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Investing

How to Invest: A Guide for Novice Investors

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

You’ve heard this line over and over again: To be smart with your money, you need to both build your savings and invest. The savings part is easy: Stash money away in a savings account — a little at a time — to pay for particular goals, like an emergency fund or a new car. Investing is a different story, and learning how to buy securities that will grow in value over time isn’t quite so simple.

Investments are made for the long term, and investing involves taking on risk. That might make you nervous, but investing is essential for your financial health. Compound interest and market gains can help your money grow a much higher rate than a savings account, helping you build long-term wealth for your retirement.

How to invest in 6 easy steps

The idea of investing might be intimidating, but don’t worry, it’s not as hard as you think. In fact, you can learn how to invest and get started in just five simple steps.

1. Start investing early

When you’re young, time is on your side. That’s especially true when it comes to investing. And the earlier you start the better, according to Brandon Renfro, a certified financial planner and an assistant professor of finance at East Texas Baptist University.

“Earnings from investments compound over time,” Renfro said. “The longer you give yourself to earn that compound return, the more money you will have when you reach a goal, such as retirement.”

Returns from your investing start slow, but compounding yields big gains over the long term. Let’s say that you start investing $200 per month at age 25 at a 7%  annual return. After five years, you would have saved $12,000 and earned only $2,400.

However, if you keep adding $200 to your investing portfolio every month until age 70, you’ll have contributed $120,000—and earned almost $976,000, for a total portfolio value of $1.1 million.

You don’t always get a steady return on your investment, as in the example above. The market fluctuates, moving up and down, dramatically sometimes. But over the long term, the market produces regular returns. According to the financial firm Morningstar, the long-term average return from the stock market is near 10%.

Investing while you’re young allows you to ride out any short-term losses so you can take advantage of gains over the long-term. Even if the market dips over the near term, over the 20- to 30-year time frame, you’ll see reliable growth rates.

2. Decide how much to invest

When deciding how much to invest, it’s important to take your goals into consideration. If you have high-interest debt or if you don’t have an emergency fund, it may make more sense to pay down your debt and build a small savings account before you invest.

After that, think about your long-term goals, such as planning for retirement. You’ve likely heard experts recommend that you save millions of dollars, but don’t let that scare you. When you’re just starting out, it’s important to start saving whatever you can and to keep contributing consistently.

Vanguard, one of the biggest investment companies, recommends that you save 12% to 15% of your income for retirement. If that sounds impossible right now, save what you can afford, even if it’s just $25 per month. Over time, those small amounts will snowball, helping you build a sizable nest egg.

If your employer offers a 401(k) retirement plan and matches contributions, try to contribute enough to qualify for the full match. That’s free money you’d otherwise leave on the table.

3. Understand how investment accounts work

When you’re ready to start investing, it’s important to think about what kind of account you want to open. There are three core investment account types:

  • Employer-sponsored plans: Some employers offer retirement investment accounts to their employees, such as a 401(k) or 403(b). You may even be eligible for an employer contribution match, putting more money toward your goals. There are tax benefits to contributing to these plans, helping you save money at tax time.
  • Individual retirement accounts (IRA): An IRA is a great way for you to start saving for retirement on your own, outside of an employer-sponsored plan. There are traditional IRAs and Roth IRAs, which both offer tax benefits.
  • Individual taxable accounts: Another way to save is by investing in an individual taxable account, otherwise known as a brokerage account. There are no tax benefits to these accounts, but they also don’t have limitations on contributions or withdrawals like employer-sponsored plans or IRAs do. If you’re saving for a goal beyond retirement, like buying a home, an individual investment account is the best choice.

According to Natalie Pine, a certified financial planner and managing partner of Briaud Financial Advisors, IRAs and employer-sponsored accounts are strong starting points.

“There is no wrong way to save, but when you are young, a Roth IRA, 401(k), 403(b) is a great option,” Pine said. “You pay low taxes now and have tax-free growth for the rest of your life and the lives of your beneficiaries.”

