Betterment vs. Wealthfront – A Marquee Event
Robo-advisors have transformed the investing landscape for countless numbers of people. Investors used to be a niche group of people, but the “appification” of the internet, which has seen web pages and web sites replaced by programmes that run on mobile operating systems, has brought the world’s markets into the homes of ordinary people, both figuratively and literally.
Among the most well-known robo-advisors are Betterment and Wealthfront, which are also among the oldest and most widely used. In the world of Modest Money, we place a high value on longevity because it usually indicates something – specifically, a pedigree built on customer satisfaction. Betterment was founded in 2008 by Jon Stein with a clear and simple goal in mind: to make investing as simple as possible. As a matter of fact, they were famously criticised by well-known startup investor Chris Sacca, who said, “This starts to feel like a toy at this point.” And that is precisely the appeal of Betterment. Indeed, investing with Betterment is akin to putting your portfolio on autopilot, if you will.
A similar ethos guided the creation of Wealthfront, whose co-founder Andy Rachleff saw a need to make sophisticated investing products more accessible to people of all income levels and backgrounds. And he was well aware that software, specifically mobile software, had the potential to be the vehicle that brought investing to the masses. As a result, Wealthfront was established. Wealthfront has been a stalwart in the wealth management space for quite some time, having made the switch to the field around the same time that Betterment launched.
Consequently, Betterment and Wealthfront are both robo-advisors that aim to make the investing process as simple as possible. They both have long and illustrious histories, and their reputations are well-established among consumers. Briefly stated, they both appear to be quite similar, don’t you think?
This article will compare and contrast the similarities and differences between the two, making it easier to determine which one is a better fit for your specific needs and circumstances.
The decision between Betterment and Wealthfront is not an easy one. All right, let’s get to the meat of the matter.
Betterment was the first gangster to emerge.
Betterment is the industry leader, and for good reason: they provide excellent service. The platform makes it simple and low-cost to invest, and it charges only 0.25 percent in management fees, in addition to offering automated tax-loss harvesting. A one-stop shop for investing, it is a fantastic way for new investors to get their feet wet in the world of investing.
Different Account Types: Betterment offers a wide variety of account types, including individual and joint taxable accounts, traditional and Roth IRAs, and SEP IRAs, as well as trust accounts, savings accounts, and checking accounts, among others.
Investment Objectives: Betterment strives to tailor your investments to match your individual risk tolerance. Therefore, the platform allows you to invest for a variety of different goals, including retirement savings and income, a financial safety net, major purchases, and all-around investing.
With SmartDeposit, you can set up automatic deposits when your bank account exceeds certain thresholds, which is a great feature for investors who receive irregular income, such as seasonal and freelance employees. Users can also change the amount of money they have deposited.
A major disadvantage of robo-advisors is that you rarely have access to a real, live broker when you need help. Betterment solves this problem by providing users with access to financial experts through their mobile application. Through the application, you can easily send messages to other people.
Investing Made Simple: When you sign up for a Betterment account, you will be asked to complete an onboarding questionnaire that will ask you about your investing objectives. Betterment then employs artificial intelligence to determine which investment profile is the most appropriate for you, and it allocates your funds accordingly based on its findings.
Wealthfront – Putting the Fairness Back in Fairness
Yes, it is undeniable that the financial industry was not intended to operate in a fair manner. Look no further than the distribution of wealth around the world: in the United States, the top 5 percent of the population controls 65.1 percent of all resources, according to Forbes. However, while the game is rigged, robo-advisors are slowly adjusting things by granting people access to a piece of the pie.
Investment Requirement: Wealthfront requires a minimum of $500 in initial investment. Even though $500 is a manageable sum for the majority of investors, Betterment requires no initial investment, making it the more inclusive of the two options.
Real estate: Unlike Betterment, Wealthfront provides investors with the opportunity to profit from the sale of real estate. While real estate lacks some of the growth potential associated with common stocks, it is an excellent asset class for those looking to make long-term investments in the stock market.
Account Types: Users have access to a variety of account types, ranging from taxable accounts to multiple IRAs, through Wealthfront’s online platform. The one unique account that Wealthfront does provide users with is access to 529 plans, which can be a very useful option if you have children and want to save for their future college tuition.
Portfolio Line of Credit: This is yet another standout feature that may be of interest to investors with a little more experience. A portfolio line of credit becomes available once your account balance reaches $25,000 USD. Essentially, this makes it possible for you to borrow money against your investment portfolio (up to 30 percent ).
Betterment vs. Wealthfront: Which is the superior service?
Betterment vs. Wealthfront, the battle of the originals – it’s a tough call on who will win. Unlike traditional robo-advisors, Betterment and Wealthfront offer a comprehensive set of features and amenities that we have come to expect from modern robo-advisors. Both of them, in fact, are archetypical examples of how to make investing simple and painless, and they should appeal to investors of all stripes who are just getting started.
Betterment is a fantastic service because it requires no minimum investments and has a graphic interface that is extremely clear and simple to navigate.
Wealthfront, on the other hand, may have a greater appeal to high-net-worth individuals. This is due to the fact that investors who have at least $100,000 in their accounts have access to the Risk Parity portfolio as well as stock-level tax-loss harvesting.
Briefly stated, if you are completely new to the stock market, we recommend Betterment as your first investment. Wealthfront is a fantastic platform if you already have some experience and capital but are looking for a more automated investing experience than you can find elsewhere.