Looking for an online investment is definitely not an easy task to do because you have to consider many things, such as account minimums and the low commission or account fees. There are so many options out there and two of them are Betterment vs Etrade. In this article, we are going to compare these two financial services to give you information regarding what you can expect from them. If you are interested in one/both of them and confused about which to choose, go check our article below.
In this article, we are going to give you information about:
– What are Betterment and Etrade
– What Betterment and Etrade can offer to you
– Betterment vs Etrade
For those who are still not familiar with the service, Betterment is one platform that offers you a professional investment management with a particularly low cost, so you don’t need quite a fortune to open an account. The service combines all the feature you will need to do professional investment but also a lot more. We can say that it is one of the best package for those new and small investors today.
The company has more than 175.000 customers and more than $5 billion asset under their management. However, only people who live in the United States with a permanent U.S address, has a U.S Social Security Number, and a checking account from a U.S bank that can use the platform.
The Betterment pricing may change from time to time since the company used to base the fee on the amount of the money you have under their management in 3 levels, now they are charging you based on minimum balance in only 2 levels. The types is also kept simple by only offering two levels; the Digital that start from $0 minimum balance will required 0.25% annual fee while the Premium that started from $100.000 will require 0.40% fee from the total account balance.
The service will works as an automated investment service because they will determine the investor time horizon, goals and risk tolerance to build your custom designed portfolio that will works within those preset parameters. Your portfolio will be managed in an ongoing basis to make it consistent with the original design. With this system, you won’t have a responsibility to manage or establish your portfolio or to put it simply, the service is a “hands-off” investment platform and not suitable for do-it yourself type of investor. Read also: Stripe vs Authorize Net here.
As you can see from the pricing above, one of the greatest benefit of Betterment is you won’t need a minimum account balance to start or to maintain one. You also can deposit your money regularly per month rather than dumping a large sum at once. The company offer several account types; Traditional IRA, Roth IRA, Trust account, account under your spouse’s name, Traditional IRA with your spouse’s name, Roth IRA with your spouse’s name, joint account, Betterment for Business, Taxable investment, and SEP IRA.
Another benefit you can get when using the platform is the account protection because all of Betterment account are covered under SIPC insurance that will protect account up to $500.000 in cash and securities. However, the insurance won’t cover the loss due to market fluctuations.
Another similar platform that you can use if you want the opposite side of Betterment is Etrade. This platform is known to have rather high commissions among the rivals that making many people are less sure about setting up an account there. However, it offers a value to both beginner investors and frequent traders with their library of educational resources and easy to navigate platform as well as a bunch of tools for you to assemble risk-appropriate and balanced portfolio.
The pricing of Etrade is on the top at $6.95 per trade. However, high-volume traders will get the benefit for the price will drop until $4.95 per trade for 30 or more trades per quarter. The platform somehow still can’t beat competitor like Fidelity and Charles Schwab that edge out it at flat $4.5 per trade.
The service offer you 3 trading platforms, the Etrade Web, Options House, and Etrade Pro added with 2 mobile apps. The web version will give you a free streaming market data, live market commentary, analyst research stock screeners, free real time quotes, and many more. You can even track your accounts, view streaming market and make trades, create watch list as well as complex option strategies.
Option House at the other and is perfect for those who are eager to trade. This platform will give you real-time data, numerous charting tools, over 100 technical studies, streamlined trade tickets, customizable options chains and more. The highest of them all is the Pro platform, which offer another notch level. However, not all people can access it since only those with at least $250.000 account balance or execute at least 30 stock or options trades per quarter an use the platform.
Another thing that makes Etrade stands out is its 2 free mobile apps that may be the best available today for any online broker. Their mobile app is just as powerful as its web platform; it will allow you to manage your account, place trades, and get real-time quotes right in your portable devices, such as iOS, Android, and Windows phone. The service also offers over 4.400 no transaction-fee mutual funds beating other competitor like Merrill Edge, Schwab, and Fidelity.
Now, let’s compare Betterment with Etrade. They may similar on the outside but as it has been mentioned earlier, the basic idea of these two are very different. Etrade is a tool for the user to buy and sell stocks while Betterment is more like a comprehensive approach for investing to steer the investors towards the choices that matter in this case not buying individual stocks. Another thing that separate them is the pricing.
As you already see, Betterment don’t have minimum balance and transaction fee for they charged you based on your account balance while at the other side, you will have to pay $6.95 or $4.95 per trade you do in Etrade.
Betterment vs Etrade
|- Platform for hands-off investment||- Platform for those who want to manage their plan|
|- Don’t charge transaction fee||- Charge transaction fee|
|- Pricing based on account balance||- Pricing based on the amount of trades|
|- Require no minimum balance||- Need minimum balance|
All in all, the decision is all yours to make. In our opinion, both of them serve different type of investors. If you are the type who get value from playing the stock market, Etrade is the one to go but if you don’t want to bother yourself doing this and that to manage your plan, Betterment is the best option.
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