Whether saving for retirement or paying off your house, you must have a long-term financial strategy for the future. A huge part of that strategy means making your money work for you.
Betterment is the original robo-advisor, having been an innovation to come out of the last financial crisis. Other platforms have also launched to rival it, which you can find out more about in this M1 Finance review.
For both small and large investors, Betterment is one of the best platforms for executing your financial strategy.
Let’s take a look at how you can use Betterment to help you on the path to financial freedom.
Where Does Betterment Shine?
Betterment is ultimately a robo-advisor providing targeted recommendations based on prevailing market conditions. When comparing M1 Finance vs. Betterment, there are a lot of similarities.
Where Betterment excels is in the number of ways in which you can distribute your money to meet your goals. During the account creation process, you’ll be asked about what your goals are and given tailored recommendations for which portfolio is best for you.
It’s also tailored towards where you are in life and who you are as a person. Some investors are passionate about specific markets. Other investors have a low appetite for tolerance and want their portfolios to reflect that.
To find out more about the features of this platform, read through this Betterment review.
Smart Portfolio for Big Returns
Every investor secretly dreams of nailing that special stock before it shoots to the moon. For younger investors, you have a lot of time to recover if your investments don’t go according to plan. If they succeed, however, it could change your life.
This is why Betterment offers a special portfolio option that focuses on baskets of companies offering higher-than-average returns. However, there’s a level of systematic risk, which is a natural part of investing.
Every young investor course will tell you that this is part of the game. High rewards must come with high risks. Betterment is extremely transparent about the level of risk involved and you’re advised to do your research to see if this type of portfolio is for you.
Regular Income Portfolio
Another type of portfolio option involves claiming a regular, passive income through your investments. This standardized portfolio focuses exclusively on government bonds. These are practically risk-free but come with extremely low returns.
Only take a portfolio like this if you’re willing to keep your money where it is for decades to come. A portfolio invested primarily in bonds is recommended for older investors or those who are already retired.
There are alternatives. Betterment allows you to build your own portfolio. If you prefer stocks with regular dividends, consider choosing mega-cap stocks. Large and mega-cap stocks are guarantees of stable companies that will still be profitable ten years from now.
Socially Responsible Portfolios
There’s been an increasing interest in socially responsible investing. Although most investing guides focus exclusively on potential for profit, many millennials, in particular, are more concerned with which companies they’re supporting.
Betterment caters to this through a selection of socially responsible portfolios. These are designed to align with different values.
For example, many of the companies included in these portfolios operate in the green energy sector or make donations to green action groups.
If choosing stocks that align with your values is important to you, Betterment allows you to do it at the click of a button.
Maximize Your Investments with Fractional Shares
Shares in major companies tend to be expensive. Amazon, for example, recently crossed the $3,000 mark. If you only have $2,000 in your account, does it make sense to leave that money there until you can deposit more funds?
No, and Betterment understands this. If you’re still trying to educate yourself on investing and don’t want to make additional deposits right now, the platform allows you to invest through fractional shares.
The concept of fractional shares is they are owned by the platform, split up, and then sold to individual investors. That means you can still own a piece of Amazon via a third party.
Crucially, it ensures the whole of your portfolio is working for you. Dollars are not just sitting around waiting to be allocated.
You can even set Betterment up to do this for you automatically.
Is this the Best Robo-Advisor for You?
There are so many choices available, and Betterment is one of the best options you can choose. You can also read this SoFi Invest review for a similar alternative.
The only downside, when compared to other platforms, is Betterment charges a 0.25% annual management fee on your account. When M1, SoFi, and Stash charge nothing for you to invest, this might turn away some investors.
However, what is clear is that Betterment offers a solid option for creating diversified portfolios that can be fully automated at the click of a button.
Have you tried out a robo-advisor as your investment platform of choice yet?
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