Four ways we help trim your tax bill Jun 10, 2026 12:00:00 AM And why these "invisible" wins matter more than you may think. As investors, we tend to focus most on what we can see. Things like portfolio makeup, and the returns generated by those investments. No less important, however, are the less obvious things, like the taxes you never paid in the first place because of technology that quietly runs in the background. You may only think about taxes once a year, but here at Betterment, every day is Tax Day. This sort of year-round tax optimization sounds boring, but believe us, it makes a difference. Taxes can steadily eat away at your returns over the years. So any advisor worth their salt should take taxes seriously and minimize them as much as possible. These “invisible” wins are hard to spot in the moment, so let’s shine a light on them now. Here are four sophisticated ways we buy, sell, and hold your shares, all in the name of trimming your tax bill. Choosing which assets go where – Our Tax Coordination feature helps shield high-growth assets in the most tax-efficient account types. Rebalancing wisely – After rebalancing target allocations for cash holdings, we take advantage of any available cash flows to help minimize capital gains taxes while rebalancing your portfolio. Choosing which taxable shares to sell (or donate) – Our TaxMin technology helps minimize short-term capital gains taxes. Harvesting losses – When your taxable investments dip below their initial purchase price, we jump on the opportunity to “harvest” the theoretical loss and potentially lower your future tax bill. 1. Choosing which assets go where From a tax perspective, you have three main account types at your disposal when saving for retirement: Tax-deferred (traditional IRAs, 401(k)s, etc.), where taxes are paid later. Tax-exempt (Roth IRAs, 401(k)s, etc.), where taxes are paid now. Taxable, where taxes are paid both now and later. Because of their different tax treatments, certain types of investments are a better fit for certain accounts. Interest from bonds, for example, is typically taxed at a higher rate than stocks, so it often makes sense to keep them away from taxable accounts. This sorting of asset types based on tax treatments, rather than divvying them up equally across accounts, is known as asset location. And our fully-automated, mathematically-rigorous spin on it is called Tax Coordination. When Tax Coordination is turned on, the net effect is more of your portfolio's growth is shielded in a Roth account, the pot of money you crucially don't pay taxes on when withdrawing funds. To learn more about our Tax Coordination feature and whether it’s right for you, take a peek at its disclosure. 2. Rebalancing wisely When the weights of asset classes in your portfolio drift too far from their targets, our technology automatically brings them back into balance. But there's more than one way to accomplish this portfolio rebalancing. You can simply sell some of the assets that are overweight, and buy the ones that are underweight (aka "sell/buy" rebalancing), but that can realize capital gains and result in more taxes owed. So we take advantage of any available cash flows coming into or out of your portfolio. When you make a withdrawal, for example, we first rebalance any applicable target allocation for cash, then we intentionally liquidate overweight assets while striving to minimize your tax hit as much as possible (more on that below). 3. Choosing which taxable shares to sell (or donate) Say there's no way around it: you need to sell an asset. Maybe cash flows aren't enough to keep your portfolio completely balanced. Or you’re withdrawing funds for a major purchase. The question then becomes: which specific assets should be sold? The IRS and many brokers follow the simple script of "first in, first out," meaning your oldest assets are sold first. This approach is easier for your broker, and it can avoid more highly-taxed short-term capital gains. But it often misses the opportunity of selling assets at a loss, and harvesting those losses for potential tax benefits. So our algorithms take a more nuanced approach to selecting shares, and we call this technology TaxMin. TaxMin is calibrated to avoid frequent small rebalance transactions and seek tax-efficient outcomes, things like helping reduce wash sales and minimizing short-term capital gains. In the case of donating shares, we apply the same logic in reverse, or TaxMax as we call it. That's because when donating shares, it benefits you to choose the ones with the most gains, since any shares bought as a replacement will effectively have a reset tax bill. 4. Harvesting losses Life is full of ups and downs, and your investments are no different. At times, most notably during market downturns, the price of an asset may dip below what you paid for it. Our tax-loss harvesting takes advantage of these moments, selling taxable assets that fit this bill. We then use available funds to buy similar investments to replace those we sold, making adjustments to rebalance your portfolio. You can then use those harvested losses to shift taxes you owe now into the future. The strategy doesn’t make sense for everyone, but it can help some investors sprinkle tax advantages on a portion of their taxable investing. And our fully-automated spin on it takes a tax hack once reserved for the wealthy and makes it available to the masses. Happy harvesting. In conclusion, we care a lot about taxes Because it’s one of the most reliable ways to boost your returns. We can’t control the market, but tax laws? Those are set by the IRS and broadcast far and wide. And we can help you navigate them wisely. We wouldn’t be doing our job if we didn’t. So the next time you take a peek at your returns, ask yourself how much of that growth will still be there come tax time. If you’re a Betterment customer, you can rest assured we’re working tirelessly to minimize those tax drags. You may not realize it right away, and rightfully so. Live your life, and leave the tax toiling to us.

