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Self-directed investing, the Betterment way See what makes Betterment’s self-directed investing different from the rest. Plus, get three tips to help develop your own investing strategy. Key takeaways We surveyed our customers and learned that 75% of them use self-directed investing elsewhere, but many want it alongside their automated investing—so we built it the Betterment way. With Betterment, you can invest your way, buying and selling thousands of stocks and ETFs with no commissions. Manage your automated portfolios, cash accounts, and self-directed trades together on one platform for a fuller view of your finances. Unlike other investing apps, Betterment’s tax impact preview lets you see the impact of a sale before you trade, so there are no tax surprises. Invest smarter with these three tips: set clear goals, plan for taxes, and keep emotions out of your investing. Recently, we surveyed our customers and learned that 75% of them use some form of self-directed investing. That was eye-opening. While our automated investing tools are designed to take the work out of wealth building, many people still want the option to pick and manage certain investments on their own. So we asked ourselves: how can we bring self-directed investing to life—the Betterment way? Our answer: combine our award-winning platform with a customer-first experience to let you buy and sell thousands of stocks and ETFs with no commissions. With Betterment’s self-directed investing, you’ll get more investing choices, the ability to see all of your investments in a consolidated place, and tax insights you won’t find anywhere else. Investing your way, all in one place Not everyone invests for the same reason. We know this because we continually solicit feedback from our customers. Some customers told us they want to invest in companies they believe in. Others find it intellectually rewarding to follow markets and make trades. And many simply like having more control over their portfolio. With Betterment’s self-directed investing, you can get that flexibility while keeping everything on one platform. Manage your automated portfolios, cash accounts, and self-directed trades side by side, with technology designed to give you a clear view of your financial life. Tax insights you won’t get anywhere else Here’s where we’re really different than the typical “stock trading” platforms. Self-directed trading often means more frequent buying and selling, which can bring a hefty and unexpected tax bill at the end of the year that catches people off guard. In fact, when we asked our customers about their biggest challenge with self-directed investing on other apps, the top answer was “managing tax implications.” We solved that challenge. At Betterment, you’ll see a tax impact preview before you sell a stock or ETF. That preview includes how the sale could affect your taxes, and even potential wash sales. A wash sale occurs when you sell a security at a loss and then repurchase the same or a substantially identical security within 30 days before or after the sale, disallowing the tax deduction for that loss. With our tax impact preview, there are no surprises or guesswork. Just clear tax insights to help you make smarter decisions. (See how tax impact preview works.) Three tips to get started with self-directed investing Self-directed investing provides you with the choice to invest your way. But you get to decide what “your way” means. To help, here are three steps to get started: Have a clear goal before you trade: Don’t just buy because something looks hot or is in the news. Ask yourself: Am I investing for long-term growth, short-term income, diversification, or some other reason? Having a clear purpose can help you avoid making impulsive trades. Think about taxes before you sell: Selling a stock or ETF can trigger capital gains taxes. Short-term gains (for investments held less than a year) are usually taxed at a higher rate than long-term gains. Using tools that preview your tax impact before you trade—like Betterment’s—can help you avoid surprises. Avoid emotional trading: Markets move fast. It’s easy to panic-sell when prices dip or chase a stock that’s soaring. Instead, set rules for yourself—like only initiating a trade at pre-set price targets or sticking to a dollar-cost averaging plan—so emotions don’t dictate your decisions. Plus, at Betterment, your trades are queued for execution and not made immediately, but they are made in a timely manner, limiting your ability to try to “time the market.”

