Betterment vs. Vanguard: The best option depends on whether you prefer automated trades or DIY investing


Betterment vs. Vanguard: The biggest differences

Betterment and Vanguard are top investing platforms providing a wide range of wealth-building products at low costs. The two share similar features: automated investment offerings, human advisor access, IRA accounts, and socially responsible investment options.

But while both offer low fees, Betterment manages your investment portfolio for you, while Vanguard gives you the option to trade on your own or invest in a managed portfolio.

Editor’s rating

4.8 out of 5

Editor’s rating

4.9 out of 5


0.25% to 0.40%


0% (0.15% to 0.30% for professionally managed portfolios)

Account minimum

$0 or $100,000, depending on the account

Account minimum



Earn between one month and one year of free management if you fund an investment account with at least $15,000 within 45 days of opening.


None at this time.


Open Account

Betterment and Vanguard also have notable differences when it comes to account types, features, and investment choices. Keep reading to see which brokerage is best for you.

Account types

  • Individual and joint taxable accounts
  • Individual retirement accounts401(k)s for businesses

Trust accounts

  • Checking and cash reserve accounts

Account types

  • Individual and joint taxable accounts
  • Individual retirement accounts
  • Small business retirement plans529 plans
  • Education savings accounts

Investment choices

  • Stock ETFs and bond ETFs
  • Investment choices
  • Stocks, ETFs, options, bonds, mutual funds, and CDs

Account perks

Human advisors available?

Yes — unlimited access to certified financial planners with premium plan or one-time consultations starting at $199

Human advisors available?

Yes — unlimited access to financial advisors with Vanguard Personal Advisor Services account


Yes — all of Betterment’s accounts are automated


Yes — Vanguard Digital Advisor and Vanguard Personal Advisor Services

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Is Betterment right for you?


  • No minimum account size requirements for digital plan
  • Tax-loss harvesting, goal-focused investing strategies, charitable giving, and socially responsible investing available
  • Mobile app with option to connect external bank accounts
  • Certified financial planners available
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Only investments available are stock ETFs and bond ETFs

It’ll cost more to consult a financial advisor, unless you’ve got the premium plan

Betterment is an automated advisor offering investment and retirement management services, so it’s a good choice for those who want to be more hands-off with their assets. With more than $29 billion in assets under management, the company currently provides individual and joint taxable accounts, retirement accounts, trust accounts, and checking and cash reserve accounts.

Betterment offers two subscription plans for investors: digital and premium. The digital plan has no minimum account size requirements and holds a 0.25% annual fee. But you’ll need at least $100,000 to access Betterment’s premium plan (and you’ll have to pay a 0.40% annual fee).

Both plans offer tax-loss harvesting, goal-focused investing strategies (Betterment currently offers five different goals: retirement savings, retirement income, safety net, major purchase, and general investing), fractional share investing, dividend reinvesting, and socially responsible investing portfolio options (socially responsible investments represent companies that strive to improve society through environmental, social, and ethical means).

But with premium, you get unlimited access to certified financial planners, and you can add Betterment’s checking and cash reserve for free. Another thing to note: Portfolios typically consist of a mix of stock ETFs and bond ETFs, and you can adjust your investing goals (and target amount) at any time.

The digital account doesn’t include unlimited financial advisor access, but Betterment offers one-time consultations for $199. And the company offers Betterment for Advisors, a platform that helps financial advisors offer more investing tools to their clients.

If you’re looking for new retirement savings options, Betterment offers individuals traditional IRAs, Roth IRAs, 401(k) rollovers, and IRA rollovers. Retirement plans cost 0.25% per year, and Betterment also has 401(k)s for businesses.

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Is Vanguard right for you?


  • Thousands of low-cost mutual funds available
  • Self-directed, advisor-assisted, and automated investing accounts available
  • Commission-free stocks, ETFs, and options
  • Great customer service
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Options contract fee is higher than most brokerages

No other trading platforms besides the Vanguard web and mobile apps

Formed in 1975, Vanguard is an online brokerage offering a vast collection of investing and retirement savings accounts for individuals and businesses.

On the investing front, Vanguard has a wide selection of commission-free stocks, ETFs, and options (though options contracts cost $1). You can also actively trade these investments without meeting any minimum account size requirements, but minimums for Vanguard’s mutual funds start at $1,000 and range up to $10,000.

Vanguard has about 160 of its own mutual funds, but you can also take advantage of more than 3,000 no-transaction-fee mutual funds from other companies. And if you’re thinking of investing in ETFs, you’ll have the choice of about 75 commission-free Vanguard ETFs plus 1800 ETFs from other companies.

If you’re big on investment education and/or research, you’ll have several sources and tools to choose from. Vanguard offers multiple tools and calculators for investment planning, retirement, and education savings planning. Plus, the brokerage offers tons of downloadable documents on the latest investment research and expert analysis.

The brokerage also has a couple of options for investors looking for hands-off and advisor-assisted investing. Its two robo-advisors – Vanguard Digital Advisor and Vanguard Personal Advisor Services — both allow you to sit back and watch your money grow, but you’ll need a $3,000 minimum for the former and a $50,000 minimum for the latter.

When it comes to retirement, Vanguard gives you a variety of options. You can currently utilize traditional IRAs, Roth IRAs, and 403(b). Businesses can open SEP IRAs, individual 401(k)s, and SIMPLE IRAs.

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Vanguard’s IRA offerings have no minimum requirements, but you’ll need at least $1,000 if you decide to invest in the Vanguard Target Retirement Fund or the Vanguard STAR Fund. You’ll need a minimum of $3,000 for other Vanguard funds.

Finally, the Vanguard 529 plan lets you save for qualified education expenses and access perks such as tax deductions, tax-deferred growth, and tax-free withdrawals.

Betterment vs. Vanguard: Which is right for you?

Betterment could be right for you if you’re looking for a low-cost robo-advisor with an array goal-specific investment strategies and automated account features. And — if you want some human advisor support every now and then — you can either pay for a one-time consultation, or you can get unlimited access to certified financial planners with the premium account.

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Vanguard is best for those looking for an all-around investing experience. For hands-on or DIY investors, the brokerage has thousands of mutual funds and offers commission-free trading for stocks, ETFs, and options. And if you’re more of a passive, or hands-off, investor, Vanguard offers you two options: Vanguard Digital Advisor or Vanguard Personal Advisor Services. Vanguard also provides a long list of retirement and investment research materials and resources.

Vanguard could be the better choice if you’re an active investor looking for access to a larger selection of low-cost investments. But this brokerage’s advisor-assisted and automated investing accounts could make it a good fit for hands-off investors, too. However, you should consider Betterment if you’re looking for inexpensive, goal-focused robo-advice. You can sign up for Betterment with a $0 account minimum, but you’ll need at least $3,000 for Vanguard’s robo-advisor.

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By: Rickie Houston, CEPF
Title: Betterment vs. Vanguard: The best option depends on whether you prefer automated trades or DIY investing
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Published Date: Fri, 13 Aug 2021 10:12:03 -0400

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