Many people dream of achieving financial freedom. The freedom not to work or actively seek ways to make money without worrying about how to cover the cost of living.
Fortunately, this dream is something that can be achieved. In fact, there are actually a lot of people who are already living this dream.
And many are not your typical millionaire or billionaire, so this shows that even an average person can achieve financial freedom.
If you ask them what their secret was, most likely they’ll say it’s because they invested their money and allowed it to grow.
This is actually the secret to achieving financial freedom, investing your money and allowing it to grow on its own, and you don’t even have to do anything.
Of course, investing is not really as easy as it sounds since there are a lot of different factors that you need to consider.
Fortunately, there are companies out there that aim to make it easier for people to invest their money. One such company is called Betterment.
It’s a company that can make investing simple and automated for you. It considers several factorss including personal information like your age, risk tolerance, and so on to come up with an investment portfolio fit for you.
But is Betterment really a legitimate company that can make investing simple? Or is it just a scam that you should avoid?
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Betterment is A Legit Company That Makes Investing Simple
Betterment, which launched in 2010, is a company that offers automated investment services to make investing easy and simple.
The company is basically what you call a robo-advisor, which makes use of algorithms to manage an investment portfolio. You just need to provide certain details that the computer will collate and create the right investment portfolio.
They’re one of the first to come out with this service, making the company one of the leaders in the robo-advisor niche. They currently have about $15 billion in assets under management.
Based on what I’ve seen about Betterment, I can say that they really are a legit company that makes investing simple and easier.
The services that they offer really makes it easier and simpler to invest. You don’t have to do any research since the company will do everything for you.
You just need to provide the details they require and they’ll recommend an investment portfolio based on that. Of course, like any other investment, there are also some issues with Betterment.
One of the common issues that people have with this opportunity is that it is actually very hard to close your account and transfer your money.
There are also a lot of complaints about the performance of the portfolio, usually yielding low returns or even losses. The annual fee for the Premium Plan is also a bit pricey compared to others.
There are also minimal education tools and resources you can use. Lastly, there is no 24/7 support available. I’ll discuss these issues and complaints about this opportunity as we progress further in this review of Betterment.
Who Uses Betterment?
Betterment is designed for people who want to invest their money but don’t really have the time and patience to do so.
The company offers automated investment services where they will be the one to do all the work for the investor.
As an investor, you just need to provide some details like age, risk tolerance, goal, and so on. The company will use the details they got from you and create a portfolio that is fit for you.
They’ll basically be the one to invest your money on a combination of stocks, ETFs, and bonds, based on the details that you provide.
Their services will not be free of course, so expect to pay a fee to use the automated service that Betterment offers.
In the next section, I’ll discuss in more detail the pricing that the company has, the kind of services they are offering, and how it really work.
What Are the Investment Services that Betterment Offers and How Does it Work?
Betterment is one of the pioneers of robo-advisors and is considered a leader in the industry. Their automated investment services make it easier and simpler for you to invest your money.
The goal of the company is to maximize investment returns regardless of the risk level that you are comfortable with.
Now, Betterment has two investment services to choose from, one is the Betterment Digital and the other is the Betterment Premium.
Betterment Digital is the company’s robo-advisor service. It basically offers online computerized investment advice based on information that you provide like age, risk tolerance, and so on.
This service doesn’t require a minimum balance to start and it only invests in funds that will maximize the money you put in at different risk levels.
Betterment Digital also features Automatic Rebalancing, where the company will automatically adjust the investment to maintain your target allocation whenever the market shifts.
This account also makes use of automating the tax loss harvesting and asset allocation so that your after-tax returns will be much higher.
As for the annual fee for using this service, Betterment has a 0.25% annual fee for the Betterment Digital.
Of course, not everyone prefers talking to a computer or relying on algorithms for their investment portfolio.
The company also has that covered with their other service, the Betterment Premium. It offers all of the benefits of their Digital Plan, plus in-depth advice from real people about investment opportunities outside Betterment.
This service also features unlimited access to the company’s CFP professionals that can guide you in aligning your investing goals to your life events like getting married, retirement, planning for a child, and so on.
Unlike Betterment Digital, though, the Premium Plan has a minimum investment requirement of $100,000. The annual fee is also higher, at 0.40%.
One advantage of having at least $100,000 in your account is that it gives you the ability to adjust the percentage of the portfolio in each investment, allowing you to personalize your portfolio to your preference.
When it comes to the portfolio mix, the standard portfolio uses ETFs from about 12 asset classes. Betterment can also provide socially responsible investing, smart beta, and target income portfolios.
Betterment will also have several investment tools that you can use to help you set up your goals and choose the right accounts to enroll in. The tools can also help you make the right money decisions.
If you want to start with the Digital Plan but still want expert advice, the companys got you covered there with their one-on-one expert advice.
The price starts at $199, where you get one 45-minute call that can provide a step-by-step tutorial to set up your Betterment account.
If you want to know how your financial health is looking, the company also has a Financial Checkup Package for $299. You get one 60-minute call with a licensed expert to review your financial health and situation.
If saving for college is your concern, you can also check Betterment’s College Planning Package for $299, where you get one 60-minute call with a certified financial planner.
The planner will review your family financial situation and explain to you how much money you’ll need to save, how you can invest, and what education savings account to use.
There’s also the Marriage Planning Package for $299, where a certified financial planner will guide you about budgeting for the wedding, getting into debt, and even with merging finances.
