Which Robo-Advisor is Right for You?

Insider’s experts select the best products and services for you to make smart financial decisions.here’s how). Sometimes, we may be paid a commission by our clients Our partnersHowever, these opinions are not necessarily those of the company. All offers on this page are subject to the following terms and conditions

Comparison of Wealthfront and Betterment: The most significant differences

Two of the first platforms that offer automated investment advice are Betterment and Wealthfront. These platforms, also known as “Investment Platforms”, were designed to simplify the investment process. robo-advisorsSoftware and computer algorithms can be used to manage your investments and finances. These are an alternative option for investors who don’t want to work with financial firms or engage in active/day trading. Brokerage.

Betterment offers a $0 minimum and $100,000 minimum for its premium accounts, but Wealthfront requires that all investment accounts have a $500 minimum balance. In addition to the 0.25% management fee, you’ll have to pay an investment fund fee ranging from 0.06% to 0.13% — and Wealthfront doesn’t offer financial planner access like Betterment does. Wealthfront compensates by allowing you to adjust your ETF allocation if Wealthfront doesn’t like it.

If you are looking for lower fees, more goal-oriented investment strategies and access to human advisors, Betterment might be the right fit. For those looking for additional features such as lines of credit, crypto investments, and college savings plans, Wealthfront may be a better option. High-yield cash account, and direct Indexing Strategies.

There are many options and features available for Betterment and Wealthfront.

Are you a candidate for Betterment?

Betterment can be considered an independent entity Automated advisorMore than $32 billion of assets under management. It provides automated individual and joint taxable accounts as well as trust accounts, retirement accounts, checking and cash reserve accounts. 

What are Betterment’s fees for?

Two types of investing accounts are available from Betterment: a premium and a digital plan. The digital account costs the least and has a 0.25% annual cost. This account allows you to invest your money in ETFs and bonds. ETFsIt is available in a variety of features, including automatic rebalancing and tax-loss harvesting Fractional sharesProviding access to human advisors, goal-based planning and socially responsible investing.

Tax-loss harvesting allows for you to claim or write off investment losses on tax returns. This can lower your taxes. Betterment employs tax-loss harvesting for the sale and reinvestment of losses into securities that are in line with your current portfolio.

You can set up the digital plan for free but will need $299 to have a one-on-one advisor consultation. You’ll have unlimited access and support from financial professionals if you upgrade to the premium plan.

The premium account has a $100,000 minimum — and you’ll incur a 0.40% annual fee — but you’ll get access to all of the features of the digital plan plus more. In particular, you will have unlimited access. Certified financial plannersInvestment advice that is both in-depth and comprehensive.

Betterment also offers traditional IRAs as well as a number of retirement accounts. Roth IRAs, SEP IRAs, Roth IRA conversions 401(k)sIt is an investment platform for advisors and businesses. You get a 0.75% interest-rate on your cash balances. Wealthfront offers only 0.35%.

If you are looking for specific goals-based investing or retirement strategies, Betterment might be the right fit. There are five types of taxable goals on the platform: Retirement savingsRetirement income, safety net and major purchases, as well as general investing. These goals can be adjusted at any time.

This robo advisor could be a great option if your goal is to find an expert. App for investingAccess to human advisors. However, Betterment may not suit your needs if you are interested in specialty accounts such as College savings plans.

Are Wealthfront’s services right for you?

Wealthfront offers investment accounts, retirement account, and portfolio lines credit. 529 College Savings PlansManagement accounts and Cash Management Accounts. Its investing accounts provide tax-loss harvesting, financial planning tools, and access to an array of Index fund investments.

And, with larger balances (you’ll need at least $100,000 for US Direct Indexing — formerly known as stock-level tax loss harvesting — and risk parity), you can take advantage of its PassivePlus portfolio features such as US Direct Indexing, risk parity, and smart beta strategies (this feature has a $500,000 minimum).

Wealthfront’s US Direct Indexing method, according to its website aims at capturing even more losses and lowering your tax bill. It searches for movements in individual stocks within the US Stock Index. Risk parity is an asset-allocation strategy that aims to improve your risk-adjusted returns.

Smart beta on the other hand works to increase your returns using portfolio DiversificationThese are just a few of the many strategies that can be used to select securities.

Wealthfront is also the first app that offers managed portfolios and the possibility of investing in crypto. There are two crypto trusts available: Grayscale Ethereum Trust and Grayscale Bitcoin Trust (GBTC). Wealthfront allows you to choose between a combination of these assets up to 10% of your portfolio. They offer them both for its taxable investment accounts as well as IRAs. Find out more about Wealthfront’s cryptocurrency products here.

Wealthfront: Is it worth the price?

There is a $500 minimum deposit required. The platform also charges a 0.25% advisory and fund fees. Wealthfront provides more investment options, even though it does not offer the same human advisor guidance as Betterment.

Its automated features also apply to retirement accounts — including Traditional IRAs, Roth IRAs, SEP IRAsAnd 401(k) rollovers — and education savings plans.

Wealthfront’s portfolio lines of credit are a unique feature. You can borrow up to 30% from your investment account to get quick cash. The best part is that you can repay the loan with interest at any time. Wealthfront’s current interest rates range from 3.15% up to 4.40%.

Wealthfront offers more than Betterment. 529 College Savings PlanThis allows you to set aside money for your child’s education. The account — which can be opened in any state — has fees ranging up to 0.46%. Additionally, withdrawals can be made without federal taxes.

Wealthfront also offers a college savings plan and a free cash account with a 0.85% annual percentage yield. Uninvested cash grows at a rate of 0.35%.

Although Wealthfront is slightly less expensive than Betterment this robo-advisor may be a good option if you are interested in products such as education savings plans, portfolio line of credit and high-yield cash account.

Wealthfront vs. Betterment — Frequently asked questions (FAQ)

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