Twine vs. BettermentDisclaimer
- Very few platforms out there offer joint accounts.
- The app is very easy to use.
- The 0.60% fee for investing is reasonable compared to the industry average.
- Well known fund companies like BlackRock and Vanguard are used for ETFs.
- You can have multiple savings goals at once.
- While the fee is low for investing, some platforms offer fee free investing.
- Retirement accounts are not currently being offered.
- Twine does not offer any investment guidance beyond prebuilt portfolios.
- 100% passive investing.
- Automate your savings with Smart Saver and Two Way Sweep.
- Rest easy knowing your money is being invested in low fee ETFs.
- Betterment does not have an account minimum.
- Smart Saver is not FDIC insured.
We have countless choices for saving and investing platforms. It seems like every day, there is a new app being released. We created this blog, Investing Simple to provide clarity when trying to understand all of these different options you have in front of you. In this review, we’re going to compare two new investing platforms that are rising in popularity, Twine, and Betterment. Both of these platforms offer a similar service for the potential investor or saver.
What Is Twine?
Twine is a hybrid between a saving platform and an investing platform, offering the best of both worlds. You set savings goals for major life events, like buying a house, and Twine helps you reach that goal and stay on track. You can even save with a partner! Twine allows you to set up a joint account so you can compete with your significant other and reach your goals even faster. As a reader of Investing Simple, they are offering you a free $5 credit to get started!
How Does Twine Work?
You can begin using the Twine investment platform by creating an account here.
As soon as your account is created, you can get started with your first savings goal. This is, surprisingly, 100% free to use. Other comparable savings apps charge a monthly subscription. Twine also gives you the option to invest your money through the app too! They collect an asset management fee of 0.60% per year for this service. This allows you to save your money and grow it, all in one place!
Save With Twine
You and your partner can set up recurring monthly payments to your Twine account. You can save for one goal at a time or spread your money across multiple goals! Of course, if you want, you can go at it yourself with your own independent account as well.
Twine savings accounts currently yield 1.05% variable interest. Most banks pay next to nothing in interest. The best part is you can start saving with Twine with as little as $5!
Invest With Twine
For some long term savings goals, it makes sense to invest that money and allow it to grow. If you feel it is a good fit for you, you can invest within the Twine app!
Twine investment accounts offer multiple portfolios based on your risk and goals. You can get started investing with as little as $100. Fees are just $0.25 per month for each $500 invested (or 0.60% annually).
Twine offers a variety of investment portfolios based on risk tolerance and time horizon. This includes ETFs from some highly reputable names like BlackRock and Vanguard.
Twine Investment Portfolios
The conservative portfolio is for savings goals that are within 5 years away. This portfolio contains 94% money market and bond securities, the other 6% is invested in stock ETFs. As you get closer to your savings goal, 6% of stocks may decrease to 5% or 4%. This portfolio is for risk-averse investors who would like more stability and less volatility in their portfolio. Though this portfolio may generate lower returns, it is less risky compared to the other Twine portfolios.
The moderate portfolio aims to offer slightly higher returns than the conservative portfolio but carries additional risk in doing so. If your time horizon is 5 years or less, then your portfolio will consist of 90% money market and bond funds, and 10% or less in stocks. For those with 10-15 years until their goal, their moderate portfolio will consist of 55% to 70% stocks. If you have a longer time horizon, your stock allocation will lean towards 70%.
The aggressive portfolio is for investors who would like to take on a higher risk to earn higher potential returns. For investors with less than 5 years until their goal, the aggressive portfolio will allocate 70% to money market and bond funds, stocks will consist of 30% or less of the portfolio. If you have a longer time horizon (10 to 15 years), the aggressive portfolio will allocate as much as 80% of your portfolio to stocks. This allocation will be higher as your savings target time horizon increases.
These ETFs you are investing in will most likely pay dividends each quarter. Twine lets you automatically reinvest these dividends, allowing your returns to compound! Warren Buffett would approve.
Twine offers protection of its accounts under SIPC and FDIC. The Federal Deposit Insurance Corporation protects your cash up to $250,000 per account. The Securities Investor Protection Corporation (SIPC) is a non-profit that protects against brokerage firm failure. SIPC will ensure the securities in your account up to $500,000, and $250,000 for cash.
The Twine savings account is 100% free. There are no ongoing fees for these types of accounts. Twine investment accounts have a minimum of $100 to get started. Fees are just $0.25 per month for each $500 invested (or 0.60% annually).
What Is Betterment?
Betterment is an online robo-advisor geared towards everyday investors who want automation of their investments, paired with personalized financial advice. Through the use of technology, Betterment can offer deficient management fees. Refined investing strategies such as tax loss harvesting and smart rebalancing are some of the many features offered by Betterment.
Betterment also offers some tremendous automated options for savings. They recently rolled out a feature called Smart Saver. As interest rates remain extremely low in the current economic environment, interest rates on savings accounts are virtually nonexistent. Betterment offers a solution to this issue by providing an alternative to a savings account. The Betterment Smart Saver account yields 2.19% annually. This is significantly higher than most savings accounts. Betterment offers this feature while still providing liquidity. According to Betterment, you will have access to your funds in 4 to 5 business days.
You can pair Smart Saver with another feature called Two Way Sweep for a 100% hands off cash management solution. Betterment will monitor your account and sweep extra cash into the Smart Saver account. As your balance gets low, they will sweep money back.
It is important to note that Smart Saver is not a bank account. It is an investment account that holds ultra short term bonds. While the risk is shallow, it is still something investors need to be comfortable with. Through Smart Saver, you have SIPC insurance and not FDIC insurance. This means you are protected if Betterment were to lose your investments, but not if your investments experienced a loss.
Betterment has a strong focus on minimizing fees and expenses to investors. They specifically choose ETFs that have some of the lowest expense ratios. Betterment has no trading fees and no markups on prices. The only fees Betterment charges is a management fee of 0.25% to 0.40% depending on the investment plan.
Twine vs. Betterment: The Verdict
Overall, looking at this from an investment standpoint, Betterment is going to be a lower fee option. Most people will end up taking advantage of Betterment Digital, which has an annual asset management fee of 0.25%. On the other hand, Twine has an annual asset management fee of 0.60%. Both Twine and Betterment invest your money in industry leading low fee ETFs.
One area where Twine is superior to Betterment is when it comes to the savings features offered by this platform. Twine allows you to automatically save your money and earn FDIC insured variable interest, currently 1.05% yield. Betterment does not offer an FDIC insured saving option, and Smart Saver investors are still paying them 0.25%.
If you are looking to save money in a relatively passive way with FDIC insurance, Twine seems to be the better fit. If you are looking to save money and earn a higher return through a non-FDIC insured investment, Betterment appears to be the better fit.
Twine is offering readers a $5 investing credit to start with.