John Wittig

How donating shares instead of dollars can lead to tax-free investing Dec 1, 2025 8:00:00 AM And how we make it easy. Key takeaways 2017 legislation weakened the federal income tax incentive for donating to charity. Donating and replacing taxable shares, however, can unlock a new avenue for tax savings. Pairing the strategy with tax-loss harvesting can lead to even more savings. Betterment gives you two easy ways to donate shares: directly to one of our partner charities, or through a donor-advised fund. Donating to charity isn't the big tax write-off it used to be. Not since the 2017 Tax Cuts and Jobs Act watered down the charitable tax deduction. But altruistic investors such as yourself have another tax-saving option at your disposal: donating shares. In this article, we’ll walk you through: How donating (then replacing) shares resets their tax bill How adding tax-loss harvesting can plus-up the savings How we make it easy to donate shares How donating (then replacing) shares resets their tax bill Let's start with a couple prerequisites up front: You can only donate appreciated shares, meaning ones that have gained in value. We require that you've held them for at least a year to maximize the potential tax savings. You can only donate shares from a taxable investing account. That means tax-advantaged accounts like 401(k)s and IRAs—with one exception for those 70 ½ or older—are off the table. So if you'd like to start leveraging this tax strategy, you'll need to first open and fund a taxable investing account. Similar to the mechanics of tax-loss harvesting, donating shares lowers your taxes thanks to a little something called cost basis. Cost basis is the price you pay for a share. It's how the IRS calculates the profits (aka capital gains) on your investing, and by extension your taxes owed on that investing. By donating and (most importantly) replacing shares, you reset the price paid for that slice of your investing. This means a share that had increased in value by say, 20%, suddenly becomes, in the eyes of the IRS, a share that hasn't appreciated at all. It's as if all the profit to that point never happened. Don't worry; the capital gains are still very much there. And you're wealthier for it. But the taxes owed when you ultimately sell those investments will be lower than if you had never donated. How adding tax-loss harvesting can plus-up the savings Tax-loss harvesting (TLH) helps you defer taxes down the road, freeing up more cash to invest now. And it does this by letting you deduct taxes today in exchange for a higher tax bill in the future. You can think of it like handing Uncle Sam an IOU come tax time. But guess what happens when you donate a share that was originally part of a harvest? You erase its entire tax bill—IOU and all—up to that point. It's one of the few ways you can actually avoid paying taxes altogether on some of your investing. So it’s no wonder why this combo move has long been a favorite of the wealthy. Now, thanks to technology like ours, it's never been easier for everyday investors to do right while reaping the same rewards. How we make it easy to donate shares Before tech like ours helped lower barriers, donating shares required several steps, things like tracking down the charity’s brokerage information, figuring out which shares to give, and filling out the necessary forms. But with Betterment, it’s as easy as logging in on a desktop browser and making a few clicks. We show you exactly how much of your taxable investing is eligible to donate, and our TaxMax technology seeks out the most tax-efficient shares to sell and donate. We also give you two ways to give. Donate directly to more than a dozen partner charities. We don’t charge any processing fees, so your entire donation goes directly to them. Open a donor-advised fund (DAF) with our partners at Daffy and donate to that, then choose from up to 1.5 million nonprofits, schools, and faith-based organizations while your funds stay invested. You get the tax deduction up front and can then automate your giving or disperse funds as you go. DAFs have historically come with high minimums, high fees, and dated technology, but Daffy is doing its best to change that. DAFs compared Daffy Fidelity Schwab Vanguard Minimum to open $0 $0 $0 $25,000 Minimum annual cost $36 0.60% or $100 0.60% 0.60% or $250 Average investment fee 0.05% 0.54% 0.65% 0.06% Source: Daffy Give smarter. Save bigger. Feel better. By donating and replacing shares, you can give your taxable investing a fresh start. Pair it with tax-loss harvesting, and you could wipe out even more of your tax bill while keeping your money growing. And since Betterment takes care of the tricky parts, from choosing which shares to donate to handling the logistics, giving smarter has never been easier. It’s one simple move that helps your portfolio—and your favorite cause—thrive.