4. Understand what to invest in

Once you’ve chosen an account structure, you can think about what type of asset classes and investments you want to make. There are several different investment options:

  • Stocks: When you buy a stock, you’re purchasing a share of a company like Apple or Google. Your gains or losses are dependent on the company’s performance and trends in the stock market.
  • Bonds: Bonds are loans you make to the government or corporation in exchange for interest payments over a set time period.
  • Mutual funds: With a mutual fund, you pool your money together with other investors to purchase a mix of stocks, bonds, and other securities that would otherwise be too expensive to purchase on your own.
  • Exchange traded funds (ETFs): Like mutual funds, ETFs are pooled investment options that allow you to invest in a diversified portfolio. However, they’re traded like stocks on the stock exchange.
  • Index funds: An index fund follows the performance of a specific market benchmark, such as the S&P 500 Index. The fund’s manager will a preselected collection of hundreds or even thousands of stocks and bonds, diversifying your portfolio.
  • Options: When you invest in options, you create a contract that allows you to buy or sell a security at a fixed price within a specific period of time.
  • Cryptocurrency: Cryptocurrency is a digital representation of assets used to buy and sell goods; one of the most well-known versions is bitcoin. It’s a very risky and volatile investment option, but it’s gaining popularity.

5. Choose an investment strategy

Next, think about your investment strategy. Consider your own risk tolerance. Some people are comfortable taking on more risk, thinking it’s worth it to potentially see high returns. Others get panicky when they see the market dip, and prefer more conservative investments that offer lower, steadier returns. Choose an investment strategy that works for your comfort level.

  • Consider how long you have until your target date. For example, if you’re planning on retiring in 30 years, you can choose a more aggressive portfolio that’s more heavily invested in stocks.
  • If you have short-term goals, like buying a home within the next five years, you want to invest more conservatively. You may put your money in a high-yield savings account or invest in low-risk bonds.
  • If you’re feeling overwhelmed, consider investing with a robo-advisor. Automated investing platforms like Betterment or Wealthfront review your financial goals and risk tolerance, and comes up with a comprehensive investment plan for you. The robo-advisor will invest your portfolio in a range of ETFs, mutual funds, stocks, or bonds, and will rebalance your portfolio as you approach your investment target dates. Many robo-advisors have low fees, and have no account minimums, so you can invest even if you don’t have a lot of money.

The most important part is simply getting started. “While it is important to plan, don’t let the details overwhelm you to the point of inaction,” advised Renfro. “It’s better to get started now understanding just the basics than to keep putting it off.”

6. Automate your investments

According to Pine, consistency is key to your success as an investor.

“With regard to investing, consistency is essential to avoid emotions driving decisions that ultimately lead to poor performance,” she said. “If you stick with a system, whatever that may be, you are more likely to weather various storms than if you trade around a lot and catch investments at the wrong time.”

Making regular contributions will help you build long term wealth. When you’re short on cash each month, finding extra money to invest may feel impossible. However, there are different strategies you can use to invest, even if you don’t have a lot of cash:

  • Pick an investment account with a low minimum: Some discount brokers have very low account minimums. For example, Fidelity and Charles Schwab have $0 minimums, so you get started with just a few dollars.
  • Invest your spare change: Investment apps like Acorns allow you to engage in micro-investing, where you invest your extra change. The app syncs to your bank account or credit card. Every time you make a purchase, the app rounds it up to the next dollar, and deposits the difference to your investment account. For example, if you pay $2.53 for a cup of coffee, the app would deposit $0.47 into your investment account. Over time, those small amounts can add up.
  • Set up recurring contributions: If possible, set up recurring withdrawals into your investment account. Setting up automatic deposits will take out the money before you can mentally spend it, helping you stay on track.
  • Deposit windfalls: If you receive any money unexpectedly, such as a bonus at work, your tax refund, or a gift from a relative, deposit that money directly into your investment account. It’s extra cash, so you won’t need it to make ends meet, and it can help you reach your long-term goals.

Always keep learning

As a new investor, the most important thing to do is to get started as soon as possible. The earlier you invest, the more time your money has to grow.

