Betterment has been providing customers with an investment platform since 2008, giving it a long and stable reputation as a robo-advisor. When comparing Betterment vs. Robinhood, Betterment markets itself to beginning investors, even offering an advisory questionnaire to those new to the app. The questionnaire is not very technical, simply asking users basic questions about investment goals, income, and how aggressive the investor wishes to be.
Based on these questions, Betterment can set customers up with a software-generated portfolio, but more experienced users can customize their own portfolios if they know how they would like their assets organized. The application also offers portfolios based on investing in companies known for their moral business practices, a recent term called socially responsible investing.
Betterment also automates many processes for time-strapped investors. Portfolio re-balancing will automatically re-balance a client’s investment ratio if it falls outside the limits set by the user. Investors can set up recurring deposits so that money is consistently available to grow one’s assets, and dividends are also automatically reinvested to keep one’s money back into the market.
Betterment has also begun providing its clients with tools to save when filing their tax returns. Betterment claims to automatically place holdings in more tax-advantageous accounts, sell assets that are experiencing a loss, and help to calculate how much users would lose in taxes by withdrawing from their accounts.
Just like Robinhood, Betterment requires to minimum balance to be kept in one’s account, so people who don’t have a great deal of funds to start with can still begin investing with as little or as much as they want. It should be noted that the basic form of Betterment does charge a managerial fee of 0.25%, but this is very low compared to traditional brokerages.
Unlike Robinhood, Betterment offers a much wider range of account types such as trust and checking accounts as well as individual retirement accounts (IRAs). This leaves Robinhood limited depending on a potential user’s goals, as the application only provides brokerage accounts at this time.