Three burning questions for the market in 2025 Are U.S. stocks overvalued? Will AI pan out? Do markets care who’s in the White House? Investors are starting to feel a healthy dose of cognitive dissonance—that grating feeling when two beliefs you hold don't quite line up. On one hand, the U.S. market is soaring on the back of AI optimism and potential tax cuts. And on the other, companies’ stock prices, relative to their actual earnings, are starting to loosely resemble the run-up to the Dotcom bubble of the late 90s. So which belief will win out in 2025: boom or bust? Let's parse this conflicted outlook by examining three questions in particular: Are U.S. stocks overvalued? Will AI pan out? Do markets care who’s in the White House? Are U.S. stocks overvalued? Around this time last year, we said the booming market at the time might keep going if the Fed lowered interest rates in response to cooling inflation. Interest rates did tick down, and boy, did markets take notice. Through the end of November 2024, a 90% stock Betterment Core portfolio returned roughly 17.6% year-to-date. Such a run, however, begs speculation of yet another reversal, a swing of the pendulum toward less frothy valuations and a drawback in portfolio returns. The S&P 500 currently costs about 25 times more than what those companies are expected to bring in over the next 12 months. For comparison, this average “price-to-earnings” ratio over the last 35 years has been 18x. Taking the perspective of a long-term investor, however, these ratios matter less than you may think. So long as you stay invested for more than a few years, chances are the market as a whole may “grow” into its valuation. Remember 2021 when a group of tech-centric, risky stocks were darlings of the pandemic and shot to the moon? Analysts rightly called foul—those kinds of valuations shouldn’t be sustainable. But within a few years the market was setting fresh all-time highs. An investor who had sold or stayed on the sidelines would've missed out on all that growth. So if you’re tempted to sell “high” right now, remember this: On average, investing at all-time highs hasn’t resulted in lower future returns compared to investing on any given trading day. On the contrary, buying when the market has never been higher leads to slightly higher average returns in the long run. You can never be sure exactly when a growth cycle will end. Will AI pan out? A big driver of this bull market has been optimism surrounding artificial intelligence and the big tech companies powering it, like Amazon, Google, and the computer chip-maker Nvidia. They’ve rallied big-time over the last 12 months, and as a result, they make up an increasingly large share of the U.S. and global stock market. A debate, however, surrounds their outperformance and the hoopla around AI in general. Some analysts argue that a good amount of AI investment won’t ultimately prove fruitful, while others foresee significant boosts to productivity and profits. There’s that grating feeling again—the potential of revolutionary upside sitting right next to worries that it’s mostly hype. In the face of uncertainty, all one can do to lower their risk is hedge their bets and diversify. Our portfolios’ stock allocations take this to heart, offering significant exposure to Big Tech, while also investing in European, Japanese, and emerging markets. It’s these less expensive equities that provide a potential buffer in the event AI’s ambitions fall short. Do markets care who’s in the White House? Right now, markets aren’t sure exactly what to make of President-elect Trump’s proposed economic agenda. Promises of corporate tax cuts, while fueling the recent surge in stocks, could in practice increase inflation. Same goes for tariffs and mass deportation. And rising inflation could in turn pause or reverse the recent trend in interest rate cuts. But until more details emerge, or the policies themselves are actually put into practice, we won’t know their full effect. Instead of sitting back and anxiously waiting, we suggest taking a look at the chart below. It shows that markets tend to rise over time regardless of which party holds the presidency. Maintaining a consistent, diversified investment approach is the best way to navigate political and economic cycles. That, and maybe cooling it a bit on your news consumption. So what now? As always, it’s impossible to know exactly how long each growth cycle will last, so consider erring on the side of staying invested. If you find yourself sitting on too much cash, now might be the time to put it to work in the market. You can invest it as a lump sum, which research shows may offer higher potential returns. Or you can sprinkle it into a portfolio over time. Most importantly, however the market performs in 2025, we suggest zooming out and reminding yourself you’re in it for the long haul.