Betterment’s portfolio construction methodology Jun 10, 2026 12:00:00 AM Learn more about the process that underpins all the portfolios we build on behalf of customers. Table of contents Introduction Global diversification and asset allocation Portfolio optimization Tax management using municipal bonds The Value Tilt portfolio strategy The Innovative Technology portfolio strategy The Socially Responsible Investing portfolio strategies Conclusion Citations I. Introduction Betterment builds investment portfolios designed to help you make the most of your money and live the life you want. This guide lays out our portfolio construction process, one informed by real-world evidence and systematic decision-making. The Betterment Core portfolio serves as the foundation for all of the globally-diversified portfolios we construct. From there, specific adjustments are applied to other portfolios based on the investment objective of their particular strategies. These adjustments include additional allocations to value-focused or innovative stocks, or adherence to Socially Responsible Investing (SRI) criteria. For more information on the third-party portfolios we offer, such as the Goldman Sachs Smart Beta portfolio, see their respective pages and disclosures. When building a portfolio, any investment manager faces two main tasks: asset class selection and portfolio optimization. We detail our approach to these in the sections that follow. Our fund selection process, while equally as important, is covered in a separate methodology. II. Global diversification and asset allocation An optimal asset allocation is one that lies on the efficient frontier, which is a set of portfolios that seek to achieve the maximum objective for any given feasible level of risk. The objective of most long-term portfolio strategies is to maximize return for a given level of risk, which is measured in terms of volatility—the dispersion of those returns. In line with our approach of making systematic decisions backed by research, Betterment’s asset allocation for the invested (non-cash) portion of portfolios is based on a theory by economist Harry Markowitz called Modern Portfolio Theory.1 A major tenet of Modern Portfolio Theory is that any asset included in a portfolio should not be assessed by itself, but rather, its potential risk and return should be analyzed as a contribution to the whole portfolio. Modern Portfolio Theory seeks to maximize expected return given an expected risk level or, equivalently, minimize expected risk given an expected return. Other forms of portfolio construction may legitimately pursue other objectives, such as optimizing for income, or minimizing loss of principal. Asset class selection Our approach to asset allocation starts with a universe of investable assets, which could be thought of as the “global market” portfolio.2 To capture the exposures of the asset classes for the global market portfolio, we evaluate available exchange-traded funds (ETFs) that represent each class in the theoretical market portfolio. We base our asset class selection on ETFs because this aligns portfolio construction with our fund selection methodology. All of our portfolios are constructed of the following asset classes: Stocks U.S. stocks International developed market stocks Emerging market stocks Bonds U.S. short-term treasury bonds U.S. inflation-protected bonds U.S. investment-grade bonds U.S. municipal bonds International developed market bonds Emerging market bonds We select U.S. and international developed market stocks as a core part of the portfolio. Historically, stocks exhibit a high degree of volatility, but provide some degree of inflation protection. Even though significant historical drawdowns, such as the global financial crisis in 2008 and pandemic outbreak in 2020, demonstrate the possible risk of investing in stocks, longer-term historical data and our forward expected returns calculations suggest that developed market stocks remain a core part of any asset allocation aimed at achieving positive returns. This is because, over the long term, developed market stocks have tended to outperform bonds on a risk-adjusted basis. To achieve a global market portfolio, we also include stocks from less developed economies, called emerging markets. Generally, emerging market stocks tend to be more volatile than U.S. and international developed stocks. And while our research shows high correlation between this asset class and developed market stocks, their inclusion on a risk-adjusted basis is important for global diversification. Note that we exclude frontier markets, which are even smaller than emerging markets, due to their widely-varying definition, extreme volatility, small contribution to global market capitalization, and cost to access. We incorporate bond exposure because, historically, bonds have a low correlation with stocks, and they remain an important way to dial down the overall risk of a portfolio. To promote diversification and leverage various risk and reward tradeoffs, we include exposure to several asset classes of bonds. Asset classes excluded from Betterment portfolios While Modern Portfolio Theory would have us craft a portfolio to represent the total market, including all available asset classes, we exclude some asset classes whose cost and/or lack of data outweighs the potential benefit gained from their inclusion. Our portfolio construction process excludes commodities and natural resources asset classes. Specifically, while commodities represent an investable asset class in the global financial market, we have excluded commodities ETFs because of their low contribution to a global stock/bond portfolio's risk-adjusted return. In addition, real estate investment trusts (REITs), which tend to be well marketed as a separate asset class, are not explicitly included in our portfolios. We do provide exposure to real estate, but as a sector within stocks. Adding additional real estate exposure by including a REIT asset