Intro: Is Betterment Worth It? | Is Betterment Safe? A Scam? Reviews of Betterment
If you’re considering investing your money with Betterment, you probably have a few questions. Will Betterment really work for me? Is Betterment safe to use? We examined reviews of Betterment from around the web to bring you the facts behind this relatively new investment service.
Is Betterment Safe?
Before we examine whether Betterment is worthwhile or check out reviews of Betterment, the most important question on any potential investor’s mind is, “Is Betterment safe?” Giving out personal financial information online and entrusting your hard-earned money to an online investment service can be scary. You may wonder whether your information is really safe with Betterment, or if you’ll be left vulnerable to hackers and cyber-attacks.
Image Source: Betterment
The good news is that Betterment follows a number of strict security procedures to keep your information and money safe. The Betterment site uses the strongest available browser encryption, so you can rest assured that your connection is secure when you log on to Betterment.
Betterment also uses secure servers that are monitored constantly. All account information is encrypted and stored behind secure firewalls. Betterment follows standard security procedures and runs frequent security audits to check that the site is safe from hackers.
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Software Security Features
Aside from using encryption and secure servers, Betterment has extra safety features built into their software. If you’re wondering, “Is Betterment safe?” you may be concerned about someone stealing your password or account information. Betterment has features designed to prevent this from happening.
Betterment uses standard security features like automatic logout, so even if you forget to log out, unauthorized persons cannot access your account. Betterment also works to verify your identity before making any changes to your account. Any changes made to your contact information, for example, must be verified by you. This ensures nobody can steal your account.
Additionally, Betterment verifies that you own any external accounts linked to your Betterment account and that your identity is accurate before you can even open an account with Betterment. This ensures that nobody but you can open a Betterment account using your information.
Keeping Your Investment Safe
We’ve established that Betterment’s website is safe and secure, but is Betterment safe for investing? Many users wonder what would happen if the company went bankrupt, or if the market were to crash.
The good news is, Betterment is SIPC insured. This means that if Betterment goes bankrupt, your money is still there. This insurance applies to amounts up to $500,000 per account, even if you have multiple accounts with Betterment.
The bad news is, Betterment is not FDIC insured. This means there’s no guarantee you won’t lose money when you invest with Betterment. FDIC protection typically applies to a regular checking or savings account, so this should come as no surprise to those familiar with investing. If the market takes a downturn, you could lose money. This doesn’t mean Betterment is a scam; Betterment simply cannot control the market.
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Is Betterment Legit?
You might still be wondering, “Is Betterment legit, or is Betterment a scam?” Handing over your money to an online investment institution is scary for some, and it makes sense to research whether Betterment is a scam or a legitimate banking service.
Although Betterment is fairly new (the company was founded in 2008), it has already garnered praise from many in the financial world. There are many positive reviews of Betterment already. This should reassure investors that Betterment is not a scam, and in fact, Betterment is used and loved by many already.
Positive Reviews of Betterment
Betterment has received mostly positive reviews. Users love the ease-of-use that comes with Betterment, and most reviews of Betterment seem to agree that Betterment is a great solution for those with little to no experience or knowledge about investing.
Larry Ludwig of Investor Junkie called Betterment, “a perfect starting point for young investors,” and the site awarded Betterment a five-star rating. Similarly, the popular investing advice site Nerd Wallet gave Betterment five stars on their rating system. These reviewers, along with countless others, have focused on the advantages Betterment offers to investing newbies who might otherwise not know what to do with their money.
This ease-of-use is thanks to Betterment’s beautifully simple interface. You don’t have to know the first thing about stocks or bonds to use the program. All you need to know is what your goals are — how much money you want to have and when you’ll need it. You can set a variety of goals, from retirement to saving up for college, a house, or just a vacation. Betterment will do the rest for you, automatically adjusting the allocation of your funds to ensure you the best possible chance of reaching your goal.
Most reviews of Betterment praise the program for its smart approach to investing, too. Betterment is based on what’s known as Modern Portfolio Theory, a theory that has been popular with investors for decades and suggests that the best way to invest is to diversify. Rather than encouraging users to try to beat the market, Betterment automatically invests users’ money in a variety of ETFs. Betterment encourages a hands-off approach to investing, which can save inexperienced investors from losing their savings betting on the market.
