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Betterment vs Acorns: Which Should You Choose?

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 great way to start investing with a low barrier to entry, robo-advisors Betterment and Acorns can help. Betterment allows you to set multiple investing goals and offers tax-advantaged investing, while Acorns offers a clever automatic investing function that makes building your portfolio very easy.

Betterment is better for those looking for tax-efficient investing as well as the ability to use accounts for multiple goals. Acorns is ideal for those who have small amounts of money and want to start investing. Here’s what you need to know about Betterment versus Acorns as you make the best decision about where to put your money to work in the market.

Betterment vs. Acorns: Feature comparison

BettermentAcorns
Amount minimum to open account
  • $0
  • $0
Management fee
  • 0.25% for Digital offering (no minimum account balance)
  • 0.40% for Premium offering ($100,000 minimum account balance)
  • $1 per month for Acorns Core
  • $2 per month for Acorns Core + Acorns Later
  • $3 per month for Acorns Core + Acorns Later + Acorns Spend
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
Current promotionsThree months free for new customers who are referred by an existing Betterment account holder.Acorns Core ($1/month) is free for college students.
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • SEP IRA
Portfolio
  • 12 asset classes represented in ETF portfolio
  • Acorns offers 7 asset classes
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
 
 
Mobile appiOS, AndroidiOS, Android
Customer supportPhone, EmailEmail

Betterment vs. Acorns: Fees & account minimums

Neither Betterment or Acorns require an account minimum to open. You can open an account and start investing without worrying about meeting a threshold. However, with Acorns your money won’t be invested until your account balance reaches $5.

Like all brokers, both Betterment and Acorns charge fees. Betterment charges an annual fee of 0.25% of your account balance for portfolios of up to $100,000. After that, you pay an annual fee of 0.40% — account balances above this threshold get you access to a team of financial advisors.

Acorns, on the other hand, charges a flat monthly fee, depending on the type of account you have:

  • Acorns Core: $1 a month for an investing account and spending roundups.
  • Acorns Core + Acorns Later: $2 per month for an investing account, spending roundups, plus an individual retirement account (IRA) account to save for retirement.
  • Acorns Core + Acorns Later + Acorns Spend: $3 a month a checking account product and a debit card, in addition to the investing account, spending roundups, and the IRA account.

Once your portfolio with Acorns reaches $1 million, you can contact customer support for next steps.

When you divide the fee annually, Acorns can seem more expensive than Betterment, at least for smaller balances. For example, if you have $2,000 in your account, and you pay $1 per month ($12 per year), that’s like paying an annual fee of 0.60% of your balance. The bigger your balance, the more you benefit from the flat fee. With $200,000 in a Betterment account, you’re paying $800 a year, but that same amount with the Acorns flat fee would still be $12.

Because both companies rely on mixes of exchange traded funds (ETFs) for their portfolios, you also need to be aware of expense ratios. These are the fees charged by the company that maintains each ETF; the fee is deducted from your fund balance, rather than being charged separately. Expense ratios at Betterment are between 0.06% and 0.17%, while at Acorns they range from 0.03% to 0.15%. What you end up paying depends on your portfolio allocation and the funds used.

Betterment vs. Acorns: Special features

Both Betterment and Acorns are robo-advisors that create investment portfolios tailored to your investing goals and your risk tolerance.

Both brokers offer various IRA choices, including traditional IRAs, Roth IRAs and simplified employee pension (SEP) IRAs. However, Acorns will automatically choose an IRA type for you based on your needs, while Betterment offers more control over what type of IRA you choose.

In addition to offering investment choices, Betterment offers an FDIC-insured high-yield savings product. You can also be added to the waitlist for Betterment’s recently-announced checking product. Acorns doesn’t offer a high-yield savings account, but it does offer Acorns Spend, which is an FDIC-insured checking product that comes with a debit card and reimbursed ATM fees.

Betterment offers more flexibility in saving for individual goals, while Acorns offers the ability to earn extra cash back for investing when you shop with different partners. Betterment does have a better tax-coordinated portfolio which spreads your investments over your various accounts, based on strategies to minimize your overall taxes.