After you’ve opened an account and made your initial investment, spend some time learning about your investment options. There’s always something new to learn, and growing your knowledge base can help you make more informed investment decisions, which can pay off over the long run. And keep reading on MagnifyMoney to learn more about investing!

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Tretina
Kat Tretina |

Kat Tretina is a writer at MagnifyMoney. You can email Kat here

Advertiser Disclosure

Investing

Wealthsimple vs Betterment: Which Robo-Advisor Is Best for You?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

If you’re a hands-off investor, choosing a robo-advisor could be a great option. You can invest your money and set up recurring deposits, and the robo-advisor will do all the heavy lifting. If you’re trying to decide on the right robo-advisor for your investments, both Wealthsimple and Betterment are great choices.

Both robo-advisors allow you to invest in exchange-traded funds (ETFs) based on your risk tolerance level. However, Betterment offers lower fees and cheaper expense ratios for investors with $100,000 or less under management. By contrast, Wealthsimple caters to more seasoned investors. And, if you have over $100,000 under management, you’ll get access to elite perks like VIP airport lounge access.

We created a side-by-side comparison to help you decide between these two excellent robo-advisors and choose the one that’s right for you.

Wealthsimple vs Betterment: Feature comparison

Wealthsimple Betterment
Amount minimum to open account
  • $0
  • $0
Management fees
  • 0.5% (less than $100K deposited)
  • 0.4% ($100K+ deposited)
  • 0.5% (less than $100K deposited)
  • 0.40% for Premium offering ($100,000 minimum account balance)
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
  • $0 annual fee
  • $0full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • SEP IRA
  • Trust
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • ETFs cover 10 asset classes.
  • 12 asset classes represented in ETF portfolio
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
 
 
Mobile app iOS, Android iOS, Android
Customer support Phone, Email Phone, Email

Wealthsimple vs Betterment: Management fees

Neither Betterment or Wealthsimple have account minimums, allowing new investors to get started right away. Both charge a flat annual management fee, with no extra fees for transactions or trades.

With Wealthsimple, your annual fee is dependent on the amount you invest:

  • Basic: For investors with up to $100,000 under management, there is a 0.50% annual fee. That fee includes a personalized portfolio, expert financial advice, auto-rebalancing and dividend reinvesting.
  • Black: If you have over $100,000 under management, your annual fee is 0.40%. You get all the perks of a Basic plan, but you also get a financial planning session and VIP airline lounge access.
  • Generation: Seasoned investors with at least $500,000 under management get all the perks of a Black plan membership, as well as a dedicated team of advisors, access to in-depth financial planning and individualized portfolios. There is a 0.40% annual fee for the Generation plan.

For beginner investors, those fees are significantly higher than Betterment’s. For Betterment Digital accounts, which have a $0 minimum, the annual fee is just 0.25%. With that fee, you’ll get personalized financial advice, diversified investment portfolios, automatic rebalancing and tax-saving strategies.

If you have over $100,000 invested with Betterment, you can sign up for a Premium plan, with an annual 0.40% fee — putting it at the same price as Wealthsimple. You’ll get all the benefits of the Digital plan, plus in-depth advice on investments you have outside of Betterment, such as your 401(k) accounts. You’ll also have unlimited access to certified financial professionals (CFPs) to get guidance whenever you have a major life change, like getting married or retiring.

Regardless of which company you choose, make sure you pay attention to expense ratios. The expense ratio is a fee you pay when you invest in ETFs, which covers the company’s operational and administrative costs. It’s deducted directly from your investment, and can impact your total returns.

The exact expense ratio you’ll pay depends on your investment portfolio, but in general, the range for average expense ratios of Betterment’s recommended portfolios was 0.07% to 0.15%, depending on allocation. At Wealthsimple, the expense ratio tends to be higher; it’s about 0.20% each year.

Wealthsimple vs Betterment: Special features

Both Wealthsimple and Betterment support individual investment accounts, traditional IRAs, Roth IRAs, SEP IRAs, joint accounts and trust accounts.

