Those looking to break into the market may be weighing their options across several applications and brokerages. Potential investors could end their search by deciding between Etrade vs Betterment.
While Etrade vs Betterment are publicly traded companies and are considered reliable brokers, there is a range of differences that investors should ponder before siding with one over the other. In this article, we’ll give you an overview of the benefits that each application provides before you ultimately decide which entity you’d like to invest with.
eTrade vs Betterment – Overview
E-Trade is a subsidiary of Morgan Stanley established by its parent company in 2012. We offer exchanges for a variety of assets including common stocks, futures, options, and mutual funds.
It boasts features that help beginners learn about the market using automated portfolio tools, but also provides sophisticated investors with sufficiently sophisticated data that they may not find in other applications. A regular in the platform’s review is E-Trade’s customer service department. The platform has always been praised for his 24/7 phone and email support.
Like most brokers, E-Trade has no minimum account balance. This has become typical of robo retailers. This is the main attraction as traditional companies have demanded historically high minimum amounts to gain a foothold in the market.
There may be fees associated with mutual funds that are not on the “free” list. Many of these mutual funds also require a minimum investment based on security conditions. E-Trade also had to catch up with its competitors by removing trading fees, as most robo-retailers charge no fees when trading stocks, options or exchange-traded funds (ETFs).
There are no fees associated with options trading, but investors can expect a contract fee of 65 cents. A more active trader can reduce this contract fee to his 50 cents when trading options. At the time of this writing, an investor must make at least 30 trades per accounting quarter, but this policy is subject to change by his E-Trade.
Betterment has been around since 2008 and has an even longer lifespan than e-trade’s already established reputation. Comparing Betterment and E-Trade, Betterment offers similar benefits and additional services that are very useful for the average retail investor.
Betterment’s greatest strength is probably its complete accessibility and automation capabilities. Investors who don’t know where to start can answer a series of questions about their basic goals, current income, and risk tolerance. Betterment then creates a basic portfolio built on these answers (little technical knowledge required). Experienced investors can adjust their portfolios as needed.
Similar to E-Trade, Betterment does not require a minimum account balance. There is an administration fee of 0.25%, which is historically low compared to traditional brick-and-mortar brokers of the past.
This fee is even offset by the fact that Betterment automatically collects tax losses if an asset goes down in value and calculates how much tax a user loses when withdrawing from a particular account.
eTrade vs Betterment: Cryptocurrencies and Fractional Shares
E-Trade offers access to a multitude of investment opportunities, but there are some key pitfalls that potential users may reconsider. For better or worse, cryptocurrencies are becoming more and more popular among retail investors. E-Trade offers crypto-related assets (such as Bitcoin futures), but actual cryptocurrency trading is currently not available on the platform.
Additionally, E-Trade does not offer fractional shares, so investors do not have to buy the entire stock at once. This can limit your options to those who don’t have a lot of capital because you can’t buy all the shares in very expensive stocks like Google or Disney.
Betterment is researching cryptocurrency trading but does not currently offer it. Betterment vs. However, E-Trade is the key difference where Betterment offers fractional shares.
This means users with limited funds can invest in blue chip stocks. Plus, regular deposits make things even easier. For example, users can set automatic investments in well-known assets such as Tesla and Amazon over time.
eTrade vs Betterment – Pros
- Large selection of investments
- Extensive research
- Best customer support
- Low management fee
- Tax loss harvesting
- Automated investing
eTrade vs Betterment – Cons
- Fractional shares only available by a dividend reinvestment plan or robo-advisor
- Options trading can be costly
- No Estate
- Limited compatibility with external accounts
- Limited portfolio customisation
Conclusion on eTrade vs Betterment
Both platforms offer very similar services and nominally charge different fees. E-Trade receives consistently positive reviews for its 24/7 customer support online and by phone, as well as several tools that help market analysis and portfolio automation.
Betterment’s greatest strength is its simplicity and automation, making it ideal for novice investors who want to slowly accumulate money for a long period of time without the stress and frustration of constantly monitoring their accounts.
While no platform offers direct trading of cryptocurrencies, the ability to buy fractional shares can be a huge benefit for individual investors looking to grow their wealth over time, so Betterment is better. It could prove to be an excellent choice.
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