The ideal place to invest is where your interest gets the highest return, and that’s just what online investing platforms strive to achieve. But which one should you choose? We’re putting two of the most popular online investing platforms – Betterment vs Ellevest – under the microscope so you can make an informed decision.
Betterment Overview
Betterment was founded with the vision of making financial advice more accessible and affordable to everyone. It has a mobile app that lets you check on your account and make changes to your investments on the go. Betterment’s robo-advisor Platform automatically diversifies and rebalances your investments, giving you access to personalized financial advice when you want it. As a client, you’ll never need to worry about keeping up with the markets or buying individual stocks, bonds, or mutual funds. Betterment handles all of this for you!
Betterment Details
Betterment is an investment firm headquartered in New York City. It provides a portfolio that includes cash, stocks, bonds, commodities, mutual funds, and ETF. The company was founded in 2008 by Jon Stein and Eli Broverman, then launched in 2010 at TechCrunch Disrupt NYC. Betterment has more than $7 billion in assets under management.
In our Betterment Review, we talk about how Betterment offers five different accounts: a brokerage account, savings account, checking account, trust account, and Roth IRA. The brokerage account can invest in any ETF offered on the platform up to the maximum amount permitted by the investor’s state of residence. Each of these accounts has a minimum balance requirement ranging from $0 to $100. The company charges an annual fee of 0.25% for all accounts except the Roth IRA which charges 0.40%. Get up to 1 year for free with betterment today!
The company uses Modern Portfolio Theory and computer algorithms to build and maintain portfolios designed to suit individual investor risk profiles. These portfolios consist mostly of Exchange Traded Funds (ETFs) structured as broad-market index funds with complementary asset classes such as bonds, international stocks, and real estate investments. Betterment also includes custom asset allocation portfolios for investors who want more control over their stock/bond mix or for those who prefer individual stocks over mutual funds.
Betterment Fees
Betterment offers three types of accounts: regular, Roth, and ISC. Each has its own set of fees:
- Betterment Regular Account: This is their most popular account type, which charges a flat management fee of 0.25% annually. Betterment Premium members with more than $100,000 invested on the platform will need to pay a 0.40% annual management fee.Betterment uses this fee to cover everything involved in managing your assets, including investing your money into ETFs across different asset classes like stocks, bonds, and real estate. It also includes advice from licensed financial planners and tax-loss harvesting.
- **Betterment Roth Account:** The Roth version is similar to the regular account except that it allows you to contribute after-tax dollars instead of pre-tax dollars.
Ellevest Overview
Ellevest is a digital investment platform that is used by women to help them make financial decisions. This platform is designed to help women invest in the stock market, bonds, and other places where they can put their money and earn more of it. This platform is created from a woman’s point of view and takes into account what women want and need to know when it comes to investing. Ellevest is not just for those who want to become professional investors, but also for those who are looking for financial advice and guidance.
Ellevest Details
Sallie Krawcheck and Charlie Kroll recognized that women were underrepresented in the investing world, and Ellevest was designed to fill the gap. Not only does the company offer a female-friendly interface, but it also provides a completely customized experience with an algorithm that understands a woman’s unique financial needs—specifically her life stage and goals.
Ellevest offers three different types of accounts, traditional IRAs, Roth IRAs and SEP IRAs, as well as various types of investments (stocks, bonds, ETFs, and mutual funds). There is no account minimum at Ellevest and there are no fees for opening or maintaining an account. Additionally, there is a financial planning option where you can receive advice on topics that range from saving for retirement to saving for college to saving for a down payment on your first home.
The Ellevest algorithm offers personalized investment guidance based on your financial goals: what you want to accomplish and when you want to do it. For example, if you’re looking at your retirement options in 20 years, the algorithm will assign a higher risk/reward ratio than if you’re looking at an investment in 5 years.
Ellevest Fees
Ellevest is an investment advisory firm that uses a mix of technology and human advisors to provide financial planning and investing for women. Ellevest’s fees vary depending on whether you are using the platform or working with a financial advisor. The fee for Ellevest’s digital offering is 54$ per year.
Ellevest executive charges its clients an annual fee of 97$, which is significantly higher than the average fees of its competitors.
Betterment vs Ellevest Which One is Right for You?
Betterment vs Ellevest Which one is better? Both have different pros and cons, but Betterment is likely the best option for investors who prioritize tax-reduction strategies and goal-based planning and can survive with or without complementary one-on-one human advisor guidance. Ellevest lacks some of the bells and whistles that Betterment has, like automatic rebalancing and tax-loss harvesting. But it also charges a $50 annual fee, which is steep compared to the $0 fee that Betterment charges.
If you’re looking for a solid, low-cost investment platform that provides personal financial advice, Betterment may be the way to go. The company’s goal is to help investors achieve financial freedom by making their money work for them. The service offers a variety of investment strategies and tools to help simplify financial planning and investing.
Final Thoughts
At the end of the day, both Betterment and Ellevest are great financial services companies, but they’re going to cater to slightly different kinds of investors. Ultimately, we side with Betterment because they have lower fees and better investment philosophy. They also seem to be more focused on developing their brand than Ellevest, and their documentation is a bit easier to wrap your head around.
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