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New and Notable Updates

On February 8, 2022, Betterment announced that it is acquiring crypto manager Makara. As a result of the acquisition, Betterment now gives retail investors and advisors the ability to invest in diversified crypto portfolios alongside their existing investments.

There’s a reason that Betterment is the largest stand-alone robo-advisor with nearly $31 billion in assets under management. The firm offers excellent low-fee investment management for new investors right through to high-net-worth clients and provides all of its users with comprehensive financial planning. Another sign of Betterment’s stellar reputation comes from former competitor Wealthsimple, who recently turned over all of their U.S. customers to Betterment.

Betterment goes beyond the typical offerings from robo-advisors, providing Smart Beta, an income-focused, bond-centric portfolio, and several socially responsible investment (SRI) portfolio choices. Adding to the platform’s allure, financial advisors are accessible to all users at an additional cost. All of this is in addition to checking and high-yield cash reserve accounts, making Betterment a strong candidate to meet all your financial needs with one robo-advisor. We’ll dig deeper into Betterment’s platform to help you decide whether it is the right fit for you.

Key Takeaways

  • Betterment is our best robo-advisor for beginners and best for cash management.
  • Portfolio choices include Core, Goldman Sachs Smart Beta, and BlackRock Target Income.
  • Betterment allows you to create multiple goals and see average and worst-case scenario returns to make your financial planning straightforward.
  • Investment portfolios are designed to outperform over the long term, due to value and small-cap bent.
  • Betterment syncs data from outside accounts for more accurate investment management.
  • Easily set up multiple goals and track progress

  • Portfolios are adjusted to accommodate users’ changing goals and risk tolerance

  • Three distinct SRI portfolios

  • $0 account minimum, $10 investment to start

  • Tax-loss harvesting available for all customers

  • No margin or borrowing

  • No REITs exposure in Core portfolios

  • No weekend live customer service

  • Must create an account before viewing your specific portfolio

  • Premium plan requires $100,000

Company Overview

Betterment was founded in 2010 to help people make their investment dreams a reality. The company is headquartered in New York, N.Y. Since its founding, Betterment has grown significantly, now with more than 775,000 customers.

Account Details

Account Minimum $0 account minimum, but $10.00 is required to start investing, $100,000 account minimum for Premium
Fees For accounts with at least $20,000, the annual fee is 0.25% on AUM;  For Premium accounts with at least $100,000, the fee is 0.40% on AUM. For accounts with less than $20,000, the fee is $4 per month.
Goal Setting Investing categories: growth, specific goal, retirement
Available Assets ETFs
Interest Paid on Cash Balances 4.20% (as of March 27, 2023)
Customizable Portfolio Yes, to some degree, in some cases
View Portfolio before Funding Need to set up an account including social security number to view your specific portfolio
Customer Service Phone-Monday - Friday, 9 a.m.-6 p.m. ET, Email, Chatbot
Financial Advisor Available Yes - Premium customers have unlimited meetings. Investing account customers can access low-fee Advice Packages
Cash Management No fee checking and rewards debit card. Cash Reserve savings with high yield
Tax-Loss Harvesting Yes
External Account Sinking/Consolidation Yes
Mobile App Yes

Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking is made available through Betterment Financial LLC. Neither Betterment Financial LLC nor any of its affiliates is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.

Account Setup

The account setup is easy and begins with creating a login and password. At that point, you can select from five general goals that can be customized later in the process.

To complete the account setup, you simply provide your name, phone number, address, Social Security number, and a few other items. After account setup, you complete the questionnaire with queries about your goals, time horizon, and risk tolerance. Betterment offers live customer service by phone for assistance with the process, which is a plus.

After you have completed your questionnaire and account registration, a potential investment portfolio is presented with a mix of stock and bond exchange-traded funds tailored by your questionnaire responses. Unfortunately, those unwilling to go through the complete account setup process, including providing your Social Security number, can’t view their recommended investment portfolio. If you go through with the account setup, however, you will be able to select goals to generate investment portfolios tailored to the target timelines and fund them through automatic deposits from the same external accounts that you are encouraged to sync as part of the setup. 