How SIPC insurance protects against the loss of cash and securities Nov 3, 2025 11:45:22 AM And how this one backstop helps build trust across markets. Key takeaways Investors across the industry benefit from SIPC insurance, which provides coverage in the event of a broker-dealer failure, not market losses. All brokers (including Betterment) are required to be SIPC members. Industry safeguards like audits and asset segregation make SIPC claims exceptionally rare. Trust makes the world go round, and the same goes for markets. So when more than a million customers place their trust in us—along with $65 Billion+ in assets—we don’t take it lightly. We put multiple measures in place to help safeguard their assets. Beyond these, investors also benefit from one industry-wide backstop—SIPC insurance. Though rarely called upon, it reinforces confidence across markets. So let’s break down what it is, why it matters, and why you’ll likely never need it. An explanatory brochure is also available upon request or at sipc.org. SIPC insurance comes into play when securities go missing One of the biggest misconceptions about this type of insurance relates to what it actually safeguards you from. It doesn’t protect against market losses (wouldn’t that be nice). Instead, it insures against broker failure. SIPC insurance protects against the loss of cash and securities held by a customer at a financially-troubled SIPC-member broker. Congress created it after the “paperwork crunch” crisis of the late 1960s, when outdated technology and a surge in trading volume led to backlogs at several brokers. When a market crash then caused many of those same brokers to go belly-up, they weren’t able to account for all their customers' securities. So similar to when the bank failures of the Great Depression led to FDIC insurance, legislators created the SIPC and its related guarantee to restore confidence in the financial system. Unlike the FDIC and banks, however, all brokers (including Betterment) are required to be SIPC members. How SIPC insurance works Okay, let’s talk numbers. SIPC insurance protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). But crucially, this limit applies to each account with a “separate capacity” at each SIPC-member broker. Examples of separate capacities include: individual accounts joint accounts accounts for a corporation accounts for a trust created under state law IRAs Roth IRAs accounts held by an executor for an estate accounts held by a guardian for a ward or minor In the event that a broker goes bankrupt, a judge appoints a trustee to sort through their books and distribute assets back to their clients. SIPC insurance only comes into play if assets can’t be recovered and returned to their owners. Why it’s highly unlikely you’ll need it As important as this protection is, chances are, you won’t actually need it. That’s because brokers are required to abide by a series of regulations that seek to stabilize and strengthen securities markets. They must segregate their own assets from their clients’ assets, for example, making it less likely that securities get lost in the fray. This separation is also important because it protects your securities from creditors. Because of guardrails like these, SIPC proceedings have been increasingly rare since the dust settled from the “paperwork crunch” of the late 60s, in spite of there having been roughly 40,000 brokers and SIPC members since its inception. Usage has faded even more in the recent past, with no cases in the last 7 years, and fewer than two cases per year since the turn of the century. Invest with confidence at Betterment Every investment carries some level of risk—but that risk should come from market movement, not from your broker. That’s why the brokerage industry operates under clear safeguards: firms must segregate customer assets, maintain sufficient capital, and undergo regular oversight. Betterment follows these same standards—helping you stay focused on your goals, backed by the same protections that support confidence across U.S. markets.

How we help move your old accounts to Betterment Aug 29, 2024 7:00:00 AM Moving investment accounts from one provider to another can be tedious and complicated. We help smooth out the process. Moving investment accounts from one provider to another can be complicated. You may be in the early days of mulling over a move. Or maybe you’re ready to make a switch and simply need a little help making it happen. Wherever you are in the process, we’re here to help. And once you’re ready to act, you can easily start the ball rolling in the Betterment app. The steps vary slightly different depending on your situation and how willing your old provider is to play ball: ACATS — Most taxable accounts, and even some retirement accounts, can be transferred automatically by simply connecting your old provider’s account to Betterment. You stay invested, and the entire process often takes less than a week. Direct rollover/transfer — Some retirement account providers, meanwhile, require a check be mailed to either you or your new provider. In these cases, we provide step-by-step instructions for reaching out to your old provider to initiate the process, which often takes 3-4 weeks. And for those considering moves of $20k or more, our Licensed Concierge team can help you size up the decision before helping shepherd your old assets to Betterment, all at no cost. Here’s how. The Betterment Licensed Concierge experience Whether you’re already sold on a switch or need help weighing the pros and cons, our Concierge team uses a three-step process to help guide your thinking. Step 1: Assess where you are, and where you want to be We start every Concierge conversation by gathering as much information