There are so many options out there if you want to start investing today. The most popular method in the last several years is using online investment service which is of course cheaper than the traditional human advisor method. In today Betterment vs Vanguard article, we are going to give you information regarding what these two platforms can offer to you and if there is any, how they are separated from each other. If you are confused about what to choose, go check our article below.
In this article, we are going to give you information about:
– What are Betterment and Vanguard
– What Betterment and Vanguard can offer to you
– Betterment vs Vanguard
If you are looking or an online investment, chances are you already stumbled upon Betterment because this one is the current leader among robo-advisors service provider available today. It even already has around 300.000 clients and $11 billion assets under their management. They offer two service options; the Betterment Digital with its no minimum account and 0.25% charge and the Betterment Premium with $100k account minimum and 0.40% fee to get unlimited phone access to financial advisors.
Betterment is shining in so many aspects. First, the no minimum account required, so you can start with the amount of money available. Second is the investment because the company use modern portfolio theory and mirrored it in 12 asset classes depend on your risk tolerance and goals while getting rebalanced as needed. For those with $100k or more in their account even can adjust what percentage of their money invested in particular ETF.
Betterment is goal-based saving and when you make an account there you are going to be asked about age and annual income, so they can suggest some goals based on them while estimating a safety net to six months of expense, retirement target, and other investing goals. Another feature called Smart Deposit will harvest unneeded cash from your checking account, so they can work for you. Read also: Betterment vs Robinhood here.
Another big name in the online investment market is Vanguard. This platform is well-known for the low cost investing service that offer below average expense ratio in their index funds and exchange traded funds. It is suitable for any non-active traders otherwise they will find that the service is lacking in many features like trading tools or platforms and because it will also penalizes most investors who traded more than 25 times per year.
Vanguard boasting its low cost funds and in fact even robo-advisors often used their ETFs to keep expenses low, it is probably because the founder is also the inventor of index fund. Not only low-cost, their mutual funds are significantly less that industry average. Their average expense is 0.12% while the typical equity mutual fund has 0.57%. Even though, it is low cost, you don’t have to worry about the service performance since they reports that 95% of their no-load mutual fund returns beat their peer-group averages over the last 10 years period.
In Vanguard, investors can learn about investment options and prioritizing their goals as well as seeing when they will be able to retire using the calculators and tools. They may also estimate retirement expenses and consider the benefit of converting IRA to a ROTH.
Now, let’s compare Betterment with Vanguard. First, management fee in Betterment is 0.25% to 0.40% for the premium plan while the other is 0.30%. In investment, Betterment ETF portfolio consist of 12 asset classes and expense ratio from 0.09 to 0.17% while Vanguard has 1.800 commission-free ETFs and those portfolio created based on their index funds have expense from 0.05 to 0.19%.
Betterment vs Vanguard
|- For hands-off investors||- For low-cost investment seeker|
|- 0.25% to 0.40% fee||- 0.30% fee|
|- Less flexible||- More flexible|
All in all, the decision is all yours to make. In our opinion, both of them are suitable for different investors. With Vanguard, you can manage your own portfolio while for those who don’t want to, you can use betterment.