Betterment’s suggested portfolios tend to fall into the standard modern portfolio theory types tailored by your stated time horizon and risk appetite. An alternate account type may be suggested according to your stated goal, as Betterment supports individual retirement accounts (IRAs) and trust accounts in addition to regular taxable accounts. If you are looking for a 529 account or custodial account, however, you will need to look elsewhere as betterment doesn’t support them (although you can still save for the goal of educating yourself or a child, it just won’t be tax-advantaged). 

The standard Betterment portfolio is made up of ETFs that diversify a portfolio globally and it usually includes the lowest-cost index trackers from the usual suspects like iShares and Vanguard. You can, however, opt for a few different portfolios beyond the standard one. This includes three ESG-based portfolios called Broad Impact (full ESG), Climate Impact (focus on climate change), and Social Impact (companies championing diversity). There are also third-party portfolios like Goldman Sachs Smart Beta and BlackRock Target Income that aim to outperform or produce regular income respectively. Finally, you have the option of a Flexible Portfolio where you can tweak the standard MPT weightings to your own preferences. All that said, Betterment’s recommended portfolio for any goal will be a version of its standard portfolio with the weighting adjusted by your risk profile and the time until you need the money. 

Goal Planning

Betterment excels at the goal-planning model of investment management. Your saving and investing are segregated into buckets with various growth, timeline and risk metrics. For example, the money you’re saving for a home down payment is invested conservatively in bonds. While money for retirement is invested more aggressively with greater allocations to U.S. and international stocks. 

Betterment’s goal tracking includes the choice to connect outside accounts, for a 360° view of all of your assets. The Goal Forecaster tool also enables you to calculate when you will likely reach the goal. With ongoing goal tracking, you can adjust your saving and investing to improve the likelihood of success.

Goal setting begins with five broad choices:

  • Retirement
  • Retirement Income
  • Major Purchase (House, Education, Other)
  • Safety Net
  • General Investing

After making a selection, you personalize your goals with a name, the number of years until funds are needed, and the target amount needed. One of the key strengths of Betterment is that it calculates the likelihood of achieving goals under different market scenarios. Betterment also allows you to assign the external accounts synced to its platform to a goal, giving you a consolidated snapshot of your progress toward it. This level of consolidated scenario planning is a key strength of Betterment’s platform.   

Account Services

Betterment customers can easily set up automated deposits and structure them to fund specific goals. Withdrawals from your account don't incur any fees or penalties, and they are similarly easy to make. The checking account, debit card, and high-yield cash reserve enable you to keep all of your finances under one roof with Betterment essentially acting as your bank as well as your robo-advisor. Many robo-advisors offer cash accounts, but the checking account setup that Betterment provides is less common within the industry. It is a handy feature as it enables investors to keep more of their money in high-yield accounts, including money that they are holding for monthly expenses they haven’t yet incurred. An added bonus is that no management fees are levied for money held in Betterment cash accounts.

Betterment doesn’t offer margin, lending, or individual stock trading. It is pretty plain as far as portfolio composition, only selecting exchange-traded funds (ETFs) in its portfolios. They launched crypto portfolios, but it looks like they will be separate from their primary investment portfolio product. So, investors seeking greater portfolio customization might prefer M1 Finance or SoFi.

Cash Management

Betterment’s cash services include a no-fee checking and a cash reserve account. The checking account includes a Visa cash-back debit card. This checking account beats the competition with ATM fee reimbursement nationally and internationally. The account has no overdraft fees or minimum balance requirement. That said, you will need to open this checking account separate from your investment account if you'd like to have it.

The cash reserve account is a fee-free, high-yield cash account with funds deposited across several banks. This account is suitable for shorter-term cash needs. Transfers and withdrawals are easy and fund within one to two days. 

Betterment messages you if your cash balance exceeds your target, so you can transfer cash to higher-yielding assets and keep your money working for you.

Portfolio Construction

The Betterment Core portfolio includes a diversified mix of ETFs from companies like Vanguard, Schwab, and iShares. The globally diversified funds lean towards value and small-cap equity index funds. The bond offerings, which are also through ETFs, are widely diversified among US corporate and government bonds, including municipal bonds for taxable accounts. Betterment offers both international and developing market international bond funds. It is uncommon to find international bond funds available through a robo-advisor, so that fact is in Betterment’s favor as it helps diversify a portfolio globally.  