class would overweight the exposure to real estate relative to the overall market. Incorporating awareness of a benchmark Before 2024, we managed our portfolios in a “benchmark agnostic” manner, meaning we did not incorporate consideration of global stock and bond indices in our portfolio optimization, though we have always sought to optimize the expected risk-adjusted return of the portfolios we construct for clients. The “risk” element of this statement represents volatility and the related drawdown potential of the portfolio, but it could also represent the risk in the deviation of the portfolio’s performance relative to a benchmark. In an evolution of our investment process, in 2024 we updated our portfolio methodology to become “benchmark aware,” as we now calibrate our exposures based on a custom benchmark that expresses our preference for diversifying across global stocks and bonds. A benchmark, which comes in the form of a broad-based market index or a combination of indices, serves as a reference point when approaching asset allocation, understanding investment performance, and aligning the expectations of portfolio managers and clients. In our case, we created a custom benchmark that most closely aligns with our future expectations for global markets. The custom benchmark we have selected is composed of: The MSCI All Country World stock IMI index (MSCI ACWI IMI) The Bloomberg U.S. Universal Bond index The S&P US Treasury Bond 0-1 Year Index (for <40% stock allocations) Our custom benchmark is composed of 101 risk levels of varying percentage weightings of the stock and bond indexes, which correspond to the 101 risk level allocations in our Core portfolio. At low risk levels (allocations that are less than 40% stocks), we layer an allocation to the S&P US Treasury Bond 0-1 Year Index, which represents short-term bonds, into the blended benchmark. We believe that incorporating this custom benchmark into our process reinforces the discipline of carefully evaluating the ways in which our portfolios’ performance could veer from global market indices and deviate from our clients’ expectations. We have customized the benchmark with 101 risk levels so that it serves clients’ varying investment goals and risk tolerances. As we will explore in the following section, establishing a benchmark allows us to apply constraints to our portfolio optimization that ensures the portfolio’s asset allocation does not vary significantly from the geographic and market-capitalization size exposures of a sound benchmark. Our benchmark selection also makes explicit that the portfolio delivers global diversification rather than the more narrowly-concentrated and home-biased exposures of other possible benchmarks such as the S&P 500. III. Portfolio optimization As an asset manager, we fine-tune the investments our clients hold with us, seeking to maximize return potential for the appropriate amount of risk each client can tolerate. We base this effort on a foundation of established techniques in the industry and our own rigorous research and analysis. While most asset managers offer a limited set of model portfolios at a defined risk scale, our portfolios are designed to give customers more granularity and control over how much risk they want to take on. Instead of offering a conventional set of three portfolio choices—aggressive, moderate, and conservative—our portfolio optimization methods enable our Core portfolio strategy to be customized to 101 different stock-bond risk levels. Optimizing portfolios Modern Portfolio Theory requires estimating variables such as expected-returns, covariances, and volatilities to optimize for portfolios that sit along an efficient frontier. We refer to these variables as capital market assumptions (CMAs), and they provide quantitative inputs for our process to derive favorable asset class weights for the portfolio strategy. While we could use historical averages to estimate future returns, this is inherently unreliable because historical returns do not necessarily represent future expectations. A better way is to utilize the Capital Asset Pricing Model (CAPM) along with a utility function which allows us to optimize for the portfolio with a higher return for the risk that the investor is willing to accept. Computing forward-looking return inputs Under CAPM assumptions, the global market portfolio is the optimal portfolio. Since we know the weights of the global market portfolio and can reasonably estimate the covariance of those assets, we can recover the returns implied by the market.3 This relationship gives rise to the equation for reverse optimization: μ = λ Σ ωmarket Where μ is the return vector, λ is the risk aversion parameter, Σ is the covariance matrix, and ωmarket is the weights of the assets in the global market portfolio.5 By using CAPM, the expected return is essentially determined to be proportional to the asset’s contribution to the overall portfolio risk. It’s called a reverse optimization because the weights are taken as a given and this implies the returns that investors are expecting. While CAPM is an elegant theory, it does rely on a number of limiting assumptions: e.g., a one period model, a frictionless and efficient market, and the assumption that all investors are rational mean-variance optimizers.4 In order to complete the equation above and compute the expected returns using reverse optimization, we need the covariance matrix as an input. This matrix mathematically describes the relationships of every asset with each other as well as the volatility risk of the assets themselves. In another more recent evolution of our investment process, we also attempt to increase the robustness of our CMAs by averaging in the estimates of expected returns and volatilities published by large asset managers such as BlackRock, Vanguard, and State Street Global Advisors. We weight the contribution of their figures to our final estimates based on our judgment of the external provider’s