Betterment Review: Get Up To 6 Months Commission Free!

Betterment is a low cost robo-advisor who manages the heavy lifting of investing for you. Read my Betterment review to see how to get 6 months for free!

Betterment is a robo-advisor that seeks to simplify investing for you by managing much of the heavy lifting. This Betterment review will go over how they might be able to help you reach your investment goals. Betterment began in 2008 and is one of the more well-established players in the robo-advisor space. Through a relatively low price and solid approach, Betterment lowers the barrier to entry for those who want access to a financial advisor without the added cost.

What makes Betterment so unique from other brokerages is that you do not trade individual stocks or mutual funds, but you invest in a bucket of Exchange Traded Funds (ETFs) that are personalized to your specific goals. The other thing I really appreciate is they have no account minimums. Thus, if you have little money to invest or are new to investing you have little to worry about. With that bit of background out of the way, let’s move on to the review of Betterment.



You Don’t Actively Trade: You do not trade individual stocks with Betterment. That is simply not their approach. Their approach is very similar to a buy and hold type of investment strategy where they’re concerned about your long-term goals and not actively trading stocks.

Buckets to Choose From: If you do not trade stocks with Betterment, then what investment options do they offer? It’s quite simple, they select buckets of ETFs based off of what information you give them. They have two main buckets they select from and you personalize from there the amount each ETF will make up of your portfolio. The first one is their stock market bucket which seeks to give you balanced exposure in the US as well as internationally. It is made up of:

  • VTI – Vanguard Total Stock Market ETF
  • VTV – Vanguard US Large-Cap Value Index ETF
  • VOE – Vanguard US Mid-Cap Value Index ETF
  • VBR – Vanguard US Small-Cap Value Index ETF
  • VEA – Vanguard Europe Pacific (EAFE) ETF
  • VWO – Vanguard Emerging Markets ETF

The second basic bucket they provide is their bond bucket. Below are the options to select from:

  • SHV – iShares Short-Term Treasury Bond Index ETF
  • VTIP – Vanguard Short-term Inflation-Protected Treasury Bond Index ETF
  • BND – Vanguard US Total Bond Market Index ETF
  • MUB – iShares National AMT-Free Muni Bond Index ETF
  • LQD – iShares Corporate Bond Index ETF
  • BNDX – Vanguard Total International Bond Index ETF
  • VWOB – Vanguard Emerging Markets Government Bond Index ETF


They Personalize Your Service: The nice thing about Betterment is they don’t just stick you in a grouping of funds, but offer something that is personalized. When you open an account with Betterment they ask you 10-12 questions to understand your goals. They use your responses to help formulate your portfolio. The questions are relatively straightforward and should be able to answer them within 10-15 minutes.

Retirement Income: This is a new feature added by Betterment that allows you set up a system for sustainable cash flow for those that are in retirement. Decumulation during retirement can be tricky to balance and Betterment provides investors in retirement a way to better balance that.

RetireGuide™: This is another new feature Betterment recently added to help differentiate them from other robo-advisors, like Wealthfront. The purpose behind RetireGuide™ is to provide you personalized retirement planning advice. RetireGuide™ looks at things like income when you retire (based on your current investments), help you make plans based on if social security will be available to you or not and how much you should be saving each year. RetireGuide™ also looks at all of your investment accounts. No other robo-advisors are currently able to do this as far as I know.

SmartDeposit: Do you like to invest money through the month? That is the basic premise behind SmartDeposit. SmartDeposit allows you to invest money once you reach a certain threshold in your bank account. It is important to point out this feature is something you must select in your account. If you do, it allows you to put any overages in a bank account directly into your Betterment account.

Straight Forward Pricing: By not trading stocks, you avoid any commission fees. That’s not to say it’s free – of course. Their pricing is as follows:

  • Builder Plan – .35 percent of your balance, but requires a monthly deposit of at least $100
  • Better Plan – .25 percent of your balance with a $10,000 minimum balance
  • Best Plan – .15 percent of your balance with a $100,000 minimum balance

Those fees are annual and accrue on a quarterly basis. If you’re unable to make the $100 monthly deposit and have under $10,000 in your account they’ll move you up to the Better plan with a $3 monthly charge.




Great for beginners: What I like about Betterment is they’re great for beginners. Having spoken with many beginner investors in my past, I know investing can be confusing. If you’re a new investor and simply want to get started Betterment can make the process much simpler to manage. They take your goals to make up a portfolio. You have little to figure out on your own. It doesn’t get simpler than that in my opinion.

They do the heavy lifting: The other big thing I like about Betterment is they do a lot of the heavy lifting for you. They rebalance your account for you as well as reinvest any dividends for you. For the beginning investor this really makes Betterment unique among some of the alternatives. This is where someone like Motif Investing differs from Betterment. Betterment offers dividend reinvesting whereas Motif Investing does not. That might not be big to some, but it is something to keep in mind.