In addition to the Core offers, Betterment provides alternative allocations for distinct categories of investors. Retirees and those seeking income might consider the BlackRock Target Income portfolios and a high-yield cash account. Investors who strive to beat the market returns have access to Smart-Beta factor portfolios from Goldman Sachs. Socially conscious investors have the most selection with three model portfolios: Broad Impact, Climate Impact, and Social Impact. 

We like the nod toward value and small-cap stocks in the Core portfolio, despite recent lackluster performance. Over long periods of time, this allocation is typically rewarded. The lack of a REIT fund is a missing piece in Betterment’s asset allocations. That being said, Betterment also offers Flexible Portfolios to give you some customization options with which you can remedy this omission.

Betterment offers several investment portfolios, including:

  • Betterment Core: portfolios include US and internationally diversified stocks and bonds with exposure to value, small- and mid-cap equities. 
  • Goldman Sachs Smart Beta: includes funds that weigh their assets with factors, such as volatility or momentum, in lieu of market cap weighting. Many funds in this portfolio are from Goldman Sachs with higher fees and distinct diversification, in contrast with the Core portfolios.   
  • Socially Impact: portfolios offer three choices: Broad Impact, Climate Impact with lower carbon emissions, and a Social Impact portfolio that favors minority empowerment and gender diversity. 
  • Retirement Income: for investors seeking an income stream these portfolios combine growth with cash flow.
Available Assets
Individual Stocks No
Mutual Funds No
Fixed Income Only fixed-income ETFs
Socially Responsible or ESG Options Yes - Broad Impact, Climate Impact, and Social Impact
ETFs Yes
Non-Proprietary ETFs Yes
Mutual Funds No
Private Equity No
Forex  No
Crypto Yes

Portfolio Customization

Flexible portfolios are available to Core portfolio investors. This feature enables more advanced Investors to adjust specific asset class weightings. This might be useful if an investor prefers a greater allocation to emerging markets or small-cap value stocks. Users who’ve adjusted their asset class weightings still receive risk and diversification information as well as tax-loss harvesting and rebalancing.

Portfolio Management

Betterment’s rebalancing is set to occur when assets veer 3% above or below the desired asset percentage. Betterment’s tax-loss harvesting is designed to avoid any cash drag, keeping investors in the market at all times. Betterment shines when it comes to the ability to link your external accounts and sync your financial planning to include all of your assets, not just the funds managed by Betterment. Once you have synced all your accounts, the platform also uses your complete financial picture to make recommendations and offer guidance.

Key Portfolio Management Features
Automatic Rebalancing Daily account monitoring. Rebalanced when portfolio drifts 3% from target allocation. 
Reporting Features Dashboard provides financial overview with net worth, goal progress, and investment performance. Betterment provides regular nudges and reminders to keep users invested. 
Tax Loss Harvesting Yes - Keeps users invested, avoids short-term capital gains tax.
External Account Sync/View Yes-Clients can link retirement, banking and brokerage accounts. Only Betterment assets are rebalanced.

Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors. Read more at and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.

User Experience

Desktop Experience

Betterment’s desktop user experience is clean with a comprehensive dashboard and easy access to accounts, goals, performance, and fund transfers. The ability to connect outside accounts enables users to monitor all of their finances from the Betterment platform. Investors can monitor and adjust goals from the dashboard as well.

Mobile Experience

The Betterment app offers all of the functionality of the desktop version. There are a number of clever nudges on the app that help users save more and invest with taxes in mind. Both the android and iOS versions are highly ranked (4.7 iOS and 4.6 Android), although some users have reported difficulty with linking accounts and fund transfers.

Customer Service

Betterment’s customer service includes weekday phone and email. There is a virtual assistant chatbot too. You can purchase financial advice sessions with certified financial planners. Premium members can schedule these for free.

Betterment’s FAQ page is adequate, with the advantage of live phone customer service during weekdays. The only drawback is that phone customer service is not available on the weekends. Clients seeking more comprehensive customer service hours might consider robo-advisors connected with major investment brokerage firms. 