methodology. Constrained optimization for stock-heavy portfolios After formulating our CMAs for each of the asset classes we favor for inclusion in our portfolio methodology, we then solve for target portfolio allocation weights (the specific set of asset classes and the relative distribution among those asset classes in which a portfolio will be invested) with the range of possible solutions constrained by limiting the deviation from the composition of the custom benchmark. To robustly estimate the weights that best balance risk and return, we first generate several thousand random samples of 15 years of expected returns for the selected asset classes based on our latest CMAs, assuming a multivariate normal distribution. For each sample of 15 years of simulated expected return data, we find a set of allocation weights subject to constraints that provide the best risk-return trade-off, expressed as the portfolio’s Sharpe ratio, i.e., the ratio of its return to its volatility. Averaging the allocation weights across the thousands of return samples gives a single set of allocation weights optimized to perform in the face of a wide range of market scenarios (a “target allocation”). The constraints are imposed to make the portfolio weights more benchmark-aware by setting maximum and minimum limits to some asset class weights. These constraints reflect our judgment of how far the composition of geographic regions within the portfolio’s stock and bond allocations should differ from the breakdown of the indices used in the benchmark before the risk of significantly varied performance between the portfolio strategy and the benchmark becomes untenable. For example, the share of the portfolio’s stock allocation assigned to international developed stocks should not be profoundly different from the share of international developed stocks within the MSCI ACWI IMI. We implement caps on the weights of emerging market stocks and bonds, which are often projected to have high returns in our CMAs, and set minimum thresholds for U.S. stocks and bonds. This approach not only ensures our portfolio aligns more closely with the benchmark, but it also mitigates the risk of disproportionately allocating to certain high expected return asset classes. Constrained optimization for bond-heavy portfolios For Betterment portfolios that have more than or equal to a 60% allocation of bonds, the optimization approach differs in that expected returns are maximized for target volatilities assigned to each risk level. These volatility targets are determined by considering the volatility of the equivalent benchmark. Manually established constraints are designed to manage risk relative to the benchmark, instituting a declining trend in emerging market stock and bond exposures as stock allocations (i.e., the risk level) decreases. Meaning that investors with more conservative risk tolerances have reduced exposures to emerging market stocks and bonds because emerging markets tend to have more volatility and downside-risk relative to more established markets. Additionally, as the stock allocation percentage decreases, we taper the share of international and U.S. aggregate bonds within the overall bond allocation, and increase the share of short-term Treasury, short-term investment grade, and inflation-protected bonds. This reflects our view that investors with more conservative risk tolerances should have increased exposure to short-term Treasury, short-term investment grade, and inflation-protected bonds relative to riskier areas of fixed income. The lower available risk levels of our portfolios demonstrate capital preservation objectives, as the shorter-term fixed income exposures likely possess less credit and duration risk. Clients invested in the Core portfolio at conservative allocation levels will likely therefore not experience as significant drawdowns in the event of waves of defaults or upward swings in interest rates. Inflation-protected securities also help buffer the lower risk levels from upward drafts in inflation. IV. Tax management using municipal bonds For investors with taxable accounts, portfolio returns may be further improved on an after-tax basis by utilizing municipal bonds. This is because the interest from municipal bonds is exempt from federal income tax. To take advantage of this, we incorporate municipal bonds within the bond allocations of taxable accounts. Other types of bonds remain for diversification reasons, but the overall bond tax profile is improved by incorporating municipal bonds. For investors in states with some of the highest tax rates—New York and California—Betterment can optionally replace the municipal bond allocation with a more narrow set of bonds for that specific state, further saving the investor on state taxes. Betterment customers who live in NY or CA can contact customer support to take advantage of state-specific municipal bonds. V. The Value Tilt portfolio strategy Existing Betterment customers may recall that historically the Core portfolio held a tilt to value companies, or businesses that appear to be potentially undervalued based on metrics such as price-to-earnings (P/E) ratios. Recent updates, however, have deprecated this explicit tilt that was expressed via large-, mid-, and small-capitalization U.S. value stock ETFs, while maintaining some exposure to value companies through broad market U.S. stock funds. We no longer favor allocating to value stock ETFs within our portfolio methodology in large part as a result of our adoption of a broad market benchmark, which highlights the idiosyncratic nature of such tilts, sometimes referred to as “off benchmark bets.” We believe our chosen benchmark that represents stocks through the MSCI ACWI IMI, which holds a more neutral weighting to value stocks, more closely aligns with the risk and return expectations of Betterment’s diverse range of client types across individuals, financial advisors, and 401(k) plan sponsors. Additionally, as markets have grown more