Betterment vs Stash
The monumental shift away from traditional brokers has led retail investors to look elsewhere. Apps like Betterment and Stash have opened up a brand-new world of investing platforms.
It should come as no surprise. Approximately 51.5% of investors expressed dissatisfaction with their broker’s services beyond executing trades, so what exactly are you paying for?
Betterment and Stash are low-cost investment platforms that enable ordinary Americans to get into the markets, but which one is better?
The investment app Betterment has been providing robo-investing services since 2008, which makes it one of the veterans of the business. Tens of thousands of ordinary people have invested their money in stocks and bonds via Betterment.
In the Modest Money Betterment review, we focus on how simple to use the platform is, even if you lack experience in investing. When you create a Betterment account, all you need to do is fill in a questionnaire, and the platform will come up with a recommended investment portfolio.
Some of the information you’ll plug into the platform includes income, investing goals, and risk tolerance.
Betterment’s recommendations do not bind you. Feel free to allocate your money to whatever investment you want manually. This platform caters to both the novice and the experienced investor.
|Account Types||Brokerage, Saving, Checking, Trust, Roth IRA, Traditional IRA, and SEP IRA|
|Investment Type||Exchange-Traded Funds (ETFs)|
As you would expect from a modern robo-advisor, you’re not required to deposit a minimum amount into your account or maintain a minimum dollar balance. Betterment offers the automatic rebalancing feature, which will keep your desired allocation, regardless of what’s going on in the markets.
One of the advantages of Betterment is the number of supported account types. Along with several types of IRAs, they even include the trust account.
Betterment’s angle is to create the optimal portfolio that meets your goals, as well as your investing ethics. For example, you can opt for Betterment’s premade portfolios that focus on aspects like technology, green investments, or investments that concentrate on social impact.
To conclude, Betterment is a platform that understands the needs of the modern investor, particularly when it comes to younger demographics.
As mentioned in our Betterment review, we consider Betterment an excellent starting point for investors who don’t want to burden themselves with the costs associated with traditional brokers. Betterment offers a low-fee model rather than a no-fee model.
Ordinary Betterment users will need to pay a 0.25% management fee each year. Betterment Premium members pay a 0.40% annual management fee.
When adding specific ETFs to your portfolio, there are also expense ratios to consider. These charges range from 0.07% to 0.15%.
To gain access to Betterment Premium, your portfolio balance must be at least $100,000. However, even with the higher fees, this membership tier gives you access to several perks, including financial advice from Betterment’s own CFP professionals.
Remember that Betterment Digital members can still get advice over a 45-minute call, which will set you back $199.
- No account minimums
- Tax-loss harvesting
- Automatic portfolio rebalancing
- Lack of investment options
- No real customization
- Limited additional features
In short, Betterment is a barebones investment platform with no added extras to keep things simple. Read our complete review on Betterment to find out more.
Stash is another low-cost investment platform aimed at both beginners and value investors. Unlike Betterment, Stash opts for a guided approach. In other words, Stash is not a true robo-advisor, but unless you’re specifically searching for one, that shouldn’t be too much of a problem.
Its innovative, cutting-edge platform gives all the tools an investor needs to get into investing. While Stash’s fees are higher than some of its competitors, it compensates for its higher charges with lots of guidance for investors who’re learning how to invest.
Its tiered membership system gives investors lots of choice in what they want to get out of the platform. You have the option of investing in a wide range of stocks and ETFs, but, like Betterment, investment options are relatively limited.
Since Stash opened its doors in 2015, it has continually generated new investment, including a further $125 million in 2021 in a bid to keep expanding.
In our Stash review, we praise many aspects of the platform, but how does it stack up against Betterment?
|Management Fees||$1, $3, $9 per month|
|Account Types||Traditional IRA, Roth IRA, Brokerage, Debit Account, and Custodial Accounts.|
|Investment Type||Stocks and ETFs|
In the discussion between Betterment vs. Stash, they have a lot of similarities, including the account types offered and the investments they specialize in.
Another similarity is automatic portfolio rebalancing. Through the Stash Smart Portfolio feature, Stash investing will maintain your portfolio allocation, regardless of market movements.
One area where Stash can be found wanting is its lack of tax-loss harvesting. There’s no potential to benefit from tax-loss harvesting when investing with this app. For more prominent players, this could prove to be a problem.
A remarkable feature offered by Stash is the opportunity to set up a checking account. If you want to centralize more of your financial affairs, Stash could be the app for you. You can combine your checking account with the Stock-Back Card, enabling you to get cashback on certain purchases.
Finally, new investors get $5 free to invest after opening their accounts. It’s not much, but it’s a nice touch that makes investing with Stash worth it.
Where does Stash stand on fees?
In our detailed review of Stash, we described the three different membership tiers offered by the platform. Truthfully, compared to the 0.25% Betterment management fee, these fees over a year are likely lower since the fees never change based on how much you have invested on the platform.
There’s no account minimum like Betterment, but unlike Betterment, its expense ratios are pretty high on its ETFs.
A Stash ETF will set you back with a 0.25% fee, whereas its non-thematic funds will see you being charged a 0.16% fee. If you’re a regular ETF investor, these fees can really add up over time.
Either way, Stash is still much cheaper than using a traditional brokerage.
- No account minimum
- Cashback rebates
- Low membership fees
- High ETF expense ratios
- No human advisors
- Lack of tax-loss harvesting
Discover more about how the platform works by clicking in our full Stash review now.
Betterment vs. Stash: Comparison
|Management Fees||0.25% (Digital); 0.40% (Premium)||$1, $3, $9 per month|
|Avg. ETF Expense Ratio||0.07%-0.15%||0.16%-0.25%|
|Account Types||Brokerage, Saving, Checking, Trust, Roth IRA, Traditional IRA, and SEP IRA||Traditional IRA, Roth IRA, Brokerage, Debit Account, and Custodial Accounts.
|Financial Advisor Fee||$199 (Free with Premium)||None|
|Best For||Specialized Portfolios||Beginners and Value-Based Investors|
Betterment vs. Stash: Which One is Right for You?
Betterment and Stash have many similarities. At first glance, there’s little to separate the two. Both are designed for beginners while offering a limited range of investment options to keep things simple. A couple of clicks is all it takes to invest, and you can leave your portfolio on autopilot with their respective portfolio rebalancing features.
The fees are comparable, but Stash’s higher expense ratios are a cause for concern. Plus, Betterment provides access to tax-loss harvesting, which can save you thousands of dollars throughout your investing career.
Another advantage Betterment holds is the opportunity to speak to qualified financial professionals about your affairs. Stash has no access to financial professionals.
Although Stash does offer a checking account and rebates on purchases through its Stock-Back Card, we don’t believe this is enough to recommend the platform over Betterment unless you’re a shopaholic.
That’s not to say Stash is a poor investing platform. It’s a move away from being a complete roboadvisor gives you more customization options. If you’re a confident investor, you may well prefer Stash over Betterment.
On balance, we have to say that Betterment offers a more comprehensive investment package than Stash. If you’re unsure which one to opt for, check both out. In the meantime, we highly recommend Betterment for investors.