Users can be confident with Betterment’s security protocols:

  • All data is stored on servers in a secure facility
  • Strong browser encryption
  • Fraud protection and procedures
  • Data and information are never shared with third parties
  • Two-factor authentication
  • No data breaches within the last 30 days
  • Biometric entry including fingerprint and facial recognition

In addition, Betterment's portfolio insurance is among the best in the industry with the following offerings:

  • Cash Reserve accounts are eligible for up to $1 million ($2 million for joint accounts) of FDIC insurance ($250,000 insurance per Program Bank).
  • Checking accounts are FDIC-insured up to $250,000 for individual accounts and $250,000 per depositor for joint accounts.
  • Each investment account is covered by $500,000 of SIPC insurance for missing funds, including a maximum of $250,000 for cash claims.


The education category includes tools, articles, and videos. The tools include a retirement planner, goal tracker, and tax guidance. The resource library is replete with articles on a variety of personal finance topics. The search window is the primary way to access articles by topic, making self-education somewhat confusing. Betterment’s video content is minimal, but there are a few basic topics about how Betterment works that are available as a video.

For investors seeking a comprehensive investment and personal finance education, it’s best to visit other websites. The advice nudges can provide nuggets of tailored investment guidance, albeit with a slant toward moving more assets into the platform.

Commissions and Fees

Betterment’s commissions and fees are reasonable and transparent. The Investing Plan charges 0.25% per year for assets under management or $4 per month, for accounts under $20K and has a $10 entry point. The Premium plan charges 0.40% AUM and requires a $100,000 minimum. Access to certified financial planners is included for all Premium clients. 

Although there are no transaction fees, all ETFs charge management fees which are paid directly to the fund company. Betterment seeks to select low-cost funds and keep the expense ratios you pay very low.

Separate Financial Advice Packages range from $299 to $399 per financial advisory session. We like the pay-for-services-you-need model.

Category Fee
Management fees for $5,000 account Investing - $48
Management fees for $25,000 account Investing - $62.50
Management fees for $100,000 account Investing - $250 Premium - $400
Termination fees $0
Expense ratios  Low-cost funds chosen

Final Verdict

Betterment is a solid choice for every level of investor because it delivers a lot of value throughout its lineup of products. The Investing package offers access to goal-based financial planning packages that are ideal for investors seeking professional management at a reasonable cost. The premium version with access to Certified Financial Planners is a quality service with bargain pricing when compared to the costs of traditional advisors. Last, the cash accounts bump betterment into competition with the top online banks, especially with the high-yield cash reserve account.

The only drawback to Betterment’s services is the educational resources. The articles might be superb, but there’s minimal organizational structure to access them. This shortcoming aside, Betterment is a very strong competitor in the robo-advisor space because it offers good services at an incredibly low price. There are robo-advisors that are more robust, and others that are cheaper, but very, very few are both.


Everything You Need to Know About Robo-Advisor

Frequently Asked Questions.

How trustworthy is Betterment?

Yes, Betterment is registered with both the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). In addition, the Securities Investor Protection Corporation (SPIC) insures funds on Betterment for up to $500,000 in missing assets, with a maximum of $250,000 for cash claims. The company also has a collection of safety protocols, including two-factor authentification, to protect users' accounts.

What are the cons of using Betterment?

While Betterment has a wide range of offerings, margins and borrowing are not available, nor is REIT exposure in users' Core portfolios. Additionally, you have to create an account to view your portfolio and there is a $100,00 requirement for upgrading to premium. If users experience issues with any of these offerings, Betterment customer service is also only available Monday through Friday.

Is Betterment good for beginners?

Yes, Betterment is a good option for investors at all levels. It offers a collection of different products so users can choose a package that matches their experience and needs. Betterment is also Investopedia's top pick as the best robo-advisor for investors who are just starting out.

Can you lose money on Betterment?

As with all investments, there is always the potential to lose money. Betterment is no different. That's why it's important to have an investment goal in mind and keep track of the market and your portfolio to gauge the long-term feasibility of your investments.

What is the average return from Betterment?

Betterment's average return, throughout its history, is about +7.5% annualized. The company's projected average return is slightly below that, at +7.2% annualized.


Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.

With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

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