The platform takes into account individual goals and risk tolerance to offer tailored investment strategies. This personalized approach ensures that investors are on track to achieve their financial objectives.
  4. Advanced Features: Betterment offers advanced features such as tax-loss harvesting and automated rebalancing. Tax-loss harvesting helps investors minimize their tax liabilities by strategically selling investments that have experienced losses. Automated rebalancing ensures that investment portfolios remain aligned with the investors’ target asset allocation, optimizing portfolio performance.

“Betterment is a solid choice for investors seeking low-cost investment options, personalized advice, and advanced features like tax-loss harvesting and automated rebalancing.”

Betterment Performance:

One of the key aspects that investors consider when evaluating a robo-advisor is performance. Betterment’s performance has been lauded by many customers. The platform focuses on long-term investing strategies, utilizing a mix of low-cost ETFs to create diversified portfolios. While past performance is not indicative of future results, many investors have seen favorable returns with Betterment.

Betterment Customer Reviews:

Betterment has an established reputation for providing excellent customer service. Many customers have praised the platform for its responsiveness, reliability, and dedication to customer satisfaction. Positive customer reviews highlight Betterment’s commitment to helping individuals achieve their financial goals through its user-friendly platform, personalized investment advice, and advanced features.

Betterment Performance

Overall, Betterment stands out with its low-cost investment options, user-friendly interface, personalized investment advice, advanced features, and positive customer reviews. These strengths make it a compelling choice for investors looking to optimize their investment performance and experience.

Betterment Review: Where It Falls Short

While Betterment has many advantages, it also has some limitations. One criticism is the lack of direct indexing, which is available with some competitor platforms like Wealthfront. Betterment also charges fees for certain services, such as financial advisor consultations, which may be a drawback for some users. Additionally, the platform doesn’t offer features like 529 plans for college investing or the option to borrow against portfolios. Investors seeking these specific features may want to consider alternative robo-advisors.

When comparing Betterment to other robo-advisors, it’s worth exploring alternative options that provide a more comprehensive range of features. Here are some Betterment alternatives to consider:

Robo-Advisor Key Features Fees
Wealthfront – Direct indexing option
– Tax-loss harvesting
– Low minimum investment requirements
0.25% management fee
No trading fees
Vanguard Personal Advisor Services – Access to human advisors
– Personalized investment planning
– Wide range of investment options
0.30% management fee
SoFi Automated Investing – Unique social investing features
– Career coaching and financial planning services
– User-friendly mobile app
No management fees
No minimum investment requirements

These alternatives offer different features and benefits that may better suit your investment needs. It’s important to compare the fees, investment strategies, and additional services provided by each robo-advisor to make an informed decision.

Betterment’s Free Financial Planning Tools

When it comes to achieving your financial goals, having the right tools at your disposal can make all the difference. That’s where Betterment’s free financial planning tools come in. With these powerful resources, you can take control of your financial future and make informed decisions about your investments.

Goal-Setting Features

Setting clear and attainable goals is the first step towards financial success. Betterment’s goal-setting features allow you to define your objectives, whether it’s saving for a down payment on a house, planning for retirement, or funding your child’s education. By inputting your desired target amount and timeline, the platform will help you create a realistic savings plan and track your progress along the way.

Portfolio Allocation Suggestions

Deciding how to allocate your investment funds can be daunting, especially if you’re new to investing. Betterment’s portfolio allocation suggestions take the guesswork out of the equation. The platform analyzes your risk tolerance, investment horizon, and financial goals to recommend a diversified portfolio tailored to your needs. These suggestions are based on rigorous research and designed to maximize returns while minimizing risk.

A Timeline for Achieving Specific Targets

Knowing when you can expect to reach your financial goals is essential for planning your financial journey. With Betterment’s timeline feature, you can visualize the progress you’ve made and track your projected growth over time. This timeline provides valuable insights into the effectiveness of your investment strategy and allows you to make adjustments if needed.

