Betterment’s investing fee provides value by offering a number of features under the hood that are designed to simplify your life as an investor and help maximize your returns. Please be aware the following information only pertains to stocks and bonds investment accounts.
- Dollar-based transactions/fractional shares. When you transfer money to Betterment into a stock-and-bond portfolio, your funds are automatically invested in accordance with your goal. Stock-and-bond portfolios do not contain a cash allocation, and if a full share cannot be purchased, Betterment will invest your money in fractional shares.
- A variety of portfolio options. From SRI to Flexible Portfolio strategies, you have a say in how your funds are invested by selecting the portfolio option of your choice.
- Better diversification. Any single fund has its shortcomings. By investing your portfolio across multiple funds, Betterment seeks to give you appropriate exposure to small-cap and value stocks while still maintaining a balance of large-cap and growth stocks. Purchasing these ETFs directly and maintaining the proper balance over time can be a very demanding task.
- Rebalancing. The composition of your portfolio will naturally drift over time as the market fluctuates, but once at the appropriate account balance threshold, Betterment will automatically rebalance you back to your desired allocation using cash flows, or whenever your portfolio composition drifts by 3%.
- Automatic dividend reinvestment. Dividends earned are reinvested automatically to increase potential for compound interest.
- Allocation management. Your ideal allocation should change as you near your goal. Betterment’s optional "auto-adjust" feature will automatically adjust the risk composition of your portfolio over time as you near your goal's target date, when applicable.
- Tax Efficiency. When we do make a sale, we sell your losses (short term, then long term) first, then your gains (long term, then short term) to minimize your tax bill when possible. Additionally, we offer services to make your portfolio more tax efficient by allowing you to enable Tax Loss Harvesting1 and Tax Coordination.
- Better access to your own money. For most traditional accounts at Betterment, your money is available without a transaction fee, and you can withdraw as little as $10. If you have an unexpected event and need your money, it can typically be back in your checking account in 4 to 5 business days. See more information regarding transaction timelines here.
- Integrated and actionable advice. Our advice and retirement planning tools give you actionable guidance, which we help you execute quickly.
1 Betterment is not a licensed tax advisor. Tax Loss Harvesting+ is not suitable for all investors.