efficient and value factor investing more popularized, potentially compressing the value premium, we have a marginally less favorable view of the forward-looking, risk-adjusted return profile of the exposure. That being said, we have not entirely lost conviction in the research supporting the prudence of value investing. The value factor’s deep academic roots drove decisions to incorporate the value tilt into Betterment’s portfolios from our company’s earliest days. For investors who wish to remain invested in a value strategy, we have added the Value Tilt portfolio, a separate option from the Core portfolio, to our investing offering. The Value Tilt portfolio maintains the Core portfolio’s global diversification across stocks and bonds while including a sleeve within the stock allocation of large-, mid-, and small-capitalization U.S. value funds. We calibrated the size of the value fund exposure based on a certain target historical tracking error to the backtested performance of the latest version of the Core portfolio. Based on this approach, investors should expect the Value Tilt portfolio to generally perform similarly to Core, with the potential to under- or outperform based on the return of U.S. value stocks. With the option to select between the Value Tilt portfolio or a Core portfolio now without an explicit allocation to value, the investment flexibility of the Betterment platform has improved. VI. The Innovative Technology portfolio strategy In 2021, Betterment launched the Innovative Technology portfolio to provide access to the thematic trend of technological innovation. The portfolio’s investment premise is based upon the thesis that, over the long term, the companies innovating and disrupting their respective industries are shaping our global economy and may be the winners of the next industrial revolution. Some of these themes the portfolio seeks to provide increased exposure to are: Artificial intelligence Alternative finance Clean energy Manufacturing Biotechnology Similar to the Value Tilt portfolio, the Core portfolio is used as the foundation of construction for the Innovative Technology portfolio. With this portfolio strategy, we calibrated the size of the innovative technology funds’ exposure based on a certain target historical tracking error to the backtested performance of the latest version of the Core portfolio. Through this process, the Innovative Technology portfolio maintains the same globally-diversified, low-cost approach that is found in Betterment’s investment philosophy. The portfolio, however, has increased exposure to risk given that innovation requires a long-term view, and may face uncertainties along the way. It may outperform or underperform depending on the return experience of the innovative technology funds’ exposure and the thematic landscape. To learn more, read the Innovative Technology portfolio disclosure. VII. The Socially Responsible Investing portfolio strategies Betterment introduced its first Socially Responsible Investing (SRI) portfolio in 2017 and has since expanded the options to include three distinct portfolios: Broad Impact, Social Impact, and Climate Impact. These SRI portfolios are built on the same foundational principles as the Core portfolio, utilizing various asset classes to create globally-diversified portfolios. However, they incorporate socially-responsible ETFs that align with specific Environmental, Social, and Governance (ESG) and shareholder engagement mandates, tailored to each SRI focus. Betterment’s SRI approach emphasizes three core dimensions: Reducing exposure to companies engaged in unsustainable activities Increasing investments in those addressing environmental and social challenges Allocating to funds that utilize shareholder engagement to promote responsible corporate behavior. This methodology ensures diversified, cost-efficient portfolios that resonate with investors' values. For more information, read our full Socially Responsible Investing portfolios methodology. VIII. Conclusion After setting the strategic weight of assets in our various Betterment portfolios, the next step in implementing the portfolio construction process is our fund selection methodology, which selects the appropriate ETFs for the respective asset exposure in a generally low-cost, tax-efficient way. In keeping with our philosophy, that process, like our portfolio construction process, is executed in a systematic, rules-based way, taking into account the cost of the fund and the liquidity of the fund. Beyond ticker selection is our established process for allocation management—how we advise downgrading risk over time. The level of granularity in allocation management provides the flexibility to align to multiple goals with different timelines and circumstances. Most of our portfolios contain 101 individualized risk levels (each with a different percentage of the portfolio invested in stocks vs. bonds, informed by your financial goals, time horizon and risk tolerance). Finally, our overlay features of automated rebalancing, tax-loss harvesting, and our methodology for automatic asset location, which we call Tax Coordination, are designed to be used to help further maximize individualized, after-tax returns. Together these processes put our principles into action, to help each and every Betterment customer maximize value while invested at Betterment and when they take their money home. IX. Citations 1 Markowitz, H., "Portfolio Selection".The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91. 2 Black F. and Litterman R., Asset Allocation Combining Investor Views with Market Equilibrium, Journal of Fixed Income, Vol. 1, No. 2. (Sep., 1991), pp. 7-18. Black F. and Litterman R., Global Portfolio Optimization, Financial Analysts Journal, Vol. 48, No. 5 (Sep. - Oct., 1992), pp. 28-43. 3 Litterman, B. (2004) Modern Investment Management: An Equilibrium Approach. 4 Note that the risk aversion parameter is essentially a free parameter. 5 Ilmnen, A., Expected Returns.