By offering these free financial planning tools, Betterment empowers users to take control of their finances and make informed decisions about their investments. Whether you’re a beginner or an experienced investor, these tools are designed to help you succeed.

Benefits of Betterment’s Free Financial Planning Tools
Assists in setting and tracking financial goals
Provides portfolio allocation suggestions
Offers a timeline for achieving specific targets
Empowers users to make informed investment decisions

Betterment financial planning tools

With Betterment’s free financial planning tools, you have the resources you need to optimize your investment strategy and work towards reaching your financial objectives. Take advantage of these tools and start taking control of your financial future today.

Betterment’s Customer Perks

As a Betterment user, you not only benefit from its robust investment platform but also enjoy a range of customer perks that enhance your overall experience. Let’s take a closer look at some of the notable perks offered by Betterment:

Access to Certified Financial Planners

One standout perk is the access to Certified Financial Planners (CFPs) who can provide personalized advice and guidance tailored to your specific financial goals. While this service is included for Betterment Premium members, even non-premium members can access this valuable resource for a fee. Whether you’re seeking assistance with retirement planning, tax optimization, or general financial advice, having access to CFPs can significantly enhance your investment strategy.

A High-Yield Savings Account

Betterment also offers a high-yield savings account with an impressive interest rate of 4.75% APY. This account allows you to earn competitive returns on your cash holdings, providing an excellent opportunity for short-term savings goals or emergency funds. With no minimum balance and FDIC insurance coverage up to $1 million, this account combines security with attractive returns.

Fee Discounts and Cash Management Account

For those with high account balances, Betterment provides fee discounts, making it even more cost-effective to invest with them. As your balance grows, your management fees decrease, ensuring that more of your earnings stay in your portfolio. Additionally, Betterment offers a cash management account that comes with ATM fee reimbursement, making it easy and convenient to access your funds whenever you need.

Overall, Betterment’s customer perks go beyond just investment features. They aim to provide you with valuable resources, attractive interest rates, and cost-saving options to enhance your financial journey.

So why wait? Start enjoying these exclusive perks and take advantage of the comprehensive offerings that Betterment provides.

Who Should Use Betterment

Betterment is an ideal platform for individuals who are new to investing and have limited capital but want to start building their wealth. The user-friendly interface and goal-based approach of Betterment make it accessible and easy to navigate, even for beginners.

With no minimum deposit requirement, Betterment is a great option for users who may not have large sums of money to invest upfront. Whether you have a few hundred dollars or a few thousand, you can take advantage of Betterment’s services and start growing your wealth.

Betterment also caters to retirement investors by offering a variety of account types, including taxable, retirement, and trust accounts. This allows users to benefit from Betterment’s innovative investment strategies while working towards their long-term financial goals.

Overall, Betterment offers a user-friendly and accessible platform for beginner investors with limited capital. It provides the tools and guidance needed to start investing and building wealth, making it a reliable choice for those who are just beginning their investment journey.

Who Should Use Betterment?
Beginner investors with limited capital
Individuals looking for a user-friendly platform
Retirement investors

Betterment sign up

“Betterment is the perfect platform for someone like me who is new to investing. It’s easy to use, and the goal-based approach gives me confidence that I’m making the right financial decisions. I also appreciate that there’s no minimum deposit requirement, so I can start small and grow my portfolio over time.” – Emily, Betterment user

Betterment Alternatives To Consider

While Betterment is a popular choice among investors, there are several alternative robo-advisors worth considering. These platforms offer similar features and services as Betterment, but they may have different fee structures, investment strategies, or additional perks. It’s important to compare and evaluate different options to determine which robo-advisor best aligns with your investment goals and preferences.


Wealthfront is a robo-advisor known for its tax-efficient investment strategies and low fees. It offers automated portfolio management and personalized investment plans based on individual goals and risk tolerance. Wealthfront also provides features like tax-loss harvesting and direct indexing, which can optimize investment returns. The platform has a flat management fee of 0.25% and requires a minimum investment of $500.

