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. These features are available at no additional cost. Please be aware the following information only pertains to stocks and bonds investment accounts.
- Pre-built and customizable portfolio options that make getting invested easy. From SRI to Innovative Technology Portfolio strategies, you can align with your investment preferences by selecting the portfolio option of your choice. Alternatively, you can build your own portfolio by selecting from a range of asset classes through the Flexible Portfolio option.
- Active ongoing monitoring and fund selection updates. Betterment tracks the ETF market, regularly seeking opportunities to use more cost effective funds when they arise.
- Better diversification. Any single fund has its shortcomings. By investing your portfolio across multiple funds, Betterment seeks to provide exposure to U.S. and International stocks of varying sizes-- large-, mid-, and small-cap companies. We apply the same principle to bonds. Purchasing these ETFs directly and maintaining the proper balance over time can be a very demanding task.
- Tax Loss Harvesting. Betterment’s Tax Loss Harvesting (TLH) feature helps improve tax efficiency by regularly identifying opportunities to sell securities at a loss and replace them with similar assets. This strategy can offset taxable gains and keep your portfolio balanced.
- Tax Coordination. With Betterment’s Tax Coordinated Portfolio feature, Betterment locates your assets between taxable and tax-advantaged accounts according to their tax efficiency while maintaining the appropriate overall allocation in efforts to maximize after-tax return potential.
- Tax efficiency in mind. Betterment ‘s algorithm seeks opportunities to minimize your tax bill whenever possible. When sales occur, we sell your losses (short term, then long term) first, then your gains (long term, then short term). Additionally with Betterment’s Tax Impact Preview feature, you receive estimates of expected gains and/or losses due to the sales to be better informed as you make decisions.
- 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. Available 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.
- 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 2 to 4 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.
- Dollar-based transactions/fractional shares. When you transfer money to Betterment into a stock-and/or-bond portfolio, your funds are automatically invested in accordance with your goal. If a full share cannot be purchased, Betterment will invest your money in fractional shares.