Which investing platform should you use
Betterment or Robinhood? What is up everyone? I'm rose and welcome back to my channel in this video
I'm gonna compare each investing apps side-by-side
Take you on a tour of my accounts and finally provide you with some guidance on which app might be better for you
I started investing with Dermot about two years ago, and I absolutely loved it. Then when Robin Hood came on the scene
I got really curious because they're offering free trading
Commissions for stocks and I've never seen that before so I wanted to try it out while both apps are used for investing I found
That they actually serve two entirely different purposes betterment is a robo-advisor
Whereas Robin Hood is a trading platform a robo-advisor is an automated?
Investment manager that uses algorithms to manage your investments for you betterment as a Robo advisor
They will pick and choose your investments. They'll ask you a couple questions in a beginner questionnaire
So when you open an account there, they ask you things like what are you saving towards? What are your goals?
When do you need this money by and what's your target amount? And then based on your answers? They'll create a portfolio for you
So you can see on my betterment account that under one of my goals
I have a goal to save an X amount of money in five years and after punching all this in
They created a portfolio for me that you can see right here
All the ETF's within this portfolio betterment just went ahead and picked for me. They created a custom asset allocation based on my goals
So they have my money in stocks and bonds with Robin Hood Robin Hood is just a trading platform
Which means that it's a place where you can go buy the stocks that you want to buy but unlike Betterman
They're not gonna make any investment decisions or recommendations for you. So it's a very bare-bones
Platform or you have to go in type in what you want to buy in the search bar
And they'll pull it up for you and you get to decide whether you want to buy yourself
So if you are planning to invest on Robin Hood, you better know what you want to buy or sell
you also need to know how to evaluate investments and decide for yourself whether it's a good or bad one and if it fits your
Financial situation and your needs so this is what you need to ask yourself
Do you want in invest app to make all the decisions for you and make your life really easy?
Or do you enjoy the challenge of coming up with your own?
Investments looking for them choosing them and buying it yourself in that case
Robin Hood would be a better fit for you then betterment. Also, there's nothing stopping you from having both accounts. That's what I have
I have an account at betterment and that's where I do all my passive investing
I just have this ro advisor
doing my ETFs and index investing for me, and then I have an account at
Robin Hood where I can do more of the individual stock investing and take bets on
Companies and sectors and ETFs that I think will do really well now let's talk about account types offered by betterment
They offer a really wide range of account types that would suit pretty much any investor
They offer things like the smart saver account
Which is a savings account that pays 2% and you can link that to your other investment accounts
So you have all your money stuff in one place. They also have different types of arrays
they have SEP IRAs traditional IRAs Roth IRAs, and
Since most of most of you guys are gonna be starting with IRA accounts when it comes to what account you're investing in
Betterment offers all of that for you now Robin Hood. This is a really big downside
They actually don't offer retirement accounts. The only type of account you can open is a cash account
meaning that everything in it is totally
Taxable so if you make money buying and selling and if you are drawing dividend income from it
you're gonna have to pay full taxes on the gains and the income so that really worries me when someone just says
Oh
I'm doing Robin Hood and they don't have an IRA and they don't even know about
these kinds of accounts that you should be investing within the ideal setup would be let's say you have a 401 K at work you're
maxing out your employer contributions, then you could have an IRA at betterment and then on top of that you could
Open an account at Robin Hood to trade stocks. Okay. Now let's talk about investments offered at betterment
They use a combination of a bunch of different ETFs that they've selected for their liquidity and asset allocation
your real only option when it comes to picking investments at betterment is just to
pick between their portfolios
You can adjust the percentages of asset allocations between stocks and bonds
But can't buy individual stocks at betterment whereas at Robin Hood
all you can do is buy individual stocks and ETFs Robin Hood also offers cryptocurrency and most recently they also added the option to
To trade options. So that's sort of the big difference betterment
They just offer investment portfolios that are ready-made for you and then Robin Hood offers a lot of things including
cryptocurrency options
stocks and ETFs
So you can think about it
This way betterment is better for long-term
Investors who just want to set it and forget it and then Robin Hood is more it get just the app just gives me more
day trading vibes
I think it's geared more towards short term investors who want to buy and sell stuff pretty often the kind of
investing that I talk about a lot on my channel and the thing that I think makes sense for most people is
long term investing where you invest money regularly and you put it into the stock market whether it's in
individual stocks of companies that are gonna do really well or in a
diversified basket of funds you just set it and forget it and you invest for the long term with Robin Hood something you
Really need to keep in mind is that the reason they're able to offer free trading?
Commissions is because they don't pay you interest on the cash
You have sitting on in their accounts now with other brokerages betterment included
You'll always get interest on your cash because cash deserves interest
Another thing about Robin Hood is that they don't do automatic dividend reinvesting
one of the best things about owning a stock is getting dividend payments and then when you get a dividend payment
You can reinvest that to buy more of the stock and then you get on that compound interest machine where your returns make money on
Your returns with Robin Hood the problem with it is when you get a dividend payment on a stock that you bought on Robin Hood
they'll
deposit the dividend payment in your account
But nothing's gonna happen to it unless you go in and trigger a stock purchase with betterment
You're always getting dividends on the ETFs
they've picked out for you in their portfolio and they'll automatically
reinvest those dividends to buy fractional shares of more of those ETFs so that your money is
Continually working for you
It just never has a second where it's not working for you because you forgot to go in and reinvest your dividends it
You want to harness the power of compound interest?
It's really important to consider whether the app will reinvest your dividends for you
And in this case Robin Hood does not do that and betterment does do that. Oh, and another thing is again
This is going back to the whole idea of betterment being a much easier
Automatic platform to use with Robin Hood. You can't set up automatic recurring deposits. Where say you just set up a monthly
transfer over freedom and checking account to your
Robin Hood account in order to automate your savings so you can't do that at Robin Hood
You'll just have to initiate bank transfers yourself. Whereas that betterment you can automate monthly deposits weekly deposits
Even bi-weekly deposits on whatever day of the week or month that you choose
So that's what I've done
I have you know about
$50
$20 just going here and there to my different goals within my betterment account and it just happens in the background of my life
I've literally just set it and forget it and
I'm already up to a good balance just from these automatic deposits Robin Hood and betterment
They're just really really different
They serve very different purposes
Robin Hood if you like to buy and sell stocks pretty frequently then they have really good charting features
they have a lot of cool tools that kind of just help you figure out when's a good time to buy and sell and
It really is geared towards day traders now
I know this myself because that's what I used to do before I started making videos on YouTube
I was a day trader at HSBC and this was my desk setup
All I did was look at charts and I was in and out of my trades very quickly, you know
Usually less than a couple of hours
So I really do think that Robin Hood looks very similar to the tools that I used to use
it's really meant for short-term trading not long-term investing and
Betterment is a great app for people who are quote unquote lazy investors
They just want to set it and forget it and have someone else make all the decisions for you now if you would like to
learn more about individual stocks and what factors to consider when you're picking stocks to invest in then check out my
Download my stock investing checklist, it's free and I'll link to it below in the description
But I walk you through step by step how to analyze a stock so that you know
Whether it's a good investment or not that way if you just if you do decide to open an account at Robin Hood
and you need to
Pick a stock to buy you have a little bit of guidance on what's a good investment?
And what's not so grab it below. I've linked to it below in the comments
It's super super helpful to learn more about money and investing check out these two videos right here
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Always remember to go after your dreams
unapologetically and to live life on your terms
Cheers