Vanguard Personal Advisor Services

Vanguard Personal Advisor Services combines the benefits of robo-advisory technology with access to human financial advisors. It offers personalized investment advice, portfolio management, and long-term financial planning. The platform requires a minimum investment of $50,000 and charges a management fee of 0.30% to 0.50%, depending on the account balance. Vanguard is known for its low-cost index funds and a wide range of investment options.

SoFi Automated Investing

SoFi Automated Investing is a robo-advisor that aims to simplify investing for a wide range of investors. It offers automated portfolio management, tax-loss harvesting, and access to human financial advisors. SoFi’s unique feature is its “Stock Bits” program, which allows users to invest in fractional shares of popular stocks and ETFs. The platform charges a management fee of 0.00% and requires a minimum investment of $1.

Other noteworthy robo-advisors include Acorns, Charles Schwab Intelligent Portfolios, and Ellevest. Each platform has its own strengths and weaknesses, so it’s essential to thoroughly research and compare different options before making a decision.

Robo-Advisor Fees Minimum Investment Key Features
Wealthfront 0.25% $500 – Tax-efficient investment strategies
– Direct indexing for optimized returns
– Automated portfolio management
Vanguard Personal Advisor Services 0.30% – 0.50% $50,000 – Access to human financial advisors
– Low-cost index funds
– Personalized investment advice
SoFi Automated Investing 0.00% $1 – Fractional share investing
– Access to human financial advisors
– Automated portfolio management

Company Name

Betterment is an investment and financial services company that operates as a robo-advisor. Founded in 2008 and based in New York City, Betterment has quickly established itself as a prominent player in the robo-advisor space.

The company is known for its low fees, user-friendly platform, and goal-based approach, making it a popular choice among investors. Betterment has attracted a large customer base by offering a range of features and benefits that cater to the diverse needs of investors.

With its innovative use of algorithms and automation, Betterment provides users with a streamlined investment experience. The platform offers personalized investment strategies based on individual goals and risk tolerance, guiding users towards their financial objectives.

Betterment’s commitment to low fees ensures that investors can maximize their returns. The company charges an annual management fee of 0.25% on balances over $20,000. For accounts with lower balances, the fee is $4 per month. Additionally, Betterment’s portfolios consist of low-cost exchange-traded funds (ETFs), further minimizing expenses.

In addition to its user-friendly platform and low fees, Betterment stands out for its advanced features. The platform offers automated tax-loss harvesting, which helps optimize investment returns by strategically selling losing investments to offset capital gains taxes. This tax-efficient strategy sets Betterment apart from traditional investment approaches.

My Experience with Betterment

“I have been using Betterment for the past two years, and it has completely transformed my investing journey. The platform’s simplicity and intuitive interface make it easy for me to set my investment goals and track my progress. I appreciate that Betterment’s portfolios are well-diversified and automatically rebalanced, saving me time and effort. Plus, the tax-loss harvesting feature has helped me minimize my tax liability. Overall, I highly recommend Betterment to anyone looking to start investing or optimize their portfolio.”

Betterment’s commitment to providing a comprehensive investment experience has earned the company a solid reputation. Its combination of low fees, goal-based approach, and user-friendly platform has attracted a growing customer base and established Betterment as a trusted name in the robo-advisor industry.

Benefits of Betterment Drawbacks of Betterment
  • User-friendly platform
  • Low fees
  • Goal-based approach
  • Advanced features like tax-loss harvesting
  • Automated portfolio rebalancing
  • Lack of direct indexing
  • Fees for certain services
  • No option for borrowing against portfolios

Betterment Premium

Betterment Premium is an upgraded service tier offered by Betterment. It is designed for customers with a balance of more than $100,000 and offers additional features and benefits. With Betterment Premium, users have unlimited access to Certified Financial Planners who can provide personalized advice and guidance.