Big traders have a built-in edge. So we engineered one for everyone. Jun 9, 2026 12:33:56 PM Individual investors have long faced structural disadvantages. Here's how Betterment's trading team and custom-built platform help close that gap. Key takeaways The trading system has long been tilted in favor of large institutional investors. Betterment's custom-built trading platform was designed to change that, harnessing the collective power of our customers. We pool your orders with other customers' to unlock the kind of bulk-order pricing big trading desks take for granted. The result: Betterment customers, whether you self-direct or automate your investing, get a fairer shake in the market. For everyday investors, the mechanics of trading haven’t always resulted in a fair fight. That’s because markets tend to reward size and speed. Large institutional investors—think hedge funds, pension funds, endowments—trade in enormous volume. And when you routinely show up with big trading orders, you tend to get preferential treatment. Those privileges get even bigger during bouts of volatility, or when trading activity is thin and buyers and sellers are harder to find. If you're a solo investor wading into those waters, you're swimming upstream. Betterment’s trading platform, however, was designed to harness the collective power of our customers. Here's how. We set price guardrails on your trade, so market chaos doesn’t cost you One of the key aspects of our trading execution methodology is the type of order we use to execute your trades. In many cases, Betterment uses marketable limit orders, which set a price ceiling (or floor) for every trade. They're designed to execute or “fill” quickly, but won't do it at a price worse than the limit. It's a guardrail that keeps the market's momentary chaos from working against you. Limit orders are one of the tools we use in pursuing "best execution," a regulatory standard that requires us to seek the most favorable terms reasonably available for your trade. Your trade packs a bigger punch—because it's not alone It’s a familiar concept for anyone who’s stepped foot in a Costco. When a seller knows you're ordering at volume, they're more motivated to give you their best price. The same logic applies in trading. Betterment aggregates customers' orders, combining similar buys (or sells) of the same security before sending them to market as a single, larger order. The crucial cutoff is generally 100 shares or more of any given stock or fund. These orders are known as “round” lots, the standard unit of trading that exchanges and market makers prioritize. Any order smaller than 100 shares, on the flip side, is generally considered an “odd” lot. The problem is solo investors struggle to come up with nice “round” lots on their own, and they end up paying more as a result. How much more? A 2021 analysis of more than 3 billion U.S. equity trades found that odd lot orders, even those falling just one share short of 100, experienced roughly 10% less price improvement than round lots. For a popular, heavily-traded fund like VTI, that can amount to thousands of dollars in lost gains over decades.1 1Example for illustrative purposes only, based on internally-derived simulations that reflect market behavior consistent with the cited peer-reviewed research. It does not represent actual performance. By banding your order together with the similar orders of other Betterment customers, we cross the round-lot threshold more often, which generally leads to better pricing. It’s important to note, however, that we don't delay your trade to chase a round lot. We aggregate when client orders naturally line up, and execute when they don't. Less predictable trading windows help you stay one step ahead High-frequency traders have made an industry of being first. By watching for signals in the market, like a sudden uptick in buy orders for a particular stock, they can race in ahead of you, buy what you were about to buy, and attempt to flip it for a profit before your trade even clears. It's exactly the sort of systemic disadvantage our custom-built trading technology works to help minimize. When orders are sent to market the instant they're placed, they can signal intent to anyone watching. Betterment, by contrast, batches orders into scheduled trade windows throughout the day, and we vary those windows across most of our trading activity. No predictable pattern means no easy target. This also works hand-in-hand with our bundling strategy above: the windows give us time to aggregate orders before sending them to market, making round-lot thresholds more attainable. There are always exceptions, of course. When timing is critical, like with day-end orders, we execute whatever lots are ready, odd or round, rather than wait for the next day. Prices can and do move while the market is closed, which is why we strive to process certain orders before the bell.2 Trade with confidence at Betterment Showing up to market as a solo investor can be rough. You’re a small fish in a very big pond. That’s where Betterment comes in. Whether you self-direct your investing or enlist our automated tech for help, you benefit from our custom-built trading platform. It pools your trades whenever possible, sets price guardrails, and chooses the moment deliberately. All so your trade gets a fairer shake, and you get more freedom to invest as you see fit.

Can a portfolio be too simple? Jun 9, 2026 12:00:00 AM Total market funds offer simplicity, but by unbundling asset classes—and adding Betterment’s automation—you can make your money work harder. Key takeaways Single-fund portfolios are easy to build, but they’re harder to optimize for taxes and costs. Using multiple funds adds the flexibility to fine-tune allocations and unlock savings. Betterment’s automation and expert-built portfolios give you the best of both worlds: easy to invest in, and built to work harder. If you’re looking to build long-term wealth, you could do worse than investing in one or two low-cost, globally-diversified total market funds. But you could potentially do better—and spend less of your limited bandwidth—by using a few more pieces and putting our technology to work in your favor. That’s the value of Betterment’s automated investing and expert-built portfolios, and it begins with (surprise!) tax optimization. Harvesting losses for tax wins, and putting your assets in the right place Targeting more than a date Splitting hairs on fund fees, so customers can save millions Harvesting losses for tax wins, and putting your assets in the right place Tax-loss harvesting can help give your taxable investing an edge, and it happens when we sell and replace similar assets using available funds. The downside of a total market fund, however, is you have to wait for the entire fund to experience a loss. If only one piece of it dips, you can’t unbundle the assets and harvest that specific piece. It’s sell all, or sell nothing. That’s a big reason why we switched from using a single fund for U.S. stocks in our Betterment-built portfolios, opting instead for three separate funds representing small, medium, and large-sized U.S. companies. If one of them presents a harvesting opportunity, we can swap it for a similar alternative. The second area where larger fund lineups shine is asset location, or strategically divvying up your portfolio’s assets among