Reviewers tend to applaud Betterment for this tried and true type of investing, and for choosing a variety of low-cost, liquid ETFs for users’ portfolios. Many Vanguard products, which are favored by experts for long-term investments, are included in Betterment portfolios.
Reviews of Betterment differ on whether the fees are worth it, but most reviewers tend to agree that Betterment’s fees are fairly low. This is especially true for the young, inexperienced investors Betterment is targeting, as they tend to have less money to invest and will therefore pay lower fees.
Betterment’s fees work on a sliding scale. Users with less than $10,000 (there’s no minimum deposit required to begin using Betterment) pay 0.35% in annual fees, provided users also set up a $100/month auto-deposit. You can invest less than $10,000 without the auto-deposit, but you’ll pay $3/month in fees. Once you reach the $10,000 mark, annual fees drop to 0.25%, and after $100,000, Betterment’s annual fee is only 0.15%.
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Negative Reviews of Betterment
Of course, despite all the hype, there are some negative reviews of Betterment, and there are some legitimate Betterment.com complaints. Betterment isn’t for everyone. If you feel like you can beat the market, or if you want total control over what’s in your portfolio, Betterment isn’t for you.
Betterment, as we’ve discovered, simply invests your money in a variety of ETFs, many of which are Vanguard products. This is generally considered to be a good thing for inexperienced investors, as Betterment has selected a good variety of excellent funds. However, some more advanced users may be wondering, “Is Betterment worth it? Couldn’t I just invest in these same funds on my own?”
This is the one drawback mentioned in most reviews of Betterment and by far the biggest Betterment.com complaint. An experienced investor could simply invest in the same funds on their own and pay far lower fees. For those who have been doing it this way for decades, using Betterment to invest for you may seem pointless.
Is Betterment Worth It?
Despite these criticisms, Betterment offers several features designed to make using the program better than investing on your own. The biggest selling point, according to most reviews of Betterment, is simply that the program does the tedious or time-consuming work for you, allowing you to sit back and watch your money grow.
Reviews of Betterment have lauded the program’s ability to automatically adjust the amount of risk investors are taking. When a user sets up an account with Betterment, the program asks you to select a goal and an end date. Based on this, Betterment determines how much risk you should take and allocates funds into stocks or bonds accordingly. As your end date draws closer, Betterment puts more of your money into low-risk bonds. This ensures your money is there when you need it. Because Betterment does this automatically, you don’t have to worry about reallocating funds yourself.
Another feature praised in many positive reviews of Betterment is the program’s automatic tax loss harvesting. Betterment ensures that you’ll capitalize on any investment losses to get the maximum return after taxes. This would be tedious and difficult to do manually, but for some users, this Betterment feature can save hundreds each year.
Finally, Betterment’s fairly new feature, RetireGuide, has been applauded in many reviews of Betterment. RetireGuide is a feature that truly sets Betterment apart from DIY investing and even gives it an edge over many traditional investment services. Using RetireGuide, you can predict exactly when you’ll be able to retire and how much you can spend each month in retirement.
This sounds pretty basic, but RetireGuide takes every factor into account, including cost of living in your current location and where you plan to retire. Plus, RetireGuide allows you to play with the numbers and see how you can retire sooner or how you can reach your goal if you’re not on track now. Calculating all of this on your own would be incredibly time-consuming, and re-calculating every time your situation changed would just be a pain. Like so many other features in Betterment, RetireGuide makes things simpler.
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The Final Word
So, is Betterment worth it for you? That depends on who you are and what your personal investment goals are, but for most, the answer is yes. The reviews of Betterment are overwhelmingly positive. Betterment is an excellent investment service for new and inexperienced investors, while still offering features that more knowledgeable investors will love.
Whether you choose to invest with Betterment or not, you can rest assured that if you’re wondering, “Is Betterment safe?” or “Is Betterment legit?” the answer is a definitive yes. Betterment is just as safe as any other investment service. You may lose money at times due to normal market activity, but this is not a scam—Betterment is a real and safe way to invest money.
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