Three blockbuster IPOs are launching. Here's when they'll land in your portfolio. SpaceX, OpenAI, and Anthropic are going public and selling billions in stock. Before you chase the buzz, read up on the backstory. Key takeaways Several high-profile, private companies are going public in 2026, headlined by SpaceX, OpenAI, and Anthropic. Many major indexes will fast-track these companies for inclusion within weeks of their debuts. The S&P 500, however, requires a year of seasoning and strict profitability criteria. Betterment customers have multiple on-ramps to invest in them via both automated and self-directed investing. IPO excitement can inflate opening prices, which makes it hard to come out ahead. There's a case for letting the market do its stress-testing first. As these mega-cap companies join an already tech-heavy market, diversification across sectors and geographies matters more than ever. The aerospace juggernaut SpaceX smashed records with its recent initial public offering (IPO), turning a slice of the once-private company's trillions in theoretical valuation into real, tradeable stock. It raised plenty of capital—and questions—in the process, so let’s dive in and sort through what it all means for everyday investors like yourself. Wait, what’s an IPO again? An IPO is when a privately-held company goes public, selling ownership in the open market as a way to both raise money and give earlier investors a chance to “exit” and realize a return. A trio of splashy technology IPOs headline this year: not just SpaceX, but two of the biggest brand names in AI: OpenAI and Anthropic. Both are targeting IPOs for later in 2026. Taken altogether, the three could be worth more than $3 trillion, though only a portion of that value will initially come to market. That public stock would still be substantial, so the companies and their underwriters are being deliberate about how many shares they offer upfront. Before we get to how many, however, let's look at the more pressing question: how soon might these newly-public companies show up in your portfolio? Indexes are fast-tracking the trio for inclusion, with one BIG exception Stock indexes are simply lists, or put another way, they’re the ingredient lists that index funds base their allocations on. These index funds can provide a cheaper and easier way to diversify, letting you passively invest with the aim of matching market returns. But the lists themselves aren’t open-sourced. They’re strictly owned and operated, with specific rules for how quickly new businesses on the block can gain entry. Mega-cap companies (those with valuations of $200 billion or more) are testing the limits of those rules. These tech companies could make their way into many notable indexes within weeks, if not days, of going public—including the Russell 1000, with $2 trillion of funds tied to it, and the CRSP US Large Cap Index, with $1.8 trillion indexed. But the mother of all indexes, the S&P 500, isn’t budging. It represents nearly half the value of all the investable stocks in the world, and nearly $12 trillion worth of funds follow its script. And those big institutional investors aren’t keen on passively buying brand new stocks whose valuations haven’t been stress-tested. The S&P 500 has strict profitability rules companies must pass before being eligible for inclusion, rules created after the dot-com bubble, and a 12-month waiting or “seasoning” requirement to boot. So how does all of this translate into your investing? Betterment customers can set their own launch window These IPO darlings will take a while to show up in the S&P 500, but Betterment customers still have several avenues for investing in them sooner rather than later. Most of our expert-built, curated portfolios—Value Tilt, Innovative Tech, Socially Responsible Investing, and Goldman Sachs Smart Beta—utilize index funds that have a higher likelihood of listing these companies within weeks of them going public. Our Core portfolio, on the other hand, primarily gets its U.S. stock exposure through funds that track S&P indexes, so inclusion will come farther down the road. If you self-direct your investing at Betterment, you can buy applicable funds themselves, or in many cases you can buy the companies directly as single stocks shortly after they begin trading. And in the coming weeks, we’ll also be introducing Custom portfolios, which pair the flexibility of self-directed investing with the power of our automation and tax-saving technology. This new investment option will replace our Flexible portfolio and let investors slot those funds or single stocks into their portfolios themselves. All this being said, trading in these freshly-minted equities often comes with heightened volatility and additional risk. The buzz and buildup to their IPOs can drive up their opening prices, making it tough to exceed expectations and net out in the positive. Morningstar, for one, believes SpaceX’s initial offering was overvalued. There's no shame in waiting for these companies to organically work their way into a globally-diversified portfolio. In fact, there's a strong argument for it. By then, you’d be buying at a price the market has had time to test, and you’d own them as part of a portfolio that doesn’t hinge on any single rocket launch. The tech-centric stock market is about to get more techy Diversifying across continents and industries is all the more important given the increasing concentration of the stock market. Technology already accounts for more than 44% of the S&P 500, and the arrival of several mega-cap tech and tech-adjacent IPOs in 2026 could push that share even higher. Fortunately, the full value of these companies won’t be going public. They’ll make a portion of shares available to the public in what’s known as “float,” with the remaining still owned by company insiders, employees, and the angel investors and venture capitalists who helped fund early stages of growth. SpaceX, for example, offered “only” $85.7 billion of shares in its IPO. It’s this public stock that informs how big a slice of indexes they’ll make up, and that number is still sizable. Increased concentration in any single sector, especially one driven by a relatively small number of mega-cap names, can amplify both gains during favorable market conditions and drawdowns during corrections. But that’s why Betterment exists. We’re here to do the heavy lifting of asset allocation, and help you sleep a little more soundly, no matter what starry-eyed headlines these IPOs generate.