Their portfolios stay on top of the market: Their buckets are not a ‘set it and forget it’ approach. They’re not changing them willy-nilly either. They recently changed their bond bucket in light of what is going on in the bond world to put clients in a better position. The powers that be at Betterment do this in order to stay abreast of what’s going on in the market while also positioning investors to succeed. I also love that many of the funds chosen are low in fees so more of your money is working for you. I use the free service available at Personal Capital to stay on top of this myself.

There is no minimum account balance to open: Many online brokerages have an account minimum. Betterment does not. This is great for those with little to invest, or those simply wanting a secondary investing option to what they’re doing elsewhere.

Tax Loss Harvesting: In simplistic terms, Tax Loss Harvesting (TLH) allows you to boost the return of your portfolio by selling losing holdings which in turn lowers taxable liability on gains and income. You don’t need to do anything to take advantage of this feature and is available to all Betterment clients.




Pricing Structure: The main disadvantage I see with Betterment is their pricing structure. It is clear and straightforward, I’m personally not a fan of the tiered pricing though isn’t all that uncommon. That being said, you’re paying nothing to trade with Betterment and there are no other fees on top of their pricing structure. That’s also not to mention that Betterment offers things like TLH and rebalancing free of charge. If you were to start off with a balance of $5,000, for example, you’d pay roughly $17.50 per year for your investing – that’s relatively cheap when compared to other options.

The other thing I will mention is that when you look at Betterment vs. Wealthfront it depends on your given situation as to which you should pick. Wealthfront allows to get to $15,000 managed for free and charges .25 percent after that – regardless of account size. However, Betterment charges .15 percent on accounts over $100,000 so that would give them a slight edge over Wealthfront. If you have a taxable account over $100,000 though you might benefit somewhat more by housing that account with Wealthfront – especially if you take advantage of the Direct Indexing feature they offer. Again, it just depends on your given situation.

Betterment is a low cost robo-advisor who manages the heavy lifting of investing for you. Read my Betterment review to see how to get 6 months for free!

BETTERMENT review – my take


I think if you’re new to investing and don’t want to deal with the “stress” of picking out investments then Betterment is a great option to consider. Betterment really does take a lot of the work out of investing for you and allows you to go with a balanced buy and hold strategy. In addition to that, they allow you to personalize an investment approach that is applicable to you personally as opposed to an advisor who may put you in something without knowing much about you or what you really want. That’s not to say that advisors are “bad” in any sense, just that you can have more control by managing it yourself. Essentially, a robo-advisor like Betterment gives you the benefit of a financial advisor without having too many fees or minimums to meet.

If you’re new to investing and looking for a service to help you get your feet wet and take some of the leg work out of investing for you then Betterment is a solid option to consider. That’s also not to say Betterment is only for newer investors as their core approach is one I’d recommend for most that are investing in the stock market. With that being said, depending on your circumstance, Betterment could be a great option to consider for your investing needs.

If you open a new account with Betterment they do offer a new account promotion. The breakdown of the Betterment promotion is as follows:

  • Fund with less than $5,000 = 1 month free of charge
  • Fund between $5,000 and $24,999 = 3 months free of charge
  • Fund between $25,000 and $99,999 = 4 months free of charge
  • Fund over $100,000 = 6 months free of charge

Open an account with Betterment today and get up to six months commission free!

John Schmoll
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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to U.S. News & World Report, Investopedia, Credit Karma and more. If you're wanting to learn how to monetize your blog, check out my blog coaching services to see how I can help you take your site to the next level.


  • I’ve read a bit about Betterment before, and it sounds like good stuff. More info for Rick and I to consider as we get ready to start investing. Fun and games planned for this weekend, woohoo!

    • John says:

      Assuming it’s a good fit for you then it could be a good potential fit Laurie. Like I’ve said in the past, feel free to ask me any questions as you move closer to that Laurie I’d be happy to help. :)

  • I have been with Betterment for over a year. My account has brought in over 12% returns for the year and I think that is good enough for me. It is easy and I like it. They currently hold my Roth IRA. That being said, I will be opening a different brokerage account just to do some individual stock trading focusing around dividend paying stocks.

    • John says:

      I seem to remember you mentioning that in the past Grayson. Glad to hear they’ve worked well for you and think it’s great you’ll be looking to add some to that through dividend paying stocks.

  • I do have a Betterment account and it is as easy as you said. I signed up for the bonus earlier this summer, but have kept the account open just to not pay the trading fees, which can eat up your investment if you aren’t putting in a lot of money. I’ll see after a year how the fees compare with doing the same thing at Vanguard.