Rather than investing in individual stocks, both companies focus on investing in ETFs. They look at your finances and risk tolerance level to determine your portfolio. For example, more aggressive investors will invest mainly in stocks, while conservative investors will place more of their money in bonds.

In particular, both companies offers socially responsible portfolios, allowing you to invest in companies that are supporting the common good.

However, one instance in which they differ is in investor education. While Betterment does post informational articles, Wealthsimple takes it a step further, offering an “Investing Master Class,” a free 45-minute video course that will teach you investing basics. There’s also a series of personal finance articles to help give you a background in essential financial topics.

And if you are looking to get a higher rate of return for your savings, both Betterment and Wealthsimple offer high-yield options. However, they work very differently from one another.

Betterment Everyday is a simple savings account. You’ll earn up to 1.85% APY. When you deposit your money, Betterment distributes it to up to four different partner banks. That means you’ll get up to $1,000,000 in FDIC insurance, protecting your money. One thing to keep in mind is that you’ll have to join the waitlist for Betterment Everyday checking to get the maximum APY offered; otherwise, you’ll earn just 1.60% APY.

Wealthsimple offers the Wealthsimple Save option. It’s not a savings account, but a low-risk investment account. You’ll earn an average annual yield of 1.66% (as of September 26, 2019), but that number can fluctuate based on market conditions. Plus, as an investment account, your Wealthsimple Save account isn’t FDIC insured.

If you’re looking for a safe place to grow your money and are trying to decide between the two options, Betterment Everyday savings is likely a better choice than Wealthsimple Save. It offers a higher rate of return, there’s no risk of losing money and it’s FDIC insured.

However, that’s still a lower APY than you could get elsewhere. For example, with VioBank, you could earn up to 2.07% APY by opening a high-yield savings account.

CompanyAccount NameAPY
WealthsimpleSmart Savings1.66%*
BettermentBetterment Everyday Savings1.85%**
VioBankHigh-Yield Online Savings2.07%
*Rate as of September 26, 2019
**The APY is a promotional APY available only to customers who join the waiting list for Betterment Everyday Checking. Terms apply.

Wealthsimple’s advantages

  • Roundup: Wealthsimple offers a roundup option, allowing you to invest your spare change. Whenever you make a purchase, Wealthsimple will round up the purchase to the nearest dollar, depositing the difference into your investment account.
  • Halal investing: For investors who abide by Islamic law, Wealthsimple offers Halal Investing. Portfolios are screened by a third-party committee of Shariah scholars, and there are no investments in companies that profit from gambling, tobacco, or restricted industries.
  • VIP airport lounge access: If you have at least $100,000 under management with Wealthsimple, you’ll qualify for a Black account. As an added perk, you’ll get a complimentary Priority Pass membership, giving you unlimited access to over 1,000 airline lounges in over 400 cities. If you were to purchase a Prestige Priority Pass on your own, it would cost you $429, so it’s an excellent value.

Betterment’s advantages

  • Charitable donations: With Betterment, you can decide to donate share donations from your account rather than cash. You’ll help a charity, plus you’ll avoid capital gains tax on the sale of your investments. Eligible charities currently include UNICEF, World Wildlife Fund, Feeding America, Big Brothers Big Sisters of NYC, Boys and Girls Club of America, Breast Cancer Research Foundation, Save the Children, Wounded Warrior Family Support, Hour Children, Against Malaria, DonorsChoose and GiveWell.
  • Tax-loss harvesting: Betterment offers tax loss harvesting, a practice of selling securities that have experienced a loss. By harvesting the loss, you can offset taxes on gains and income. The security that is sold is replaced by a similar one, maintaining your asset allocation.
  • Satisfaction guarantee: If you are not satisfied by your experience with Betterment for any reason, the company will try to make it right — that may include waiving management fees for the next 90 days.

Wealthsimple vs Betterment: Which is best for you?

If you’re looking for a robo-advisor, both Betterment and Wealthsimple and strong options. However, new investors will likely prefer Betterment. For investors with $100,000 or less under management, Betterment offers lower fees and lower expense ratios.