Acorns provides you the ability to round up your purchases and invest the difference in addition to setting an automatic investment, so it’s easier to get a small boost each time you use a connected account to make purchases.

Betterment advantages

When considering Betterment versus Acorns, here are some of the advantages that come with opening a Betterment account.

  • Set multiple goals: Betterment allows you to set aside money in different accounts with varying purposes. You can set different risk levels depending on when you need the money. So, if you want to set aside money for a vacation next year, as well as save up for a down payment on a house in three years, you can create different accounts for the money — and have different asset allocations based on those goals.
  • Use the savings account to boost your cash returns: If you’re looking for a safe product to grow your cash reserves, at the time of publishing the savings account offers up to 2.38% APY (note that this APY is available when you join the waitlist for the forthcoming checking account product; if you stick with the savings account only, your APY is 2.13%). Your savings are FDIC-insured and this goal coordinates seamlessly with your investing accounts at Betterment.
  • Donate to charity: If you’re interested in donating appreciated shares to a good cause, Betterment can make it happen. Betterment will even figure out which investments are the best to donate based on your tax impact.
  • Tax-efficient investing: Betterment makes decisions about your portfolio, and where to put investments, based on long-term tax efficiency. High-tax investments, for example, will be kept in your IRA to reduce their long-term impact, while low-tax investments are put in taxable investment accounts. Your entire portfolio is considered with Betterment.
  • Talk to a human advisor: Once your portfolio reaches $100,000, you have unlimited access to a human advisor who can talk you through issues like estate planning and tax management. Betterment also offers access to human advisors and planning packages for those with smaller portfolios, but you have to pay a flat annual fee starting at $199.

Acorns advantages

If you’re just looking for a robo-advisor to help you start investing with small amounts of money, there are some advantages to choosing Acorns versus Betterment.

  • Micro-investing with roundups: Connect your bank accounts and credit cards, and Acorns will round your purchases up to the nearest dollar, and then invest the difference. You can also increase the amounts invested by turning on a feature that allows you to multiply your roundups. For example, you could double your roundups. So, if you spent $2.50 on a purchase, rather than getting $0.50 for investment, the roundup would be doubled to $1.00.
  • Use Found Money to invest even more: Acorns has partnerships with a variety of merchants. When you shop through the Acorns website, you can receive cashback rewards from companies like Orbitz, Nike, Choice Hotels, Rover and more for your investments. You’ll get the money added to your investment account and it will be put to work for you.
  • Acorns Spend provides access to checking: You can use Acorns Spend as a checking account with a fee-free debit card. Betterment will be rolling out a debit product soon, but Acorns is ahead of the game. You can use your spending on the Acorns debit card to boost the amount of money you get back for investing.
  • Pay less in fees for larger portfolios: With a flat monthly fee, you have the potential to save when you have an Acorns account. Once you reach about $5,000 in your Acorns account, your annual management fee is less than what you’d pay with Betterment. This trend continues until your portfolio reaches $1 million and you contact Acorns for different arrangements.
  • Fee waived for college students: If you’re a college student, your Acorns Core account fee of $1 per month is waived. So, for students just starting out, it’s possible to get a solid start before you start paying fees.

Betterment vs. Acorns: Which is best for you?

Betterment offers a little more freedom and flexibility by allowing you to set up multiple accounts for different goals and allowing you to choose your own IRA option. Additionally, Betterment has the additional option to access financial advisors when you want someone to talk to. If you want to set it and forget it with goals and tax-efficient investing, Betterment can be a good choice.

On the other hand, Acorns can be a good choice for beginners who are less worried about fees and who just want to get started with small change. The option to use roundups and earn Found Money through partners can help those who want to invest but aren’t sure they can commit a set amount of money each month.

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.

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

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Investing

SoFi Automated Investing Review 2019

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.

SoFi is mostly known for student loan refinancing. However, in recent years the company has expanded its offerings to include mortgages, life insurance and now investing through SoFi Automated Investing.

Using the principles outlined in Modern Portfolio Theory, SoFi Automated Investing, formerly known as SoFi Wealth, aims to help you grow your wealth over time. SoFi Automated Investing uses ETFs to construct your portfolio based on your answers to a questionnaire. There are different strategies you can choose from and you have access to financial advisers, but ultimately, SoFi Automated Investing acts as a robo-advisor that puts together a portfolio for you based on your goals and risk tolerance.