as possible. What are your financial goals? How well do your old accounts align with those goals? How much risk are you exposed to? How much are you currently paying in fees? We sift through statements on your behalf to decode your old provider’s fees. We analyze your old portfolios’ asset allocations. And we help assess whether Betterment’s goal-based platform could help meet your needs. All of this information gives us and you the context and confidence needed to take the next step. Step 2: You make a call, then we chart a course forward While retirement accounts can be rolled over without creating a taxable event, that’s not always the case with taxable accounts. So in those scenarios, we provide a personalized tax-impact and break-even analysis. This shows you how much in capital gains taxes, if any, a move may trigger, and how long it might take to recoup those costs. We always recommend you work with a tax advisor, but our estimate can serve as a great first step in sizing up any tax implications. Should you choose to bring your old investments to Betterment, we help you with every step of that journey. The mechanics of moving accounts This includes sussing out which of your old assets can be moved “in-kind” to Betterment. We’re able to easily accept these assets, and either slot them into your shiney new Betterment portfolio as-is, or sell them on your behalf and reinvest the proceeds. If any old assets need to be liquidated before they’re transferred, we’ll help you work with your old provider to make it happen. This includes providing you with a full list of relevant assets to give your old provider. Whether transferring assets or cash, we use the ACATS method whenever possible to help your funds move and settle quicker. Step 3: Moving day! Making a move is exciting. Unpacking? Not so much. So we help set up and optimize your Betterment account to make the most of features like Tax Coordination. Need help setting up your goals? We have you covered there, too. Once everything is in order, we’ll begin implementing your transfer plan. We’ll communicate all the steps involved, the expected timeline, and handle as much of the heavy lifting as possible. We regularly check-in and, once your assets or funds arrive on our end, we’ll send you a confirmation making sure all your transfer-related questions are answered to the best of our abilities. Ready, set, switch Moving accounts to a new provider can be a hassle, so we strive to shoulder as much of the burden as possible. It starts with a simple step-by-step process in the Betterment app, and for those exploring moves of $20k or more, extends to our dedicated team of Concierge members. They’re standing ready to help give your old assets a new life at Betterment. Because whether moving to a new house or a new advisor, it never hurts to have a little help.

How to navigate the sunk cost fallacy Mar 18, 2024 4:09:13 PM And bring your old, underperforming investments to Betterment Let’s say you love Betterment. (The feeling’s mutual, by the way.) You have some old investments lying around, investments you’re leaning toward moving over here, but you can’t bring yourself to do it. Why? They’ve lost value as of late, and they’re now worth less than what you paid for them. In this scenario, you’re dealing with a dangerous animal: The sunk cost fallacy. Also known as the “breakeven” fallacy, it’s a phenomenon we’ve all likely experienced at some point. It's hard to sell anything at a loss, be they stocks, bonds, or Beanie Babies. Advisors often rely on hard facts to combat this thinking. For example: Did you know that an asset experiencing a 50% loss must see a 100% gain just to be made whole? That’s a long way to go. But most fallacies aren’t successfully fought with facts. Because we’re all human, and we often make decisions based on emotions. So here are two simple tips that can help you lean into these feelings, hurdle this mental roadblock, and give your old investments new life. Reframe the narrative Thinking of the move as “selling your losers” or “cutting your losses” is a surefire way to trigger feelings of loss aversion. It’s also a little overstated in this circumstance. Unlike selling your Beanie Baby collection, moving your old investments to your preferred broker isn’t swearing off the concept of investing altogether. You’re selling these stocks and bonds, yes. But that’s in order to buy other stocks and bonds with a different strategy for growth moving forward. Better yet, when you invest with Betterment, those new assets you just bought come with some shiny new bells and whistles. Features like automated rebalancing and tax-smart trading. Benefits designed to help maximize your returns. The longer you wait, the less time you have to use them. So think of the move in positive terms. You're not selling your losers and calling it quits. You're swapping them for a new strategy. Use reverse psychology If your brain’s going to insist on avoiding losses, let’s use that aversion against it. You can do that by shining a spotlight on the less obvious losses that could be slowly eating away at your old investments: fees and taxes. It’s 2025 AD, and it’s still pretty standard for advisors to charge 4 times the amount we do. That’s an extra 750 bucks vanishing for every $100,000 of investments. Then there’s the cost of the investments themselves. The average mutual fund expense ratio can be up to 5 times(!) that of the typical exchange-traded fund (ETF). Worse yet, you may have to pay taxes on a mutual fund even when the fund loses money. A loss by any other name is still a loss. And all of the examples above could be causing your old investments to bleed value. The sooner you make a switch, the sooner you can stop the bleeding.