Investing With Betterment

Get to know your ETF portfolio options Betterment makes it easy to invest with a range of expert-built ETF portfolios; learn more about your options. Betterment helps take the stress out of investing with a range of expert-built portfolio options, made of generally low-cost ETFs (exchange-traded funds). Given the breadth of available choices, it’s natural to wonder which portfolio is right for your financial situation. Keep in mind, your plan may have different investment options—log in to see what’s available. Our ETF portfolios have been designed to help investors, like you, reach their financial goals. While portfolios that combine stocks and bonds possess similar expected risk and return profiles, Betterment will recommend an investment allocation for you, based on the time horizon and goal type you select. You can also adjust your diversification and risk preferences. For most portfolios that hold both stocks and bonds, our auto-adjust feature systematically glides your portfolio(s) to a lower overall risk level as you get closer to, enter, and progress through retirement. This feature is very similar to a glide path, which is found in target-date funds (TDFs). It’s great for those that want to “set it, and forget it.” With that, let’s review your portfolio options. Core Well-diversified, low-cost, and built for long-term investing, the Core portfolio features a broad collection of ETFs made of thousands of stocks and bonds from around the world. This is the default investment option for those who do not specify a portfolio strategy. Innovative Technology A well-diversified portfolio allocated similarly to the Core portfolio, but with a subset of stocks allocated to high-growth potential companies such as clean energy, semiconductors, robots, virtual reality, blockchain, and nanotechnology. The investments use artificial intelligence, specifically natural language processing (NLP), and fundamental security analysis to identify leaders in thematics such as AI, digital transformation, clean energy, and medical innovation. This comes with increased exposure to risk. Value Tilt A well-diversified portfolio allocated similarly to the Core portfolio, but with a subset of the stocks allocation focused on potentially undervalued U.S. companies, according to certain financial metrics. Broad Impact A well-diversified portfolio that invests in companies that rank highly on environmental, social, and corporate governance (ESG) criteria. Climate Impact A well-diversified portfolio that invests in companies working to lower carbon emissions, fund green projects, and divest from holders of fossil fuel reserves—while still designed for potential long-term growth. Social Impact A well-diversified portfolio that invests in companies actively working toward minority empowerment and gender diversity as part of its long-term strategy. Goldman Sachs Smart Beta Targets companies that have potential to outperform the broader market over the long term. Diverse and relatively low-cost, this portfolio comes with higher exposure to risk. Flexible portfolio A Flexible portfolio gives you more control over your investments, and allows you to modify the individual asset class weights to best fit your preferences. We’ll provide guidance on the risk exposure and diversification of your portfolio, based on your adjustments. See when using a Flexible portfolio might be right for you. After you make a portfolio selection, Betterment will handle the rest. Here are some things to keep in mind: All portfolios benefit from auto-rebalancing, which returns the value of all allocated funds back to the target weight (after the portfolio drifts with market movements). Rebalancing may be subject to a drift threshold and account balance minimum. Although changing a portfolio’s asset allocation and fund selection can cause changes in the portfolio’s performance, Betterment has designed each portfolio to be suitable in terms of its riskiness and return potential for a given time horizon and level of risk. Which is to say, you should feel comfortable choosing a portfolio based on your convictions and values. If you’re uncertain where to start, the Betterment Core portfolio is a great way to go—and it is the portfolio used by the majority of Betterment users. Betterment is a fiduciary investment advisor that monitors market action and portfolio performance, and will periodically update asset allocation or include more cost-efficient underlying funds to help optimize your portfolio performance. We’re here to help you make decisions that bring your goals into focus, and be invested in your future.

How to invest during market highs Betterment experts weigh in on how to override anxiety, and be invested when the market climbs. While we invest for our own reasons, we get into the market to take advantage of potential price appreciation and income produced by financial assets. But anxiety can get the best of even the most eager investors. What if I buy when the market peaks, and then immediately declines? Sound familiar? As any investor knows, psychological aspects can cloud one’s judgment when it comes to money. We’re encouraged to minimize risk and maximize returns, whenever possible. So, a market that’s going up-up-up, can leave some investors feeling hesitant about paying premium prices—instead of opting for undervalued stocks, or lower price points. So how do we override the Fear of Purchasing at All-time Highs (or FOPAH, for short)? Is it best to dive in, or wait for a potential pullback? Our investment experts believe one of the best things you can do is face your fear, wading into the market. In practice, it can take a long time before that pullback comes, during which there may be further positive market returns. For instance, between 2012 and 2017, the S&P 500 did not experience a pullback greater than 12%. Oftentimes when a pullback does arrive, it’s not heralded as a positive outcome—but an ominous event, accompanied by scary headlines that spark new fears of further downturn. This can all lead to additional hesitancy around buying stocks. While there's no "perfect" time to invest, we can still be confident that choosing a diversified portfolio of investments is a smart way to help achieve long-term financial goals. To ease your fears, work out approximately how much time you’ll need to save up for your own goals. Long-term goals, like saving for college or a deposit on a house, can take time. And that’s a good thing! The longer your time horizon (the period of time you plan to keep your savings invested in the market), the more confident you can be that your money will grow by the point you want to withdraw it. Even if the market has already recently run up when you go to invest, a prolonged time horizon should help quell a pullback in the nearterm. Despite volatility, the stock market tends to trend upwards over longer periods. By maintaining a long-term perspective, you can position yourself to benefit from the market's long-term growth potential, which can outweigh short-term losses. Dating back to 1988, if you decided to invest on any given trading day, 65% of those days would have resulted in a positive investment return over the following month. The share of days with positive returns goes up as that trailing holding period extends. Historically, no matter when an investment was made between 1988 and 2009, the market was higher 100% the time just 15 years later. Short-term goals, like saving for a vacation or a home reno, have a shorter time horizon—meaning your money has less time to grow in the market. However, it's worth remembering that historically, investing at all-time highs has not resulted in lower future returns compared to investing on any other given day. After the S&P 500 reaches an all-time high, average returns tend to be slightly higher than during periods when the index has not soared so high. Practical steps to help ease your anxiety: Set up recurring deposits: When you commit to investing a fixed amount of money at set intervals over time, your losses could potentially be smaller if the market does dive in the near term. Plus, you will still have cash ready to buy at lower prices. While this comes with the risk of later buying at higher prices, it can help override the emotional pressure of trying to time the market. Diversify: Consider adding other asset classes, regions, and company sizes in your portfolio (as we do at Betterment). Our automated portfolio rebalancing is designed to maintain your investment portfolio's target asset allocation over time. Betterment continuously monitors your portfolio to see if the current allocation deviates from your target allocation—due to market fluctuations or changes in the value of your investments. Our auto-adjust feature can also help right-size the risk level of your portfolio by reducing the share of the portfolio allocated to more volatile stocks, and increasing the share allocated to bonds as your time horizon shortens.