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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.
4.5/5
Our 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
Rating image, 4.5 out of 5 stars.
4.5/5
Our 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
Commissions
$0 for stocks, ETFs, and options; $5 monthly for Robinhood Gold
$0 per trade, management fee of $4 per month or 0.25% per year
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 per month 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
Featured Offer
Rating image, 4.5 out of 5 stars.
4.5/5
Our 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
$0 for stocks, ETFs, and options; $5 monthly for Robinhood Gold
4.5/5
Our 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
4.5/5
Our 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
Robinhood offers three types of brokerage accounts -- individual (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 reimbursement, but has an excellent cash back rewards program.
Betterment
Robinhood
Taxable brokerage
Yes
Yes
Joint tenant
Yes
No
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.
4.5/5
Our 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
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.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Cole Tretheway has no position in any of the stocks mentioned. Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Bitcoin, Ethereum, and Target. The Motley Fool has a disclosure policy.
Robinhood disclosure
All investments involve risk and loss of principal is possible.
Securities are offered through Robinhood Financial LLC, member FINRA/SIPC. Cryptocurrency services are offered through an account with Robinhood Crypto, LLC (NMLS ID 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency held through Robinhood Crypto is not FDIC insured or SIPC protected. For more information see the Robinhood Crypto Risk Disclosure.
Trades of stocks, ETFs and options are commission-free at Robinhood Financial LLC. Other fees may apply. Please see Robinhood Financial’s Fee Schedule to learn more.
Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement.
Robinhood Gold is an account offering premium services available for a $5 monthly fee. Not all investors will be eligible to trade on Margin. Margin investing involves the risk of greater investment losses. Additional interest charges may apply depending on the amount of margin used. Bigger Instant Deposits are only available if your Instant Deposits status is in good standing.
Betterment disclaimers
†Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II.
**The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 4.00% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of Feb. 6, 2023. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
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Fact Checked
Eric McWhinnie
