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INVESTING Betterment Review 2026: Is This Robo-Advisor Worth It? 2026-02-26 · 5 min read · Betterment · robo-advisor · automated investing

Betterment Review 2026: Is This Robo-Advisor Worth It?

investing 2026-02-26 · 5 min read Betterment robo-advisor automated investing Betterment review index funds

Betterment is one of the original robo-advisors — a service that builds and manages an investment portfolio on your behalf using algorithms, requiring almost no investing knowledge or ongoing decisions from you. For some investors, it's the perfect solution. For others, it's an unnecessary layer of fees on top of something you could easily do yourself.

Here's an honest assessment of what Betterment does well, what it costs, and whether it's worth using in 2026.

What Is Betterment?

Betterment is an automated investment platform that builds diversified portfolios of low-cost ETFs (exchange-traded funds) based on your goals, timeline, and risk tolerance. You answer a few questions when you sign up, and Betterment constructs a portfolio of Vanguard, iShares, and Goldman Sachs ETFs.

Once set up, Betterment handles:

You don't have to choose funds, rebalance manually, or make ongoing investment decisions. You contribute money, Betterment manages the rest.

How Betterment Works

Account opening: Takes about 10-15 minutes. You provide personal information and answer questions about your goals (retirement, building wealth, an emergency fund, etc.), timeline, and risk tolerance.

Portfolio construction: Betterment assigns a stock/bond allocation based on your answers and builds a portfolio across 10-15 ETFs covering US stocks, international stocks, US bonds, international bonds, and potentially additional asset classes.

Ongoing management: Betterment rebalances automatically, typically using cash flows (new contributions and dividends) to buy whichever asset class has drifted below target, minimizing taxable rebalancing events.

Tax-loss harvesting: For taxable accounts, Betterment's tax-loss harvesting feature monitors holdings and sells positions that have declined in value, replacing them with similar-but-not-identical ETFs to maintain the same market exposure while capturing a tax loss. This can meaningfully improve after-tax returns over time.

Betterment Fees

Betterment Digital (basic tier): 0.25%/year of assets under management

Betterment Premium: 0.40%/year

Underlying ETF fees: In addition to Betterment's management fee, the ETFs in your portfolio have their own expense ratios — typically 0.05-0.15% for the index ETFs they use. So your total all-in cost is approximately 0.30-0.40% at the Digital tier.

Comparison: A Fidelity Roth IRA with FZROX (0.00% expense ratio) costs literally nothing in annual fees. Vanguard's VTI ETF costs 0.03%/year. The difference over 30 years on a $100,000 portfolio:

That's roughly $60,000+ difference over 30 years, purely from fees.

What Betterment Does Well

True automation. For people who have no interest in choosing funds, managing allocations, or thinking about rebalancing, Betterment is genuinely excellent. You contribute money and it manages everything. This is valuable for people who benefit from not having to make ongoing decisions.

Goal-based interface. Betterment organizes investing around specific goals (retirement, emergency fund, general savings, house down payment). Each goal gets its own allocation based on its timeline, which is a sensible way to think about money.

Tax-loss harvesting. For taxable accounts with significant balances, Betterment's tax-loss harvesting can generate meaningful tax savings that offset some or all of the 0.25% fee. Studies suggest this feature can add 0.25-0.77% in after-tax returns annually for higher-bracket investors with volatile portfolios.

Low barrier to entry. No minimum balance, easy to open, no financial knowledge required.

Account types. Betterment offers Roth IRA, Traditional IRA, SEP IRA, taxable, and joint accounts. A solid range for most investors.

Clean interface. Betterment's app and website are well-designed and easy to understand.

Betterment's Limitations

The fee is real. 0.25% sounds small, but on large balances over long periods, it compounds into significant lost returns. Self-directed investors can easily match Betterment's portfolio with a two- or three-fund approach at Fidelity for effectively free.

You can do most of this yourself. Betterment's portfolio is essentially a diversified collection of index ETFs — something you could build yourself at Fidelity or Vanguard in 20 minutes. Rebalancing, which Betterment automates, takes 30 minutes per year if you do it yourself. The automation has real value for some people, but it comes at a cost.

Tax-loss harvesting is less impactful than marketed. Tax-loss harvesting benefits are highest for investors in high tax brackets with large taxable accounts who have volatile, large positions. For people with small taxable accounts or low tax rates, the benefit may not offset the 0.25% fee.

Limited control. Betterment selects and rebalances your portfolio; you can adjust your risk level but don't choose specific funds. If you want to tilt toward small-cap value, sector funds, or alternative assets, Betterment isn't the right platform.

Who Should Use Betterment

Betterment is a good fit if:

Betterment is NOT the right choice if:

How to Self-Manage Like Betterment

If Betterment's approach appeals to you but the fee doesn't, here's how to replicate it yourself:

  1. Open a Roth IRA (and/or taxable account) at Fidelity or Vanguard
  2. Choose a simple portfolio: 80% FZROX (US total market) + 20% FZILX (International) — free at Fidelity
  3. Set up automatic monthly contributions
  4. Once a year, check if allocations have drifted and rebalance with new contributions or a small trade

That's it. Same diversification, similar returns, near-zero fees. The difference is about 20 minutes per year of attention.

Betterment vs. Wealthfront

Wealthfront is Betterment's main direct competitor. Both offer automated portfolios at 0.25%/year. Key differences:

Both are solid products. Betterment has a slight edge for IRAs; Wealthfront has a slight edge for large taxable accounts due to its direct indexing capabilities.

The Verdict

Betterment earns its reputation as one of the best robo-advisors. It's well-designed, genuinely automated, and a good gateway into investing for people who find the investment selection process intimidating.

But it's a premium product at 0.25%/year. For self-directed investors comfortable with a simple two-fund portfolio, the fee represents a real, compounding cost over decades with limited additional benefit.

Use Betterment if you value the automation enough to pay for it, have a large taxable account that benefits from tax-loss harvesting, or genuinely will not manage investments yourself.

Use Fidelity instead if you're willing to spend 20 minutes setting up automatic investments in FZROX + FZILX and 30 minutes per year checking balances.

Either way, you're making a far better financial decision than leaving money in a savings account or not investing at all.