Conservative investors who are looking for a safe place for their emergency fund will likely find a better home for their money with Betterment, too. As an FDIC-insured savings account, your money can grow without the risks of an investment account, like Wealthsimple’s Smart Savings option.

However, seasoned investors who want more personalized attention, comprehensive financial planning and more luxurious benefits will prefer Wealthsimple. Once you get over $500,000 under management, you’ll get access to a dedicated team of advisors and get an individualized investment portfolio. And, of course, the VIP airport lounge access perk is an added benefit jet-setters will enjoy.

If you’re still exploring your investment options, make sure you check out the best robo-advisors of 2019.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Tretina
Kat Tretina |

Kat Tretina is a writer at MagnifyMoney. You can email Kat here

Advertiser Disclosure

Investing

Personal Capital vs Betterment: Which Robo-Advisor Is Best for You?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

If you’re looking for a robo-advisor to handle your investments, two major players to consider are Personal Capital and Betterment. These two services offer a range of investment account types and beneficial features. However, they cater to very different customer groups.

Betterment has fewer investment options, but there are no account minimums and it has lower fees on smaller balances, making it an excellent option for new investors. By contrast, Personal Capital appeals to more seasoned investors. It requires customers to have at least $100,000 in investments, but the company offers individual stock investment options and more personalized attention.

We created a side-by-side comparison to help you differentiate between these two robo-advisors and choose the one that’s best for you.

Personal Capital vs Betterment: Feature comparison

Personal Capital Betterment
Amount minimum to open account
  • $100,000
  • $0
Management fees
  • 0.89% for accounts of $100k - $1M
  • 0.79% for accounts of $1M - $3M
  • 0.69% for accounts between $3M and $5M; lower fees for accounts over $5M
  • 0.25% for Digital offering (no minimum account balance)
  • 0.40% for Premium offering ($100,000 minimum account balance)
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • Personal Capital offers 6 high-level asset classes.
  • 12 asset classes represented in ETF portfolio
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
 
 
Mobile app iOS, Android iOS, Android
Customer support Phone, 24/7 live support, Email, 5branch locations Phone, Email

Personal Capital vs Betterment: Management fees

If you’re looking to invest your money, it’s important to pay attention to the fees robo-advisors charge; they can vary widely from company to company. Particularly if you don’t have a lot of money to invest, Personal Capital will be more expensive than Betterment, and it has a higher minimum investment.

Personal Capital’s robo-advisor option requires you to invest at least $100,000 to get started, and charges a tiered annual fee based on the assets you have under management. This fee covers the investment advice you receive, asset custody, and trade commissions:

  • Up to $1 million: 0.89%
  • First $3 million: 0.79%
  • Next $2 million: 0.69%
  • Next $5 million: 0.59%
  • Over $10 million: 0.49%

That is the only fee you’ll pay with Personal Capital; there are no transfer fees, inactivity fees, or monthly maintenance fees.

For new investors, Betterment provides excellent value with low fees. There is no account minimum to get started, and there is a 0.25% annual management fee for its Digital plan. If you have at least $100,000 invested and want more personalized attention, you can upgrade to Betterment’s Premium plan and gain over-the-phone access to financial experts. The Premium offering has a 0.40% annual management fee.

For investors with more assets, those fees can be even lower. If you have over $2 million under management through Betterment, your annual fee drops — to 0.15% for the Digital plan and 0.30% for the Premium plan — on the portion of your balance over $2 million.

With Betterment, your fee covers the cost of the advice you receive, transactions, trades, and account administration; there are no additional transaction fees.

Another factor to consider is the companies’ expense ratios — how fund’s assets are used for administrative or operational expenses. The higher the expense ratio, the lower your returns will be. Personal Capital reported that its average expense ratio is 0.08%. By contrast, Betterment posted that the average expense ratios of its recommended portfolios was 0.07% to 0.15%. Keep in mind that these expense ratios are dependent on your allocation, and is included solely for comparison’s sake.

Personal Capital vs Betterment: Special features

With both Personal Capital and Betterment, you can connect outside accounts to get a more complete picture of your finances and better plan for your financial goals accordingly.