SoFi Automated Investing
Visit SoFiSecuredon SoFi Automated Investing’s secure site
The Bottom Line: SoFi Automated Investing offers a simple way to start investing with a small amount of money to start and low fees.

  • Receive financial planning assistance free of charge
  • Special bonuses for members, including invitations to special events
  • A wide range of low-cost ETFs from 20 different asset classes

Who should consider SoFi Automated Investing?

SoFi Automated Investing is ideal for beginning investors looking to get their feet wet without the need for a large amount of money. You can open an account with a $100 one-time deposit or $20 monthly deposit. This makes it easy for newbies to begin investing.

Additionally, SoFi is especially suited for long-term investors looking to do very little of their own portfolio management.Due to broad-based ETFs that don’t rely on individual stock picking, there is very little effort required on the investors side. This makes SoFi investing ideal for financial goals such as retirement.

SoFi Automated Investing fees and features

Amount minimum to open account
  • $100 one-time deposit or $20 monthly deposit
Management fees
  • 0%
Account fees (annual, transfer, inactivity)
  • $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
Portfolio
  • ETFs covering 20 asset classes
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detailSoFi does not currently offer tax loss harvesting.
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone, Email, 4 branch locations

Strengths of SoFi Automated Investing

SoFi Automated Investing has several things going for it, making it a good choice for many investors.

  • No management fees: Right now, SoFi isn’t charging any management fees. ETF expense ratios still apply.
  • Diverse investments: SoFi investing offers a wide range of ETFs from 20 different asset classes. This makes it possible for you to enjoy diversity in your portfolio, according to your risk tolerance. You can get exposure to U.S. and international stocks, bonds and real estate with automatic rebalancing when needed.
  • Free access to financial advisers: SoFi Automated Investing offers unlimited access to financial planning professionals at no additional charge. There’s a wide range of hours available and you can meet with your adviser via chat, video or phone. SoFi’s financial advisers are fiduciaries, which means they must adhere to your best interest and they don’t make commissions based on recommendations.
  • Bonuses: Being a “member” of SoFi allows you access to some special bonuses. For example, SoFi often holds in-person events for which you can receive an invitation to join. On top of that, if you use SoFi investing, you can get a discount on your interest rates with SoFi loans. Finally, you can access career advice on top of financial planning help.

SoFi can be a great option for beginners looking to get started and who need a little help planning a goals-based roadmap.

Drawbacks of SoFi Automated Investing

No SoFi Automated Investing review is complete without offering some of the drawbacks to the product. While there are some great upsides, the reality is that SoFi is relatively new to investing and doesn’t offer some of the benefits you might see with other robo-advisors like Betterment and Wealthfront.

  • No tax-loss harvesting: SoFi investing doesn’t offer any sort of tax strategy. It doesn’t automatically harvest losses when you sell ETFs and it won’t distribute your assets across your accounts in the most advantageous way.
  • Limited types of accounts: While you can open individual and joint taxable accounts, and set up retirement accounts, there aren’t a lot of other options. You can’t open a 529 account or set up a custodial account. If you’re looking to do a little more, you may want to explore other options.

Is SoFi Automated Investing safe?

Anytime you invest, it’s important to be careful and comfortable with your strategy. You always run the risk of loss whenever you put your money into any investment account. However, SoFi investing is as safe as any other robo-advisor. The use of index ETFs means that your portfolio follows overall market trends, which, over time, tend to head higher returns (despite short-term losses).

On top of that, SoFi Automated Investing carries SIPC insurance, which protects account holders if the broker fails. However, realize that SIPC insurance doesn’t protect your portfolio from losses due to market and economic events.

Before you invest, check with resources like FINRA BrokerCheck and the Better Business Bureau to see what disclosures and complaints might be related to the company.

Final thoughts

SoFi Automated Investing is a good option for most investors looking for a simple way to manage a long-term portfolio. It’s very easy to open an account and you get free personalized financial planning help and advice to help you coordinate your portfolio to meet your financial goals.