The last advisory package is the Retirement Planning Package, also for $299. Here, the financial planner will review your current financial situation, any accounts or holdings you might have, your retirement plan, your employer’s plan, and more.
The company also has the Goal-based saving, Smart Saver, Two-Way Sweep, RetireGuide, and more.
What Are People Saying About Betterment?
The reviews about Betterment has mostly been positive, with many saying the company provides a good investment opportunity for both newbie and experienced investors.
The historical returns and performance of the company are also better compared to its competitors, so you’re really getting your money’s worth.
However, there are also many consumers who are not happy with the service they have got from Betterment.
One of the most common complaints about this company is that it is very hard to take out your investments from the company.
It’s not uncommon to switch investment companies but Betterment seems to make it harder for you to leave. There is a lot of paperwork that needs to be done and they are hard copies, not digital ones.
This means there is a big paper trail and it requires the traditional snail mail and not just the usual email. So, this can make the process daunting and time-consuming.
Many people complaining said that it took at least 1 month before their money was transferred out of Betterment and into the new investment company.
Some were not as lucky, as it took more than a month, with a few even experiencing a 2-month wait before they could get their investment back.
Another common complaint that I saw is the performance of the investment portfolio. Though it is not unusual to experience your investment performing poorly as this is really dependent on the market. But people complaining say they experienced a loss of money on their Betterment portfolio when the market was supposed to be performing well.
What’s worse, is that some of them even said that their investments in other companies are performing well while their investment in Betterment is falling.
Now it is still not unusual for an investment to perform differently compared to other investments. But it is definitely not a good look for the company.
I’m not sure how they choose which ETFs, bonds, or stocks to invest in, but I don’t think it’s wrong for clients to expect their portfolio to perform well during a bull market.
So hopefully the company can fix this. Some people also complained about the annual fee of Betterment Premium, saying it’s a bit pricey.
Though it is pricier, it is still within a reasonable range, especially since it also features access to one on one human advice.
There are also complaints about Betterment’s lack of usual educational tools like balance sheets and charting options.
They also don’t have video materials or live events. They do have a wealth of articles about different investment topics, including tax planning and investment strategy.
But these are not really enough to cover the lack of the usual educational features. The last issue with Betterment is their lack of 24/7 customer support.
You can only contact their support via phone, email, or text every Monday to Friday 9 am to 6 pm Eastern Time. You can also send an email on Saturdays and Sundays from 11 am to 6 pm Eastern Time.
Though this is not really a big problem, it would still be better if you can contact the company any time in case you have questions. A 24/7 support will also be helpful in case you are in a different time zone.
What I Like about Betterment
Now that we know what Betterment is and what they are offering, it’s time to discuss what I like about this opportunity.
- One of the things that I like about Betterment is that the annual fee for the Betterment Digital is really low compared to a lot of other robo-advisors. The 0.25% annual fee is really inexpensive and is a great help in maximizing the money you earn from the company.
- I also like that Betterment doesn’t require a minimum account balance for their Digital Plan. This is a big help for newbie investors since they can invest only the amount that they can really afford. The minimum investment requirement is usually one of the barriers to entry for a lot of people. So having no minimum is a huge plus.
- I also like that Betterment provides affordable access to their wealth of licensed financial advisors and planners. In investing, having an expert or professional working with you is going to be a big help in ensuring that your investment portfolio will align properly with your goals, risk tolerance, and objectives.
- It’s also good that Betterment has a wide array of helpful features like the Retirement Savings Calculator, the smart saver option, goal-based savings, and many more. These features provide you with a wide array of other options that can help you achieve your financial goals.
What I Dislike about Betterment
Of course, not everything about Betterment is good and dandy, as there are also things about this opportunity that I don’t really like.
- The first thing that I don’t like about Betterment is that it is very hard for people to close their account and transfer their funds to a different investment company. The process involves a ton of paper works and the company doesn’t seem to make use of email when it comes to processing the request. So, it takes a lot of time and effort for you just to request to have your funds transferred. Hopefully, they change this.
- I’m also not a fan of Betterment’s lack of 24/7 support. This is important, especially if you consider that the schedule that they accept calls or inquiries may not be a conducive for some people. What if the client is currently in a different time zone? That would pose some problems. So having a 24/7 customer support will help solve this problem.
- I also don’t like the many complaints that people had about their investment not performing well. I don’t usually acknowledge the complaint since investments don’t always go up. But the fact that some of them experienced this during a bull market and their other investments are performing well is hard to ignore. Hopefully, these are just isolated cases, because it won’t bode well for the company if this is a recurring issue.
Is Betterment to Be Recommended?
After learning more about Betterment and what they can really bring to the table, I can say that this is an opportunity that is worth checking out.
I believe the investment opportunity that the company offers is a good one, especially as they don’t have a minimum investment requirement for their Digital Plan and the annual fee is very low.
This could be a good for people who are just starting with their investments and don’t have a lot of money to put in yet.
However, it is important that you also take into consideration that there will be risks involved. I’m hoping that the complaints about investments not performing well are just isolated cases.
Historical data and performance still back Betterment, but just be aware that there’s a possibility this could happen. So, when you start, make sure you only use money that you can afford to lose.
Don’t put your entire savings account here. You also have to be aware that transferring your money from Betterment to a different investment is a daunting and time-consuming task.
This could make it difficult for you to close your account with the company. This is the reason why I only recommend that you check out this opportunity and make up your own mind.
There are concerns with this opportunity, and it’s best if you see if the positives the company offers is enough to negate these concerns.