Health & Fitness

Betterment Review 2021 – Forbes Advisor

Betterment offers users cash management accounts, access to professional financial advisors and tax management features to help minimize your IRS bill.

Professional Financial Advice

Like rival Ellevest, Betterment makes it easy to connect with certified financial planners (CFPs) to work through how best to optimize your Betterment accounts as well as broader financial topics.

Betterment Premium users can schedule sessions for free. For Betterment Digital customers, this service costs:

  • $199 for a 45-minute session to discuss your Betterment investments.
  • $299 for a 60-minute financial checkup, or a discussion on college planning, financial planning for married couples or retirement planning.

While the meetings are convenient, especially if you don’t want ongoing financial assistance or don’t know where to start, they are relatively expensive.

Tax Management Features

Betterment offers automatic tax-loss harvesting as a standard feature. Tax-loss harvesting is a method of rebalancing your portfolio holdings to limit capital gains taxes. To minimize your tax burden, Betterment sells securities that have lost value and replaces them with similar investments.

Betterment also offers a Tax-Coordinated Portfolio feature that allocates investments in certain assets across taxable and tax-advantaged retirement accounts to lower your tax bill.

By holding some assets, like bonds, that earn interest income (and may incur taxes) in your retirement accounts, you’ll minimize the amount of income tax you may owe in a given year. To compensate for moving more of your retirement holdings to bonds, Betterment’s Tax-Coordinated Portfolio shifts more stock holdings to your taxable account.

This keeps your overall portfolio holdings in check for your age and goals while minimizing the amount you may owe in taxes. To use Betterment’s Tax-Coordinated Portfolios, you’ll need to open both a taxable account and a retirement account.

Betterment Checking and Betterment Cash Reserve

Betterment offers two cash management accounts, Betterment Checking and Betterment Cash Reserve. The accounts are separate products, and both are available without opening a Betterment investment account and do not charge fees.

Betterment Checking works like a conventional checking account, complete with a Visa debit card. Betterment Checking charges no maintenance fee and zero overdraft fees, and it reimburses all ATM charges. Account balances are held by nbkc bank, which provides up to $250,000 in FDIC insurance for your cash.

Betterment Cash Reserve operates as a savings account and provides a parking space for cash you haven’t invested in one of your portfolios. You’ll earn what passes for high interest these days—currently 0.30% APY—and you can make as many monthly transactions as you wish. Betterment partners with multiple banks for Cash Reserve, which offer up to $1 million in FDIC insurance on your balance.

If you opt to use both Betterment Checking and Betterment Cash Reserver, the Two-Way Sweep feature helps you optimize how much you earn on idle cash. This automated feature tracks your average spending in Betterment Checking and automatically deposits cash above that average amount in Cash Reserve, to earn the higher interest rate. Conversely, when there’s not enough funds in checking, Betterment will move funds out of Cash Reserve.

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