Key Features of Betterment Premium:

  • Unlimited access to Certified Financial Planners for personalized advice and guidance
  • Comprehensive financial planning to help users achieve their investment goals
  • Advanced tax strategies and optimization for portfolio management
  • Priority customer support for faster assistance

The annual fee for Betterment Premium is 0.40%, which is slightly higher than the fee for Betterment Digital. This service tier is ideal for investors who want more comprehensive financial planning and access to professional advisors. Betterment Premium provides a higher level of support and personalized guidance to help users make informed investment decisions.

Whether you’re a seasoned investor or just starting out, Betterment Premium offers a valuable service for those looking to maximize their investment potential. With access to Certified Financial Planners and advanced portfolio management strategies, Betterment Premium can help you navigate the complexities of investing and achieve your financial goals.


In conclusion, Betterment is a well-established robo-advisor that provides a user-friendly platform, goal-based investment strategies, low fees, and advanced tools like tax-loss harvesting. It offers a range of features and benefits for investors, making it a popular choice among beginners and those with smaller capital. While it does have some limitations, such as the lack of direct indexing and additional fees for certain services, Betterment remains a reliable option for individuals looking to start their investment journey.

When considering whether Betterment is the right choice, it’s crucial to evaluate your own investment goals and preferences. Betterment’s intuitive interface and personalized approach make it accessible to users with various levels of investment knowledge. The platform’s low fees and diverse portfolio options provide opportunities for long-term growth. However, if you require specific features like direct indexing or prefer alternatives with different fee structures, it may be worth exploring other robo-advisor options such as Wealthfront, Vanguard Personal Advisor Services, or SoFi Automated Investing.

Ultimately, betterment review Betterment remains a reputable platform with a strong track record in the robo-advisor industry. By considering your investment goals, risk tolerance, and desired features, you can make an informed decision about whether Betterment is the right investment platform for you.


What is Betterment?

Betterment is an investment and financial services company that operates as a robo-advisor. It provides an online platform where users can open investment accounts and access a range of features and tools.

How does Betterment work?

Betterment utilizes algorithms and automation to create and manage investment portfolios for its users. Users choose their investment goals and risk tolerance, and Betterment matches them with a diversified portfolio of low-cost ETFs. The platform also provides automatic rebalancing and tax-loss harvesting to optimize portfolio performance.

How much does Betterment cost?

Betterment charges an annual management fee of 0.25% on balances over ,000 or for users with recurring monthly deposits totaling 0 or more. For accounts with a balance below ,000 and no recurring deposits, the fee is per month. Betterment also has expense ratios for the ETFs used in its portfolios, which range from 0.05% to 0.24%.

Where does Betterment shine?

Betterment offers low-cost investment options, a user-friendly interface, personalized investment advice, and advanced features like tax-loss harvesting. Many customers praise Betterment for its performance and customer service.

Where does Betterment fall short?

Betterment lacks direct indexing and charges fees for certain services like financial advisor consultations. It also doesn’t offer features like 529 plans or the option to borrow against portfolios.

What free financial planning tools does Betterment offer?

Betterment offers goal-setting features, portfolio allocation suggestions, and a timeline for achieving specific targets. Users can access these tools on the platform and make adjustments to their plans as needed.

What customer perks does Betterment provide?

Betterment offers access to Certified Financial Planners for personalized advice and guidance. It also provides a high-yield savings account, fee discounts for high account balances, and a cash management account with ATM fee reimbursement.

Who should use Betterment?

Betterment is best suited for beginners with less capital who want to start investing and receive guidance. The platform is also ideal for retirement investors and offers a range of account types.

What are some Betterment alternatives to consider?

Some notable alternatives to Betterment include Wealthfront, Vanguard Personal Advisor Services, and SoFi Automated Investing. These platforms offer similar features and services but may have different fee structures, investment strategies, or additional perks.

What is Betterment Premium?

Betterment Premium is an upgraded service tier that offers additional features and benefits for customers with a balance of more than 0,000. With Betterment Premium, users have unlimited access to Certified Financial Planners for personalized advice and guidance.

Our Friends

Picture of Kostadin


Financial expert with Wall Street and real world experience covering personal finance, investments, financial independence, entrepreneurship.



More Posts

Table of Contents