When it comes to trading the financial markets, you will want to know everything there is to know about companies like Betterment and TD Ameritrade. Betterment and TD Ameritrade’s longevity in the company and reputation are two things you will naturally want to know. On top of this, you will need to learn if Betterment and TD Ameritrade meet your trading wants.
Having a trustworthy and trusted broker is vital to your trading. It is for a fundamental reason knowing that your money is secure is necessary in today’s world of uncertain financial markets. Let us review how Betterment competes against TD Ameritrade.
Our comparison makes it easy to see what is best for you. The final decision depends on what and how you want to trade, just as with everything else.
With inexpensive membership fees, reliable market data, and portfolio management tools, Betterment and TD Ameritrade are popular robo-advisors. For example, Betterment began offering brokerage services in 2008, although TD Ameritrade did so in the 1970s. Both businesses now offer simple access to the market for regular investors.
Investing in retirement or other long-term objectives without paying attention to every slight market movement is a great idea for starting intermediate investors who wish to put money aside gradually.
Our crew has laboriously spent months evaluating the various stories of brokers. We collected over 1200 data points on Betterment and TD Ameritrade. To simplify things, we assessed everything for you and presented the highlights.
Table of Contents
Betterment is among the newish class of robo-advisors. Automated investing systems, such as Robo-advisors, build and maintain a portfolio of assets based on your risk tolerance. Computer algorithms determine the decisions on how to invest based on information and preferences from the consumer; since machines oversee the choices, platforms like Betterment offer lower management costs than full-service brokers like TD Ameritrade.
Betterment cannot be used to invest in a single asset, such as a stock because it is portfolio-based. This is more of a benefit, though than a drawback. Using computer-optimized diversification, Betterment reduces the risk and volatility of your total investment while still allowing you to achieve high returns.
Proper diversification is the most crucial aspect of long-term, successful investing. A well-balanced portfolio can mitigate the idiosyncratic risk encountered by a specific firm or industry. Even if one of your shares plummets, your whole portfolio will hold its value well. Betterment’s expertise in developing and improving individual portfolios makes it the right instrument to diversify your asset pool.
Betterment is fantastic for novice and seasoned investors. That needing assistance managing their portfolios can fill out a short questionnaire about their investment objectives, household income, and level of risk tolerance, and an automated portfolio profile will be prepared for them. Subscribers with more experience can still manually organize their portfolios if they choose. Thus, no portfolio is forced upon them.
A key benefit to investing with Betterment is that there is no minimum amount you must retain in your account. This is one of the main draws for robo-advisors over traditional investing businesses. Investors of any income level can participate in the market since there are no restrictions on who can invest.
A feature that many robo-advisors are giving is what has become known as automated rebalancing. This helps to regularly manage your portfolio so that your asset ratios between stocks, bonds, etc., never stray too far from your account’s particular settings.
This flexibility to build your portfolio according to your goals (no matter how skilled an investor you are) makes Betterment a terrific alternative for any potential subscribers. Those new to investing can have their portfolios constructed for them automatically. At the same time, those with more expertise or a narrower concentration can focus their resources on specific objectives. These can also include morally focused portfolios committed to responsible investing in climate change or social justice enterprises.
Betterment’s basic plan costs a 0.25 percent administrative fee on a specific user’s account, while Betterment Premium charges 0.40 percent. This is a bargain compared to the fees that typical brokerage firms charge their clients. In some cases, such as those involving higher levels of security, there are additional transaction costs associated with ETFs.
TD Ameritrade run-through
Robo-advisor TD Ameritrade also assists investors in trading equities, exchange-traded funds (ETFs), and options contracts. It provides affordable membership costs and various unique investing instruments that users will not find on other platforms.
TD Ameritrade is a full-service broker and platform. You may utilize their unique ThinkorSwim tool for real-time research on hundreds of equities and options. TD Ameritrade also enables the trading of individual assets. Therefore, it is ideal for aggressive traders, especially persons who day-trade.