SoFi investing is still relatively new, so you might miss out on some benefits and tools offered by those that have been in the investing space for decades. Consider your needs and compare SoFi Automated Investing with services like Betterment, Ellevest, and Wealthfront to see if it works for you.

Open a SoFi Automated Investing accountSecured
on SoFi Automated Investing’s secure website

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.

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

Advertiser Disclosure

Investing

Betterment vs Vanguard: 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.

Investing money with a robo-advisor is one of the easiest ways to grow your wealth in the stock market. Robo-advisors use software algorithms to manage your investment portfolio with minimal input needed from you, and charge ultra low fees. Betterment is one of the most well-known robo-advisors, while Vanguard is among the largest investment firms in the world.

Both Vanguard Personal Advisor Services and Betterment combine access to live investment advisors with automated portfolio management. Betterment is ideally suited for beginning investors with smaller portfolios. Vanguard can work well for a DIY investor who wants guidance from live investment advisors and access to a wider variety of investments, and can meet the high minimum balance required. Read on for a closer look at how Betterment and Vanguard compare.

Betterment vs. Vanguard: Feature comparison

In many ways, Betterment and Vanguard have similar offerings, but there is a big, unavoidable difference between the two: minimum balance requirements. Betterment has no minimum balance requirement, so you can start using their services even if you have very little money earmarked for investing. Vanguard Personal Advisor Services requires a minimum balance of $50,000, which makes their robo-advisor best for investors who’ve already built up a significant nest egg.

BettermentVanguard
Management fee
  • 0.25% (up to $100,000)
  • 0.40% (over $100,000)
  • 0.30%
Average ETF expense ratio0.11%0.11%
Account minimum$0$50,000
Human advisorsHuman assisted for clients with at least $100,000 investedHuman assisted
Fractional sharesYesNo, although you can get them through dividend reinvestment programs
Tax loss harvesting
College savings optionsNoNo
Investment account types
  • Individual and joint taxable
  • IRA (and Roth)
  • Rollover IRA
  • SEP IRA
  • Trust
  • Individual and joint taxable
  • IRA (and Roth)
  • Rollover IRA
  • SEP IRA and SIMPLE IRAs
  • Trust
Savings account optionSmart Saver, 2.14% APY (not FDIC-insured)No
Ease of use
 
 

Betterment vs. Vanguard: Management fees

Betterment and Vanguard Personal Advisor Services have similar management fees, with several tiers based on the size of your investment account balance. Vanguard has three tiers:

  • 0.30% for accounts with assets below $5 million
  • 0.20% for accounts with assets from $5 million to below $10 million
  • 0.10% for accounts with assets from $10 million to below $25 million

Once you surpass the $25 million tier, Vanguard offers more personal options and better pricing.

Betterment has two tiers:

  • 0.25% for accounts under $100,000
  • 0.40% for $100,000 or more

With Betterment, having a higher account balance comes with access to human-assisted management, as well as more customized portfolio options. However, it’s a bit unusual to charge more when the portfolio balance is bigger. If you were to build up a $100,000 balance with Betterment, it might be worth moving to Vanguard Personal Advisor Services because you’ll end up with a lower management fee.

Finally, separate from the management fee is the expense ratio you’ll pay on the funds held in your account. The expense ratio is basically the fee you pay for owning the fund. It covers the cost of running the fund, including administration, legal, accounting and other services. It’s a percentage of the amount you have in the fund.

Both Vanguard and Betterment have an average fund expense ratio of 0.11%. So, if you have $10,000 in a fund, you can expect to pay about $11 a year on top of the management fees. Both management fees and expense ratios are taken out of your fund directly, so you won’t get a bill.

Realize, though, that expense ratios vary by fund, and that 0.11% is only an average of what you can expect on a medium-risk portfolio. Your actual expense ratios will be different, and your portfolio’s average could be higher or lower.

Betterment vs. Vanguard: Special features

Many of the special features offered by Betterment and Vanguard are similar. For example, both companies use a process of smart asset allocation to apportion investments where they are likely to do the most good. If you have a tax-advantaged individual retirement account (IRA) and a taxable investing account, both companies look for an allocation that places assets where they are likely to provide the most benefit, such as putting a municipal bond fund in your IRA.