    • John says:

      That sounds good Kim, glad to hear that it has been easy for you. That said, I’d be inclined to think the fees would likely be better at Vanguard.

  • Matt Becker says:

    I think Betterment is definitely a good choice, though I would still prefer that someone start with one of Vanguard’s target date fund, as long as they can meet the $1k minimum. The fees are slightly lower, though the difference isn’t big enough to get too up in arms about. But overall I think the more services like this that exist, the better.

    • John says:

      I think they can be, assuming it’s the right fit for your needs. I’d likely be more inclined to go the Vanguard route if you want something simple, though I do like how Betterment seems to take a lot of the guess work out for the novice investor.

  • J. Rodriguez says:

    I recently wrote a review of Betterment. It was that review that got me to start investing. I got into Betterment and earned over 9% in 4 months. I’m loving it. This is a great outline too!

  • Great review John, and I appreciate you pointing out some of the negatives of Betterment as well as the positives. I am looking to open some investment accounts in the new year, perhaps an IRA and then an individual stock trading account. I definitely appreciate your reviews so far this year on various investment companies, most of which I am looking into currently.

    • John says:

      Thanks DC! Yea, each brokerage has their own set of good/bad things and those related to Betterment are a bit unique. Thanks for the feedback on the reviews, that’s my hope. I have a couple more planned over the next few months and will follow it up with a roundup overview afterwards.

  • I agree that Betterment may be good for beginning investors. I like the pool of funds they use, which are mostly low-cost Vanguard index funds. They use a strategy that is called slice-and-dice where rather than using the market cap-weighted index fund (VTI), they add in some mid and small-cap value index funds. I do some of this on my own without paying Betterment’s additional fees. My only hesitation with recommending Betterment to new or small investors is that people often stay with what they are comfortable with. That would not be all that bad with Betterment, but people would make more money by eventually handling their investments themselves. Personally, though, I would rather just give a new investor a copy of the Bogleheads’ Guide to Investing, let them read it, and then help them set up a portfolio.

    • John says:

      I like their pool of funds and do that on my own as it is. That is a good point about new investors staying with what they’re comfortable with and can really hinder them in the long run if they stay with that mindset.

      I see your point on what you’d recommend, the problem is though that the large majority of new investors out there can’t do that effectively. I spoke with people in that spot every day for several years and even that was advanced for them.

  • Nick Loper says:

    I’ve been torn between using a service like Betterment or WealthFront, or a traditional financial advisor, but am kind of terrified by the giant upfront fees and the research to suggest that index funds outperform managed funds over the long run.

    And then reading that the Vanguard funds have even lower fees. So still not sure what to do.

    In fact, the indecision has led to sitting on the sideline for most of the year and missing a nice 25% run up!

    • John says:

      I’ve not heard much about WealthFront, so I couldn’t answer to that. I can understand not wanting the fees of a traditional advisor though.

      Sorry to hear you’ve missed out of the run up. That said, you generally can’t go wrong with a solid, low-cost index fund especially if you’re undecided on where to put your money in the market.

  • I just can’t seem to wrap my head around their fee structure, which is really kind of high (considering most accounts will likely have less than 100k), compared to a vanguard index fund. Do they use some sort of algorithm based on answers to questions, or is it personalized service?

    • John says:

      From what I’ve read and researched it’s not algo based, but it personalized to you. That said, I could certainly be wrong on that. What you have to remember about the pricing though is that you’re paying nothing for the trading, rebalancing, etc. It may not be cheaper than a Vanguard fund, but you’d be surprised at how many have difficulties deciding on a Vanguard fund.

  • Sounds like a solid approach. However, this is really just another wrapper around a diversified portfolio of index funds. Look, you can go to Fidelity, Schwab or Vanguard and get pretty much the same thing. They have detailed questionnaires to judge risk tolerance and you sit down with them to craft a portfolio of diversified no-load mutual funds, index funds and ETFs. You do a mix of large, medium and small funds that cover growth, value and blend and you can get a fairly close result with less cost.

    • John says:

      I think it is for the right investor Steven. That said, yes many can go the route of Fidelity, Vanguard and the like but many would not even qualify to have that ability to sit down and talk with someone about the right kind of portfolio to set up for themselves because of the amount they’d be starting with. In the end, it’s another option for a beginning investor to consider as they need to make sure they find something that fits what they need and are comfortable with.