In managed portfolios, TD Ameritrade offers one at a price that will be out of reach for most investors. TD Ameritrade offers a variety of helpful tools, but because of the breadth of its services as a full-service business, it may be a bit daunting for many investors to find out which ones are suitable for them.
TD Ameritrade Services
Ameritrade provides substantial assets, including stocks, bonds, mutual funds, options, annuities, and ETFs. Choosing security that matches their financial objectives and portfolio requirements will be easy for investors.
Investors can personalize their portfolios, but they can also take the more traditional approach. An initial investment of $25,000 is required, and the advisory fee ranges from 0.60 percent to 0.90 percent. As previously observed, this conventional type of portfolio management comes at a higher charge than online alternatives like Betterment.
TD Ameritrade’s graphing and charting abilities are well-known. For example, while Ameritrade does not have this feature, its software is simple. It comes with various format choices so that customers may keep track of and emphasize facts about an asset associated with an individual firm or market event.
Due to the lack of fractional share trading on Ameritrade, blue-chip companies like Disney and Apple are out of reach for consumers on a tight budget. This may be an essential consideration for potential subscribers who desire to invest in giant corporations but lack the financial resources to buy the entire stock of the corporation.
TD Ameritrade Fees
Like Betterment, TD Ameritrade needs no portfolio minimum, and there is no price connected with first creating an account.
Most deals are free of a fee; however, this varies per asset. Users should keep an eye out for commissions when looking into a trade.
Premium options like in-person advice and personal coaching come with a hefty charge, as we have already said. Like Betterment, TD Ameritrade needs no portfolio minimum, and there is no price connected with first creating an account.
Most deals are free of a fee; however, this varies per asset. Users should keep an eye out for commissions when looking into a trade.
Premium options like in-person advice and personal coaching come with a hefty charge, as we have already said.
Betterment vs. TD Ameritrade Service & Feature – Comparison
Betterment significantly outperforms TD Ameritrade when it comes to cost. Betterment’s fees, at 0.25%, are as low as they come. Additionally, the first year is free. Betterment does not charge fees or commissions on trades. Betterment has zero account minimums.
For its human-managed portfolio, TD Ameritrade requires a minimum initial deposit of $25,000 plus advisory fees that vary by portfolio and management fees that start at 0.30%. This makes it a higher bar to entry than Betterment for most of us. For stock accounts, TD Ameritrade does not charge commission fees for online transactions, but broker-assisted trades cost $25 each.
In contrast to Betterment, which does not allow you to customize the composition of your portfolio, you can choose from various account types, such as traditional and tax-deferred retirement accounts, as well as high-yield savings and money market account types. Other options include inherited IRAs and SEP IRAs.
At TD Ameritrade, you can initiate numerous accounts, including education and margin trading accounts. TD Ameritrade is the leader in terms of a variety of accounts, but Betterment remains superior when it comes to the costs of managing those accounts.
Many people have an aversion to investing in an online mobile platform. Having over $10 billion in assets under management and as a member of the Securities Investor Protection Corporation (SPIC), Betterment is as safe and well-regulated as any full-service brokerage firm. Betterment also has varying security features to protect your account and funds.
As a full-service brokerage firm that has been around since 1975, you can trust TD Ameritrade with your money. Its systems are also well-protected from cyber intrusions, and it is a member of the SPIC. Money lost legally through financial and investment activities is not guaranteed by the SPIC.
Education and Research
There are no resources for learning about specific assets, but they have detailed materials on portfolio investing. Portfolio analysis tools are available on the Betterment website; however, that focus on the allocations in a portfolio. The same tool provides a quick summary of the ETFs owned in a managed account, their percentage weights in the account, and other relevant information.
With TD Ameritrade, we can find information on individual stocks. Third-party reports are available for free on the broker’s equity profile page. The site’s instructional section features articles and videos on various investment-related subjects. We had no trouble using the investment screeners at this firm during our investigation. TD Ameritrade’s website, like Betterment’s, offers a portfolio analysis tool.
