At the heart of Betterment is its automated investing feature. The platform uses algorithms to create and manage a diversified portfolio based on the user’s financial goals and risk tolerance. This eliminates the need for users to actively manage their investments, making it ideal for those who prefer a hands-off approach.
Betterment allows users to set specific financial goals, such as retirement, buying a home, or saving for education. The platform then provides tailored advice and investment strategies to help users achieve these goals. This personalized approach ensures that each user’s investment strategy is aligned with their unique financial objectives.
Betterment offers several tax optimization features, including tax-loss harvesting and tax-coordinated portfolios. These strategies are designed to minimize the tax impact on investments, thereby maximizing returns. Tax-loss harvesting involves selling securities at a loss to offset gains, while tax-coordinated portfolios allocate assets in a way that reduces tax liability.
For more experienced investors, Betterment provides the option to customize their portfolios. Users can adjust their asset allocation and choose from a range of investment options, including socially responsible investing (SRI) portfolios that focus on companies with positive environmental, social, and governance (ESG) practices.
In addition to investment services, Betterment offers cash management features such as high-yield savings accounts and checking accounts with no fees. These accounts come with benefits like ATM fee reimbursements and competitive interest rates, making Betterment a comprehensive financial solution.