If you're looking to start investing, there's some good news. There have never been more easy-to-use investment platforms specifically designed to make the process easier for newer investors.
Two such investment platforms are Betterment and Robinhood, both of which are designed to make it as easy as possible to start investing. However, they are intended for two very different types of investment strategies. In this Betterment vs. Robinhood comparison, we'll take a closer look at both platforms and what they have to offer, so you can decide if one of them is right for you.
Betterment vs. Robinhood: At a glance
Offer | Robinhood | Betterment |
---|---|---|
Rating | Rating Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Commissions | Commissions | Commissions |
Account Minimum | Account Minimum | Account Minimum |
Next Steps | Open Account for Robinhood Read Full Review | Read Review |
Betterment vs. Robinhood: Commissions & fees
When looking at the fee structure of these two brokers, it isn't exactly an apples-to-apples comparison. Betterment is a robo-advisor and Robinhood is a stock trading platform at its core, so the fees they charge investors aren't exactly for the same services.
With that said, both are notorious for their low fee structures.
For its standard automated investing product, Betterment charges a management fee of $4 monthly or 0.25% yearly. The 0.25% option is expressed as an annualized percentage of assets in your account. In other words, if you have $10,000 in a Betterment account, your annual investment fees will be $25. This is significantly lower than you're likely to pay a human financial advisor, where the typical fee is in the neighborhood of 1%. The company also has a premium product available to high-balance accounts that has a management fee of 0.40% but also offers access to real-live Certified Financial Planners™.
On the other hand, Robinhood pioneered $0 commission stock trading years ago, and is widely credited with moving the entire brokerage industry toward free trades. It remains one of the only places investors can trade options without paying any commissions, and also offers free cryptocurrency trading.
Betterment | Robinhood | |
---|---|---|
Stock & ETF commissions | N/A | $0 |
Options commissions | N/A | $0 |
Crypto commissions | 1% (+0.15% per trade, charged by crypto custodian Gemini) | $0 |
Mutual fund commissions | N/A | N/A |
Account transfer fee | $75 | $100 |
Account maintenance fee | $4 monthly or 0.25% annually (for accounts that set up recurring monthly deposits or transfers totaling $250 OR reach a balance of $20,000 or more across all Betterment accounts) | $0, or $5 monthly for Robinhood Gold |
Data sources: Betterment and Robinhood.
Betterment vs. Robinhood: Investments available
Betterment offers ETF investing and can purchase fractional shares of its ETFs within investors' accounts, but it's important to emphasize these are automated investment accounts. There is currently no way to buy individual stocks or ETFs through the platform. And while we're on the subject, Betterment doesn't trade options, mutual funds, bonds, or any other type of investments -- except, as of recently, crypto. Users can invest in diversified crypto portfolios that include Bitcoin and Ethereum; Betterment charges crypto investors a 1% advisory fee.
Robinhood offers far fewer investments than many full-featured brokerage platforms, allowing investors to buy and sell individual stocks, ETFs, cryptocurrencies, and options. It also doesn't offer mutual funds, bonds, or foreign exchange trading.
Betterment | Robinhood | |
---|---|---|
Stocks and ETFs | ETFs only | Yes |
Fractional shares | Yes | Yes |
Options | No | Yes |
Mutual funds | No | No |
CDs | No | No |
Bonds | No | No |
Futures | No | No |
Crypto | Yes (portfolios only) | Yes |
Currencies (Forex) | No | No |
Data sources: Betterment and Robinhood.
Alternatives to Consider
We recommend comparing brokerage options to ensure the account you're selecting is the best fit for you. To make your search easier, here's a short list of our best trading platforms of 2024.
Account | Fees | Account Minimum | |
---|---|---|---|
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | $0 for stocks, $0 for options contracts | $0 | Open Account for SoFi Active Investing |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | $0 for stocks, ETFs, and options; up to $6.99 monthly for Robinhood Gold | $0 | Open Account for Robinhood |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Commission-free; other fees apply | $0 | Open Account for E*TRADE |
Betterment vs. Robinhood: Account types available
Robinhood offers three types of brokerage accounts -- individual and joint (taxable) investment accounts, traditional IRAs, and Roth IRAs.
Betterment's investment and bank accounts can be opened with a joint owner, and there are far more brokerage account types offered. One of the biggest reasons people use robo-advisors is to save for retirement, so Betterment offers traditional and Roth IRAs, as well as SEP IRAs for self-employed people. And while Betterment doesn't support UGMA or UTMA custodial accounts, it does allow customers to set up and contribute to trust accounts.
Robinhood offers a spending account with a linked debit card, though it earns no interest on deposits. But users can opt into Robinhood's brokerage cash sweeps program to automatically earn interest on uninvested brokerage cash swept into partner banks. On the other hand, Betterment offers a cash reserve account that earns interest, as well as an actual checking account (Betterment Checking) that not only has no account fees and ATM reimbursem*nt, but has an excellent cash back rewards program.
Betterment | Robinhood | |
---|---|---|
Taxable brokerage | Yes | Yes |
Joint tenant | Yes | Yes |
Margin | No | Yes |
Robo-advisor | Yes | No |
Traditional IRA | Yes | Yes |
Roth IRA | Yes | Yes |
Other IRA | Yes | No |
Custodial | Trusts only | No |
Checking | Yes | No, but offers a spending account |
Savings | No, but offers a high-yield cash account | No, but offers brokerage cash sweeps |
Credit card | No | No |
Data sources: Betterment and Robinhood.
Betterment vs. Robinhood: Mobile app and trading platforms
Betterment and Robinhood are both largely app-centric platforms, although both also have web-based desktop platforms as well.
Both have highly rated apps that are designed to make investing easy, although in very different ways. Betterment's investment app holds ratings of 4.7 out of 5 stars on the iOS App Store and Google Play store, respectively, and Robinhood's ratings are 4.2 and 4.1 (Note: Robinhood's ratings were significantly higher prior to the "meme stock" craze of early 2021, when it was forced to suspend trading in certain volatile stocks to the disappointment of many customers).
Final take
The bottom line is both Betterment and Robinhood can be great choices if they meet your needs. Betterment is one of our top-rated robo-advisors for a variety of reasons. And Robinhood is arguably the easiest and lowest-cost place to start buying and selling stocks. To be sure, if you want more of a full-featured brokerage experience -- say, you want to invest in mutual funds or use a sophisticated trading platform or investing app -- you may be better off looking at another of our favorite brokers. However, these are two solid options for investors looking to keep it simple.
Open Account for Robinhood
OnRobinhood'sSecure Website.
Ratings Methodology
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Bottom Line
Robinhood is a simple, low-cost brokerage with a few rare perks. What it lacks in customer service it provides in a smooth in-app experience. Without membership, you will lack research resources but still be able to trade affordably. With a membership, you can earn 3% and 1% match on IRA and taxable deposits. The app grows fast -- new perks are being released at a rapid pace.
Read Full Review
Fees:
$0 for stocks, ETFs, and options; up to $6.99 monthly for Robinhood Gold
Account Minimum:
$0
Open Account for Robinhood
OnRobinhood'sSecure Website.
FAQs
It depends on what you're looking for. Robinhood offers individual stock picking, options trading, and cheaper crypto trades. Betterment offers robo-advisory services that manage your investments.
It's a pure-play robo-advisor, so you can't pick individual stocks or crypto. Betterment charges a monthly or annual fee, eating into potential profits.