TD Ameritrade vs Betterment: The Better Stock Trading Platform?

When it comes to an online brokerage firm, there’s no shortage of options out there. Since each platform has its own benefits, features, and downsides though, it can be tough to choose the right one.

More to Know About TD Ameritrade

TD Ameritrade dates back to 1971. They were founded in Omaha, Nebraska, and are still based there today. The company began as a small investment firm and slowly grew to be a company with $26 billion in assets and about 6,000 employees around the world. They have a little over 6 million customers today and are one of the largest brokerage firms.

More to Know About Betterment

Betterment is an online investing service that first came around in 2008. It’s registered with the U.S. Securities and Exchange Commission, and provides fully automated investment management for less than the price of other companies. Betterment has no brokerage advisors or sales reps.

When TD Ameritrade is the Best Option

  • TD Ameritrade may not be the cheapest option, but their pricing is right in line with other firms their size
  • Ameritrade has almost any type of investment, including stocks, preferred stocks, bonds, exchange traded funds, mutual funds, and money market accounts. They even have margin accounts available, but most experts recommend against opening those
  • The tools and research capability that TD Ameritrade has makes it perfect for someone who wants more control over their money

If you want a large company that has physical branches around the country, TD Ameritrade may be your best bet. There are over 100 branch locations, each with representatives customers can speak with. TD Ameritrade has a great benefit in that in that there’s no minimum investment amount. Customers can start a fund with as little as $50. TD Ameritrade formerly had a $2,000 minimum, but they’ve started reaching out to include smaller investors too, realizing those accounts will grow to big ones.

Any online stock transaction with TD Ameritrade costs just $6.95, so it’s not expensive to make changes to a portfolio. TD Ameritrade also offers a huge about of useful research tools, including ones from Research Team, Consensus, S&P Columns, Market Edge, and more.

Ameritrade has what’s called a “Thinkorswim Trading Platform” that has actually been voted the best trading platform on the market. It makes trading on the go simple, and has an iPhone, Android, or Windows phone app.

When Betterment is the Best Option

  • Management fees for Betterment accounts are one flat rate for their “Digital Plan,” no matter how much money the customer invests
  • A great advantage of Betterment is that they automatically reinvest and dividends and cash inflow, meaning it’s easy for a profile to grow without input from the account holder
  • When customers set up a Betterment account, they choose a goal amount they’d like to achieve, and set a date when they want to retire. The Betterment system uses computer algorithms to track the customer’s progress and determines whether or not they will be able to reach the goal they set (and invests their money accordingly)

Many people say that Betterment is a great starting point for a young person who has limited income, but wants to start investing something. It might be pretty hard for someone like that to have enough funds to put into a Vanguard account (usually the minimum required is about $3,000). Betterment can help these investors get saving, and then they can move their money to Vanguard when they have enough. Betterment doesn’t have a minimum for initial deposits or deposits along the way, so it’s perfect for someone who just wants to get into the rhythm of investing in an IRA.

Betterment does have a “Plus Plan” available that includes a call with a human advisor one time a year, and a “Premium Plan” that gets unlimited calls to an advisor. Those plans do come with some hefty requirements though: a minimum of a $100,000 balance for the one call plus plan, and a minimum of $250,000 for the unlimited call premium plan.

In 2014, Betterment’s assets under management reached $5 billion, making them the first robo advisor company to reach that point.

TD Ameritrade vs Betterment: Who is better?

For people just starting out investing, or who want a more “hands off” approach of just putting money in and letting the experts do the work, Betterment is probably going to be the best choice. But for people who are going in with a sizable investment, or who feel like they know enough about investing to research and make decisions on their own, TD Ameritrade is going to be the best bet for them.

People that want to actively trade their investments, and who know what companies they want to invest in should probably choose TD Ameritrade. Their tools for both trading and researching information make it simple, even for someone who hasn’t done it for very long. TD Ameritrade also has rock solid customer service, so if being able to speak to a person whenever you want (including stopping by to one of their physical branch locations) is something that’s especially important to you, it might be best to go this way as well.

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