  • Cindy says:

    I keep seeing comments that Betterment is good for beginners. But is it good for someone who’s been investing but is not the DIY type. I’ve been investing for over 10 years, however I have not been active with my accounts. I’ve gone with an advisor and bought some mutual funds that they recommended and it’s just sitting there. I just came to realize how much I’m paying in fees and wanted to look at reinvesting somewhere else. I want something simple but will still get me to my retirement goal. I don’t mind paying a little bit of fees to not have to worry about researching who to invest with and opening accounts with multiple brokerage firms. I also like the automatic rebalancing and tax loss harvest. Would you say this is good for someone like me? I am concerned about the self-custodian part…is my money safe? Is the gains they say accurate?

    • John says:

      Thanks for stopping by Cindy! Not knowing your exact situation, it can be hard to say with definitive confidence that it would be good for you. That said, if you are looking for a more hands off approach that will do much of the heavy lifting for you then Betterment could be a decent option. The fact that they take care of much of the ins and outs is something that’s attractive to me as you don’t really have to deal with it day in and day out as well as having a ton of fees as a result.

      In terms of protection of your money…with Betterment being a brokerage you’re covered through SIPC insurance, which is the brokerage cousin to the FDIC. With SIPC, you’re covered up to $500,000 in account value, of which $100,000 can be cash. What SIPC essentially covers is if the brokerage goes belly up your principle is covered to that amount, though not any losses you may have incurred in the market. Short story long, you’re money would be covered up to that $500,000 threshold. :)

  • Marie Constantin says:

    How about safety with this new company? To my understanding the SPIC insurance didn’t help many of the Stanford, the Madoff, or the Morales victims. Where are the assets held? How safe are these people?

    • John Schmoll says:

      All great questions Marie! I can’t really speak much to the other victims, but I’ve read quite a bit that some of the Madoff victims were repaid by SIPC, though maybe not completely. The question, as I understand it, is whether or not they were direct investors of Madoff or if they came in indirectly.

      At any rate, in relation to Betterment, personal assets at Betterment are held in street name. Meaning, they’re separate from any other assets at Betterment and are not used to be loaned out (as in the case of a margin account). They do offer the standard SIPC coverage – $100k cash & $400k securities and they’re a custodial just like someone like Schwab or Fidelity where they’re required to keep all records of your assets.

      I hope that helps and please let me know if there is anything else I can answer in relation to this. Thanks for stopping by. :)

  • Mehdi says:

    Hello, I am a college student therefore have a tight budget. However, I am very interested in investing my money to start accumulating capital in order to start my own business in the future. It seems as though Betterment might be a good fit for me as a beginner investor. I would be able to withdrawal between $25-$50 a month from my checking account. What would be a realistic goal on my returns? Is there anything else I should know before opening an account with Betterment?

    • John Schmoll says:

      Good questions Mehdi. The first question I’d ask is how much control are you wanting to have over the investing? Are you essentially wanting someone to manage it for you – or are you wanting to make the decisions on what specific investments you’ll be in?

      If it’s the former then Betterment is going to be the best option out there. I’d recommend Wealthfront, but they have a minimum balance requirement of $5,000. Betterment does not have that. If it’s the latter, I’d likely go with someone like Motif Investing which gives you a good mix of each. Here’s my review of them –

      As to the return capability, there’s no real way of saying that as no one knows what the market will do. That said, Betterment does take a good basic approach of following the market as opposed to chasing gains.

      Hope that helps! :) Feel free to let me know if you have any other questions.

  • Keith says:

    Hello guys, the comments you all made really helped me to understand some things about investing witch I want to do. I don’t have a lot to invest and I am surely a beginner. I want to understand how little I can invest. If I understand correctly, at betterment I can invest as little as a $100.00 a month. Is that correct? If so what can I expect in return in the long term haul?

    • John Schmoll says:

      Glad you’ve found it helpful Keith and awesome you want to get started investing! Yes, you are correct, Betterment allows you to start with as little as $100 per month.

      There’s no way to say how it’d perform in the long-term unfortunately. That being said, their approach is one that aims to be passive and stay with the market – and not something crazy like trying to time the market. That approach will generally help your holdings perform the way the market as a whole is. Hope that helps & thanks for stopping by.

  • Timothy Mullen says:

    i like the reviews of the betterment and thought this was a great break down. but if you start out with just 100$ a month and they are taking 35% of that each month are you really going to make any money? if nearly ever deposit is hit for almost half? guess i am a little confused.

  • John Schmoll says:

    Thanks Timothy! Thank you for stopping by as well. The fee is actually .35% of your annual balance if you make the $100/mo deposit – so not truly $35 out of each $100 you deposit . If you’re under that amount per month they move you to the .25% annually plus $3/month.

    One other option to look at is Wealthfront – here’s a review I did of them –

    They have a minimum balance to start of $500, but you get the first $15k managed for free then .25% annually. They don’t require a monthly deposit like Betterment does. They operate very similar to Betterment and offer many of the same funds. Hope that helps, happy to answer any other questions.

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