traditional, Roth, and/or taxable accounts. Stocks with the highest potential for growth, for example, are often better-suited for traditional accounts. Let them grow tax-free, the thinking goes, then settle up with Uncle Sam when you’re retired and more likely to be in a lower tax bracket. Our mathematically-rigorous spin on asset location is called Tax Coordination, and it’s yet another way our automated investing helps you keep more of what you earn. To start taking advantage of it, simply open any combination of the three account types above and follow a few easy steps. Targeting more than a date One of the most common single-fund options for retirement savings are target date funds. They date back to the 90s and became the default option in many 401(k) plans starting in the late 2000s. The growth of target date funds has been a good thing for investors, helping move the industry toward lower-cost, automated investing. Prior to their arrival, advisors had to manually adjust the asset allocations or “glide paths” of portfolios over time. Similar to total market funds, however, the bundling of target date funds brings with it some constraints. The first constraint is their relative lack of choice. Say you were born in 1988 and are targeting a traditional retirement age of 62. Most target date fund managers give you one option—the 2050 fund. Our automated investing, on the other hand, gives you more than a handful of portfolios to choose from, including ones tailored for social responsibility and innovation. More funds also creates more levers to fine-tune your exposure, helping manage risk in all sorts of situations. Take bond-heavy portfolios as an example. Rising interest rates can erode their value, so we dial up their exposure to short-term corporate debt and U.S. Treasuries specifically to help hedge against that risk. Splitting hairs on fund fees, so customers can save millions The relatively high cost of target date funds has been trending downward, and many total market funds can be found for expense ratios of less than 0.1%. But we can squeeze out even more savings by splitting a portfolio up and shopping for better deals. A single one hundredth of a percentage point in fund fees (what’s referred to as a “basis point” or “bip” in investing lingo) may not sound like much, but we owe it to our customers to make every one count. You could pay 6 basis points (0.06%), for example, for a total world stock fund like VT. Or you could pay one-third of that for your U.S. stock allocation by breaking it up into three funds (SPYM, SPMD, and SPSM) like we do with our Core portfolio and others. Using our customers’ nearly $20 billion worth of U.S. stocks as an example, that would amount to roughly $7.6 million in combined savings each year. Flexibility to stretch your investing dollars even farther A simple portfolio can be a great place to start, but it’s not always where your money works hardest. By strategically using a few more funds, we can sprinkle tax advantages on more of your investing, optimize across account types, and potentially unlock even more cost savings. All automatically. You get the simplicity you want, but with our tech doing the heavy lifting behind the scenes.

Surviving the waiting room of wealth-building Jun 8, 2026 2:07:32 PM Compound growth is real and it's powerful—but waiting years to see it isn't easy. Here's an honest look at what to expect, and how to make the wait more bearable. Key takeaways It can take a while before you notice results when investing. Money invested now could double in roughly a decade assuming historical stock market returns. But things get exponential when that amount doubles again. The math starts working in powerful ways that our brains simply aren’t wired to fully appreciate. Each decade of compounding growth matters tremendously. It’s one of the biggest advantages for investors in their 20s and 30s. You also don't have to do the heavy lifting alone. Over long stretches, compound growth could grow to outweigh your own contributions. Compound growth is arguably the key ingredient to building wealth, but it takes a while for momentum to build. And waiting years to see meaningful returns on your investments is genuinely hard. It's a leap of faith that lasts longer than a lot of our relationships. So before we dive into the math, it's worth acknowledging the psychological ask here is real. This isn't a pep talk. It's more an honest look at how your ROI actually works, why it's worth the wait, and a few ways to pass the time more easily. The honest timeline (and how to survive it) How long it takes to see results when investing depends largely on timing. Markets naturally swing between phases of expansion and contraction. Start investing during a downturn, and it’ll take longer to see your returns start stacking. Your actual market returns will vary, of course, and investing always involves risk. But as a rough illustration, money invested in the stock market at-large has historically taken a decade to double. A decade. That's a long time to wait for a payoff you can be proud of. So it can help to redefine what "progress" looks like early on. A better gauge of success isn't "How much have my investments grown?" but "How consistently am I contributing?" When the moments of doubt hit—and they will—you can use our Forecaster tool to make the future feel real. Seeing a range of possible outcomes can help turn that leap of faith into a plan you can stick with. Last but not least, celebrate smaller milestones deliberately. Your first $1,000 invested. Your first $5,000. These moments won't make any headlines, but they're meaningful markers that you’re moving in the right direction and compound growth is taking root. Your brain isn't built for what happens next Humans are pretty good at thinking linearly—1, 2, 3, and so on—but we’re genuinely bad at wrapping our heads around exponential growth. MIT professors can patiently explain how one penny, doubled each day, becomes $21 million in just a month, and we’re mystified. The prof might as well be Oz the Mentalist. But that’s basically how it works. Doubling on doubling. Layer on your regular investing contributions, and the charts can quickly move into hockey stick territory. The point isn't any eye-popping numbers, however. It's that the potential growth you experience in your 20s pales in comparison to your 30s and onward. A lot of people quit (or don’t even start) before the math has a chance to show up. Similar to redefining success, another reframe can help here: saving isn’t a solo climb. Compound growth is the world’s best climbing partner, and over a long enough ascent, it can even do the majority of the work for you. That changes the calculus on saving up a large sum of money. You're not trying to sweat and toil all the way to the finish line. You're trying to get enough in the ground, early enough, that time and compounding can take over. The one advantage worth more than market conditions Baby boomers hold the bulk of wealth right now, but their window for compounding is closing. Yours isn't. It can be hard to keep that in mind early on. Not if your economic prospects seem so uncertain. Not when your balance seems stuck in slow motion. But that doesn’t mean you’re doing it wrong. Assuming you’re investing consistently, it means you're in the early—and most important—stages of building wealth.