Both Betterment and Vanguard offer human-assisted help with your portfolio. With Vanguard, you get access to human advisors as soon as you open an account — keep in mind, the minimum balance is $50,000. With Betterment, you only get access to a live human advisor once you have a balance of $100,000.

Another difference is that, even though Vanguard has a wider variety of funds available, it doesn’t offer a specific socially responsible portfolio. So, if you’re interested in a socially responsible portfolio, Betterment might be the better choice.

Both companies offer tax loss harvesting, which helps you minimize losses and maximize gains from tax situations that arise from buying and selling stocks. Betterment uses an algorithm to look for tax loss harvesting opportunities each day. Vanguard performs tax loss harvesting only when it’s called for in your financial plan, or when you make a change to your portfolio.

Rebalancing is used to bring your portfolio back in line with your desired asset allocation. Again, Betterment is more active in its approach, using an algorithm daily to determine whether your asset allocation has strayed out of line, and automatically adjusting. Vanguard rebalances quarterly, or might rebalance less often, depending on what your individualized plan calls for.

Betterment‘s advantages

  • Set up different goals: Rather than just having one account, you can track your progress for different goals. It’s possible to designate different asset allocation mixes, depending on what you want to accomplish and when you need access to the money.
  • Portfolio projection tools: In addition to different goals, you can project possible performance for each goal. This allows you to try different ideas and tweak your regular contributions, based on what you need to do.
  • Optimize your taxes: With the help of Betterment, you can maximize your portfolio’s tax efficiency. Betterment will make sure that the right assets are in tax-advantaged and taxable accounts. Additionally, Betterment will look for chances to harvest your tax losses.
  • Smart Saver: Betterment offers Smart Saver, an account separate from your investment balance that places funds in low-risk bonds to get a return that beats most traditional savings accounts. On top of that, Smart Saver will analyze your bank account to see if you could be putting your money to better use.
  • Sync other investment accounts: If you have other investment accounts and bank accounts outside Betterment, you can sync those up and see them in your account dashboard. Betterment will include those items in its projections and even offer suggestions on management so you’re getting the most out of your money — no matter where it is.
  • Option to get human help: You can also pay to speak with a financial professional to get help planning your portfolio and your financial path. If you have the Premium plan, with more than $100,000, you do have more access to professionals and a greater degree of customization.

Vanguard‘s advantages

  • Human-assisted advising: No matter your portfolio level, Vanguard offers access to advisors. You can make an appointment via phone or online to speak with someone about your planning needs.
  • Investment choices: Because Vanguard puts together its own funds, you have access to a wide variety of options. Plus, you can invest in Vanguard‘s Admiral class funds, without having to meet the minimum, which starts at $3,000 for most index funds. This provides you with a range of low-cost fund options.
  • Low fees: One of the hallmarks of Vanguard is its low fees. The management fee starts at 0.30% when you open an account with a minimum of $50,000. This is in line with many other robo-advisors. While you’ll initially pay less with Betterment, the reality is that once you reach $100,000 in your portfolio, Betterment becomes more expensive.
  • Holistic planning: Vanguard only manages the assets you have in your Personal Advisor Services portfolio on your behalf. However, if you have other accounts, including investment, savings, retirement and trusts elsewhere, Vanguard will take a look at those and incorporate them into planning and how they manage your portfolio.

Betterment vs. Vanguard: Which is best for you?

Both Vanguard and Betterment are strong choices for investors looking for a low-cost robo-advisor with access to human professionals. However, which service you choose depends largely on where you’re at right now, and what type of experience you’re looking for.

Betterment is more automated than Vanguard, so if you’re looking for a place to stick your money and not think about it, Betterment can be the right choice. However, if you want a more personal touch, Vanguard can be the better choice — especially if you can meet the steep $50,000 minimum.

Vanguard also offers more for the DIY investor, providing access to a wider variety of funds, and the ability to personalize a long-term plan, including designating when you want to rebalance. While there are more customization options with Betterment when your portfolio reaches $100,000, Betterment is really better for the hands-off investor.

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.

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here