Knowing what to do with your money can be difficult, but many new services are emerging to help you manage your investment. One crop of such services is known as robo-advisors, where a computer manages all of your money for you. Both Betterment and Vanguard have competing services to help you manage your investment. In the battle of Betterment vs. Vanguard, who is the winner?
Betterment can be one of the first robo advisor services ever, it has grown to be the industry leader. With over $7 billion in assets under management, the service has attracted hundreds of thousands of customers to its low cost investment management service. For the majority of customers, Betterment’s standard plan is best. This plan offers automatic portfolio management and tax efficient investing features for a 0.25% fee. The fee is charged based on your total assets with Betterment. There is no minimum balance to start and you can close your account at any time. Betterment’s advanced algorithms invest your dollars to match your investing preference, which you share in a short, simple survey when signing up for a new account. From that point on, Betterment handles everything. There are no trade fees, transfer fees, and Betterment periodically rebalances your portfolio. It is a complete investment autopilot from the moment you finish setting up your profile. Betterment’s system invests your dollars in a combination of ETFs. For stocks, Betterment exclusively uses Vanguard ETFs. For Bonds, Betterment uses a selection of Vanguard and iShares ETFs.
Vanguard is the king of low-cost investing, known for the well-below-average expense ratios on its index funds and exchange-traded funds. It’s hard for long-term investors to beat the service and selection found here. Active traders, on the other hand, will likely find that this stock broker falls short. Vanguard doesn’t have trading tools or platforms, and its commission schedule penalizes investors who trade more than 25 times per year. The Vanguard Group is the grand daddy of low-cost indexed based mutual fund investing. Started in 1975 by Jack Bogle, he understood over 80% of actively managed funds did not beat the market’s indices. His mantra, is you aren’t best to beat the market, you should become the market, and focus on low cost fees. Vanguard has grown to become the world’s largest no load mutual fund company. While Vanguard is mostly known for its low-cost index funds, they also offer a variety of low-cost, actively managed mutual funds and exchange-traded funds (ETFs). Vanguard also provides brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services.
|- Betterment require $0 minimum deposit||- Vanguard require $50,000 minimum deposit|
|- Betterment has $7.3 Billion assets under management||- Vanguard $51 Billion assets under management|
|- Betterment average expense ratio : 0.13%||- Vanguard average expense ratio : 0.14%|
Which one is more interesting between Betterment vs Vanguard? It depends on how much you should invest and how much personal interaction that you want. For those who feel comfortable with automated services, Betterment offers managed access to ETF from Vanguard and other providers at a lower cost than Vanguard. For those who put a high value on the potential of personal interaction, Vanguard Personal Advisor Services will look much more attractive than the automated services that become the backbone of the Betterment platform.