Does your investing app tilt the scales toward trust? Jun 8, 2026 1:08:38 PM Not every investing app is built to put your interests first. Learn what separates trustworthy ones from the rest. Key takeaways Modern investing apps make it easy to get started, but the best ones also work to keep you on track without pulling you back in every day. Some apps are designed to keep you hooked and trading, regardless of your wellbeing. Not all advisors hold themselves to the same legal standard. Fiduciary advisors are legally required to act in your best interests. Before trusting an app with your money, find out whether it operates as a fiduciary. It's one of the most important questions you can ask. It's easier than ever to start investing. Take a scroll through the app store and you'll find no shortage of apps promising 10-minute, 10-buck setups, and a lot of them deliver on that. But here’s a question worth sitting with: What happens after you get set up? The best ones, it turns out, are a little boring. They get you invested, keep you on track, and then largely get out of the way. They're not trying to pull you back in every day. They just quietly do their job, so you can get on with your life. That's a higher bar than it sounds, and not every app clears it. Some are designed more like social media platforms than financial tools, built to keep you engaged in ways that can work against your long-term interests. Here's what “genuinely good” looks like across three dimensions: usability, design philosophy, and accountability. A good investing app should simplify your life, not complicate it A new generation of app-first advisors has raised the bar on what getting started looks like. No glitchy websites, no endless forms. Just a clean, guided setup that walks you through which accounts make sense for which goals. But the real test isn't the onboarding flow. It's what happens next, and that looks different depending on how hands-on you want to be. Some people prefer to pick their own stocks and funds. Others would rather borrow expertise and let automation handle the rest. Neither is objectively better; it boils down to your goals, your risk tolerance, and honestly, how much you enjoy thinking about this stuff. The right app should accommodate both, with tools that genuinely serve each style rather than steer you toward whatever's most profitable for them. Some apps are designed to keep you hooked—here's why that's a problem Not every investing app shares that philosophy. Some have more in common with the social apps on your home screen, optimized for engagement rather than healthy outcomes. You've probably seen the signs: push notifications with outsized urgency. Streaks that reward frequent trading. Animations that make buying and selling feel fun, even when doing nothing would serve you better. Oftentimes this isn’t accidental. Higher engagement often leads to higher trading activity, and more trading generates more revenue for brokers. But it can also generate unnecessary risk and tax consequences. Many apps won't tell you that until tax season. That's why Betterment offers a Tax Impact Preview, so you can see the estimated tax consequences of a sell decision before you make it, not months later when you're filing. It's a small feature that reflects a bigger philosophy: Transparency before a transaction is just as important as a frictionless one. The one word that tells you whose side your investing app is on There's a legal framework that cuts through a lot of this: the fiduciary standard. A fiduciary is an advisor who's legally bound to act in your best interest, not theirs. That means putting your bottom line ahead of their own, avoiding or disclosing conflicts of interest, and seeking out the best execution for your trades. Not all investing apps operate as fiduciaries, however. An app can market itself as your financial partner without being legally obligated to act like one, keeping quiet on tax implications, pushing their own funds over better alternatives, or hijacking your attention and profiting from your hyperactivity. The fiduciary label doesn't guarantee perfection, but it does mean there's a legal floor, a baseline of accountability. Before trusting any app with your money, it's worth asking whether they're a fiduciary. It's a simple question, and the answer tells you a lot. The best investing app turns down the noise, and turns up the trust The right investing app should do more than look good and load fast. It should work for you, not against you, and mostly leave you alone. Ease of use matters. Fiduciary accountability matters. But so does something harder to measure: whether the app is designed to serve your financial goals or its own engagement metrics. The best ones treat your attention as something to respect, not exploit. Betterment is a fiduciary. We're legally required to put your interests first. And we've tried to build an experience that reflects that: one that helps you get invested, stay invested, and worry less about money. It may be a little boring at times, but that’s why you have other apps on your home screen.