Range of Investments
Betterment users invest in robo portfolios consisting of low-cost ETFs. There are both debt and equity sources of funding. The brokerage provides no more assets.
In addition to ETFs, investors at TD Ameritrade have access to a wide range of other investment options, such as equities, bonds, mutual funds, closed-end funds, annuities, foreign exchange, and futures contracts.
Managed Accounts and Financial Advice
Although TD Ameritrade offers self-directed accounts, the brokerage firm also gives many managed account choices, some of which involve one-on-one conventional financial coaching. The firm has a robo package. There is a $5,000 minimum start-up cost, and it only costs 30 basis points a year. Traditional packages come with in-person human assistance and vary from 0.60 percent to 0.90 percent with a $25,000 minimum commitment. Depending on your chosen package, attractive options may include bonds, equities, and mutual funds.
Betterment is a robo adviser. There is no minimum balance requirement and a 0.25 percent fee for using the digital service. Although the broker’s computerized program still makes trading choices, the premium plan includes unrestricted access to human advisors. To participate in the second program, you must put up 40 basis points, or around $100,000, of your own money.
Trading at Betterment is automated, so there is not much to do with a Betterment account. As a result, the broker’s website does not offer a lot of trading tools on it. Although it is easy to use, there is no trading platform here. To invest with the broker, you pick a model portfolio, make a deposit, and monitor your account with simple analytical tools.
TD Ameritrade, on the other hand, offers a unique experience. During our investigation, we located a website capable of placing transactions for various asset classes. A trade bar lies at the bottom of the screen. Equities and derivatives deals can be submitted using this system. The broker’s fixed-income trade tool is browser-based, but we found it user-friendly and straightforward to utilize. The same is true for trading in mutual funds.
Betterment offers a mobile app that runs on iOS and Android. It is not overly complex, but there are few noteworthy features either. In terms of portfolio analysis, it is identical to what is offered on the website. We were disappointed not to locate a mobile check deposit capability.
TD Ameritrade clients can utilize three applications, one of which is compatible with Windows 10. Live streaming of financial news, charting, check deposit, bill payment, and futures trading are available on at least one TD Ameritrade app.
We could not uncover any alternative software products for Betterment clients during our research. On the other hand, TD Ameritrade has excellent skill for Amazon Echo and Echo Show devices that is available through the company. A unique aspect of the software is its capacity to execute transactions only via spoken commands.
TD Ameritrade also provides a platform for Apple and Android smartwatches through their partnership with TD Ameritrade. Another feature in this category is the broker’s free desktop program that can place transactions for futures and currencies.
Instead of selecting your assets as you would on TD, Betterment takes care of this for you. When you enroll, there is a detailed questionnaire. These questions examine your goals, time horizon, and risk tolerance.
With this information, Betterment can design a portfolio to help you attain your goals. From there, you can merely set up automatic deposits and sit back knowing that your money is working for you. The robo-advisor will invest your funds as they are deposited.
Betterment’s tax loss harvesting (TLH+) is one of its most appealing features. Gains that might otherwise be reported as income are reduced by carefully realizing investment losses in your portfolio.
To see these possibilities, you used to require the assistance of a financial counselor in the past. Betterment, on the other hand, can now automate the entire process.
For many investors, these tax savings alone will more than cover the cost of Betterment. The research revealed that their typical customer might experience a 0.6 percent improved return—this more than makes up for the expense of any of their plans.
|Feature Comparison||Betterment||TD Ameritrade|
|Fees & Costs||0.25% – 0.40%||$0|
|Account Types||Taxable, Retirement, Joint, Trust||Taxable, Margin, Retirement, Joint, Custodial, 529 Plan, Trust|
|Dividend Reinvestment Plan||Yes||Yes|
|Educational & Research||Low||High|
Trading & Investing
Betterment vs. TD Ameritrade – Investment Options
Betterment Investment Portfolio Options
Based on your investment objectives, age, and risk tolerance, Betterment customizes portfolios for you. At $100,000 + AUM, you can use Betterment’s Flexible Portfolios option to adjust your asset allocation.
