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As an investor, I like to know about all my choices. Soon after my husband and I bought our first home and became settled in our life, we had extra money to invest. I didn't have a well-thought-out strategy for getting started. I looked for opportunities wherever I could find them. In those days, full-service brokers charged hundreds of dollars to execute stock trades, so I didn't even consider this method. Neither online brokers or ETFs had emerged. The few discount brokers available still charged significant trading fees, which surpassed the dollars that I planned to invest.
So when my utility company included an insert in my monthly bill that offered a direct investment program, I signed up. When I read about a mutual fund in a financial magazine, I opened an account and bought shares. The beauty of these arrangements was that I could invest for free plus I could invest random amounts of money, $25 one month and $100 the next. Extra cash was routinely designated for wealth building.
Today, there are many more ways to invest simply without transaction fees. One is the free online trading app, like Webull, and another is the robo advisor, like Betterment, that offers investment services for a fee but without traditional transaction fees. The investing models differ in many aspects but, from the perspective of a long-time investor, there are some similarities. Here's my take on what's alike and what's different.
How Webull and Betterment Are Similar
There are no minimums
You can open an account with Webull and Betterment with any amount of money. For example, you could make an initial deposit of $100 and then add $100 per month or $100 whenever you have extra cash. You could also start with $25 or $200 and follow with additional $50 or $100 deposits.
You can make a deposit by initiating an ACH transfer from your checking account to your brokerage account. The process is generally free and easy, after you've completed the initial setup.
There are no stock trading fees
Webull offers a $0 commission trading for individual stocks and ETFs; Betterment doesn't charge trading commissions as the company invests your money in commission-free ETFs. As a result, you don't have to worry about your investment dollars being eaten up by trading fees.
You can invest varying amounts of money
Just as there are no minimums, there are no firm requirements for investment amounts. You can transfer any amount to your account. Betterment invests all of your money immediately. After you transfer money to Webull, you can then buy stocks or ETFs. The minimum investment amount depends on the share prices but you can generally find stocks and ETFs with prices that range from $10 to $200.
They're easy to use
Purchasing individual stocks and ETFs using Webull is simple and fast. Click the Quick Trade function, choose the stock or ETF you want to buy or sell, verify the information, enter quantities, and authorize your order by clicking buy or sell.
With Betterment, you choose your portfolio when setting up your account and specific goals within the account. You simply direct money to the goal and it's invested upon the completed transfer.
Regular accounts and retirement accounts are available at both firms
Webull offers regular brokerage accounts (regular taxable accounts) and IRAs; these include Traditional, Roth, and Rollover IRAs. Betterment offers regular taxable accounts and retirement accounts; these include individual and joint taxable accounts as well as Traditional, Roth, SEP, and Rollover IRAs; and Trusts.
How Webull and Betterment Are Different
Despite their similarities, Webull and Betterment offer very different ways to invest. Webull favors the investor who wants to make decisions independent of an advisor whereas Betterment offers (robo) advisory services. Here are the specifics of these differences.
Webull gives you choices; Betterment chooses for you
Webull allows you to invest in one or many U.S. stocks, ADRs, and ETFs. The firm gives you tools, such as stock screeners, to narrow your choices.
Betterment limits your investments to specific ETFs within its portfolio selections. Here you're given tools to set goals and specify time horizons, investment amounts, and risk tolerance. Then you're offered a portfolio to help you reach this goal. Advanced investors can make changes with a flexible portfolio, adjustment asset allocation and changing ETF percentages.
Webull is a brokerage firm that facilitates your trades whereas Betterment is an advisory firm with brokerage services that trades on your behalf.
Webull focuses on trading; Betterment focuses on long-term investing
Webull is designed for active trading that generates income (or losses) quickly whereas Betterment's design favors investing for the long haul. Still, Webull can help you reach wealth-building goals and Betterment can help you achieve income-generation goals, and vice versa.
Using Webull, it's easy to acquire a position in a certain company or companies, accumulating shares on a daily, weekly, or monthly basis. This approach allows you to build wealth over a long period of time. But the company's focus is on making it easy to make money on price fluctuations by buying and selling shares.
Betterment offers high-yield savings accounts as well as income portfolios, comprised of bond funds, which are designed to generate income for you while preserving capital. But the firm's emphasis is on investing for specific goals, such as buying a car or saving for retirement.
Webull gives you access to in-depth information; Betterment gives you limited information
The Webull app gives you loads of information for stock research. At your fingertips, you'll find earnings information for target companies; share prices; market capitalization; dividends; insider activity; press releases; selected performance indicators like Return on Assets (ROA), Earnings Per Share (EPS), and Net Margin; peer comparisons; institutional holdings; company news; analyst ratings; and links to SEC reports.
Betterment gives you the allocation of your portfolio, specific ETFs for each allocation, and links to ETF prospectuses.
Webull serves DIY traders and investors; Betterment manages diversified and income portfolios for its customers
Webull allows you to invest in individual stocks and ETFs of your own choosing. The brokerage firm gives you tools to make decisions on your own.
Betterment allows you to choose a diversified portfolio among its offerings and tweak the portfolio's asset allocation in some cases. These portfolios are aligned with your stated goals as well as individual preferences and risk tolerances. This firm makes investment decisions on your behalf using the Do-it-For-Me (DIFM) model.
Webull doesn't charge for its basic services; Betterment charges for its advisory services
Webull allows you to buy and sell stocks and ETFs for free. You can subscribe to advanced quote systems, such as Taiwan Stock Exchange or NASDAQ Basic, through the app. Charges range from $2.99 per month to over $50 per month.
Betterment charges a fee for its basic advisory services, which include portfolio design and rebalancing. You'll pay 0.25% per year on investment account balances; that's $2.50 for every $1,000 in your account. So, a $7,000 portfolio generates an annual advisory fee of $17.50 ($2.50 x 7). There are also premium services that include financial planning and advisory services; these charges are 0.40% per year on investment account balances.
Webull and Betterment offer very different approaches to investing. Both are reasonably priced. Both can be useful for investors. Webull seems more appropriate for the person who wants to have fun and be engaged in investing decisions. Betterment seems better for the more conservative investor who's happy to outsource investment activities.
How has investing changed for you with zero trading commissions?