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You manage your Betterment account in terms of dollars and cents, which is the most easy and intuitive way, but there is a bit of magic happening behind the scenes. Anytime there is a transaction in your Betterment account (like a deposit, withdrawal, or change in your Allocation), we buy and sell shares of ETFs on your behalf in the proper amounts. Betterment takes care of all the transactions for you. Betterment trades in Client accounts for any number of reasons, including in response to your actions such as asset allocation changes, deposits or withdrawals. Betterment also trades in order to rebalance your account, to change investment options or otherwise to further the investment objectives that you specify via Betterment’s website.

Whenever there is a transaction in your Betterment account you will receive an email from us when the trades are complete. You can view the details of any transaction on the Activity tab.

Betterment generally trades on the same business day. However, transactions will be subject to processing delays in certain circumstances. In particular, orders initiated on non-business days, thirty minutes or less before markets close (typically 4:00 PM ET), and after markets close generally will not transact until the next business day. In addition, trades that are triggered by multiple Client actions in a single day (e.g., multiple portfolio allocation changes in different goals), generally will not be placed until the next day. Further, account deposits are automatically subject to a processing period that may be up to five business days or longer; deposit-related transactions will not occur until the next business day after this processing period is complete. You’ll know that your trades have executed when you receive a confirmation email from Betterment, and you can check on the status of any transaction on the Activity tab.

Your Allocation

Your Allocation is a measure of how your Betterment account is split between stocks and bonds. When transactions occur in your account, shares of the ETFs that compose the two baskets are bought and sold to bring your account closer to your Target Allocation.

When you change your Target Allocation, you alter the proportions of stock and bond investments that you own. The number of shares bought or sold depends on the size of your Betterment account and your Target Allocation.

Allocation Change Limits

Due to day trading rules you may only make up to one allocation change per day. Day trading means buying and selling the same security on the same day. These restrictions are mandated by Regulation T of the Federal Reserve Board and FINRA Rules.

Deposits and Withdrawals

Deposits and withdrawals result in the purchase or sale of shares of the ETFs that compose the stock and bond baskets. Money that you deposit is used to buy shares and money that you withdraw comes from the proceeds of shares sold. The number of shares bought or sold is dependent on the size of your transaction and your Allocation.

Deposits are automatically invested within 1-2 business days into your portfolio, based on our algorithm’s recommended mix of funds.

Withdrawals typically take 4-5 business days to reach your linked checking account, and includes trade settlement and transmission through the ACH network back to your bank.

Dividend Reinvestment and Rebalancing

There are two other main transaction types that occur in your Betterment account which are not a direct result of any action you take with the account management tools. Instead, Betterment initiates these transactions automatically according to certain preset parameters.

When funds you own issue dividends Betterment will automatically reinvest the cash proceeds into the Stock and Bond funds based on your Allocation setting.

Rebalancing is a way for Betterment to keep your account holdings from drifting away from your Target Allocation setting. Learn more about our rebalancing practices.