Betterment has recently added three additional portfolio choices to its menu.
- Socially Responsible Investors – The SRI portfolios allow you to invest with your values and select to put your money in socially responsible enterprises.
- Goldman Sachs Smart Beta Portfolios – This technique is appropriate for those who want to attempt to beat the market and are ready to take on a bit larger risk.
- BlackRock Target Income Portfolios – These bond portfolios are geared toward conservative investors seeking cash flow.
Investors can utilize these new portfolios in place of or with Betterment’s standard alternatives.
TD Ameritrade Essential Portfolio Options
TD Ameritrade Essential Portfolios gives investors an easy-to-understand view of their portfolio’s risk, with five distinct levels ranging from cautious to aggressive. Investors may choose from various portfolios with varying risk tolerance levels, knowing precisely what they are entering at all times.
TD Ameritrade Selective Portfolios encompass four kinds of investment portfolios that incorporate both active and passive strategies:
- Core Portfolios include mutual funds or ETFs. The TD Ameritrade Select Core Portfolios encompass several investing techniques, industries, market capitalization, and geographic locations.
- Socially aware portfolios are also available.
- Supplemental Income Portfolios are weighted towards fixed income assets with lower volatility and more significant dividend payments. This decision is diversified across various income-generating asset classes, credit quality, and interest rate sensitivity to optimize returns for specified risk levels.
- Opportunistic Portfolios are for investors who want to modify their asset allocation depending on market conditions to outperform market returns.
- Managed Risk Portfolio’s modest returns with low volatility and minimal exposure to interest rate or stock market risk are actively managed funds’ goals.
The TD Ameritrade Selective Portfolios allow extra customization for a premium.
Thus, both robots provide substantial personalization in the investment portfolio process. Although, TD Ameritrade’s more sophisticated portfolios come at a more significant premium.
My Preference: Betterment Wins Over TD Ameritrade
Betterment beats TD Ameritrade for most investors because of its easy-to-use interface, automated portfolio rebalancing, tax advantages, and cheap management costs. Betterment features many materials to assist every investor in enhancing their game, from newbie to seasoned. Its computer-enabled investment algorithms are among the best in the robo-advisor field.
TD Ameritrade also has its rewards. As a full-service business, it offers many more transaction kinds, provided you have the money and do not mind paying the higher costs. For most consumers, though, Betterment is the more suitable platform for direct, low-cost, long-term investment.
Betterment vs. TD Ameritrade: The Bottom Line
Even though they both provide similar services, these platforms’ target audiences are vastly different. Some in-person advising services are available via TD Ameritrade, but the amount of money required to use them is prohibitive for most investors.
Betterment allows active traders to personalize their portfolios. Still, it is also a superior alternative for beginning or casual investors who want their portfolio automatically constructed and changed by Betterment’s software as the account develops. Many retail investors want to invest their money and not worry about continually examining their portfolios, making Betterment the preferable option in this sense.
Besides a 0.05 percent difference in a robo fee, Betterment is a persistent underperformer compared to TD Ameritrade, which is a far better bargain when other services are included.
Is TD Ameritrade or Betterment better?
Betterment allows you to create various investment objectives and offers tax-advantaged investing, while TD Ameritrade features a sophisticated automated investing option that makes developing your portfolio very straightforward. Betterment is a superior option for investors who want to save money on taxes while still having the flexibility to use their accounts for other purposes.
Is Betterment a decent place to invest?
Betterment is a cheap robo-advisor and an excellent pick for beginner investors. Betterment is an excellent answer if you are new, have little assets, or like a professional aid but do not want to pay excessively.
Is Betterment beneficial to an individual retirement account (IRA)?
Betterment now provides FDIC-insured checking and savings accounts. Set up several objectives: One of Betterment’s most essential features is the ability to set multiple goals. It is possible to have a standard IRA and a rollover IRA, as well as establish a Roth IRA.