However, Personal Capital offers more features for seasoned investors, including 24/7 call access, even on weekends. You’re also eligible for advice on 401(k) allocations and insights into your cash flow and spending.

If you have at least $200,000 invested with Personal Capital, you’ll get even more additional features, including two dedicated financial advisors, customizable investments in individual stocks and ETFs and planning services for saving for college. Once you have over $1 million in assets, you’ll get access to estate planning services, too.

By contrast, Betterment lacks many of those features. You can only invest in ETFs and not individual stocks, regardless of your investment level. And, while you can invest in individual investment accounts and IRAs with Betterment, you can’t create a college savings plan.

If you’re looking for a cash management option in addition to your investments, Personal Capital and Betterment both offer high-yield savings options. Note that the top option on our list of the best high-yield savings accounts does offer a better APY than either robo-advisor’s cash management account.

  • Betterment Everyday Savings: With Betterment’s Everyday Savings, you’ll earn 2.38% APY (as of Sept. 12, 2019); there are no fees. You’re also eligible for up to $1 million in FDIC insurance; funds are deposited in up to four partner banks, each offering $250,000 in coverage. If you elect to exclude certain partner banks from receiving deposits, your level of FDIC insurance may be lower.
  • Personal Capital Cash: Personal Capital Cash has no account minimum, and allows you to earn 2.05% APY (as of Sept. 12, 2019). Your money is also insured by the FDIC, and you’ll get six times the coverage of what most banks offer.
CompanyAccount NameAPY
Personal CapitalPersonal Capital Cash2.05%
BettermentBetterment Everyday Savings2.39%
VioBankOnline Savings Account2.52%

Personal Capital’s advantages

  • Personalized attention: As a Personal Capital customer, you get access to a 24/7 customer service line and can talk to a financial advisory team. As your investments grow, you will also get access to two dedicated financial advisors.
  • Individual securities: With Personal Capital, you can invest in individual stocks, not just ETFs.
  • Socially-conscious investment options: Personal Capital’s Socially Responsible Personal Strategy program seeks out companies that are positively impacting environmental, social, and governance issues.
  • College planning: Personal Capital offers an Education Planning tool you can use to plan for college costs, including determining how much you need to save each year to pay for school.
  • Tax optimization: Personal Capital works to optimize your tax bill by avoiding mutual funds and allocating high-yield stocks and fixed income into tax-deferred or exempt accounts. It also engages in tax loss harvesting, using individual securities to offset gains or qualify for a deduction.

Betterment’s advantages

  • Low account minimums: Betterment doesn’t have an account minimum, so you can start investing with just $1, rather than having to wait until you’ve saved enough money.
  • Fractional shares: Betterment allows you to purchase fractional shares, so you’re able to invest your entire deposit.
  • Hands-off investing: Betterment is perfect for investors who want to set-it-and-forget-it. You can make an initial deposit, set up recurring investments, then allow Betterment to do the heavy lifting by rebalancing your account for you based on your risk tolerance.
  • Charitable investing: With Betterment, you can donate shares rather than cash to partner charities including UNICEF, Feeding America, Wounded Warrior Family Support, and GiveWell. Not only will you be able to help a worthy charity, but you’ll also avoid the capital gains tax on the sale of your investment.

Personal Capital vs Betterment: Which is best for you?

When it comes to deciding between Personal Capital and Betterment, think about your current financial situation and your future goals.

If you’re new to investing, don’t have much money to deposit or want to be a hands-off investor, Betterment is likely the better choice for you. It offers lower fees, has no account minimum, and completely manages your investments for you. Plus, you can invest in fractional shares, making every dollar work harder for you.

If you have at least $100,000 to invest, and need more personalized attention or assistance with saving for college or estate planning, Personal Capital may be a better fit. Personal Capital has higher fees than Betterment, but you get 24/7 access to support staff, and you can even talk with dedicated financial advisors.

If you’re still exploring your investment options, make sure you check out the best robo-advisors of 2019.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Tretina
Kat Tretina |

Kat Tretina is a writer at MagnifyMoney. You can email Kat here