📖 Betterment Glossary 📖

Account Minimum: The minimum amount of money required to open a specific type of investment account with Betterment.
Account Value: The total worth of the investments and cash held in your Betterment account at any given time.
ACAT (Automated Customer Account Transfer Service): A system that facilitates the electronic transfer of investment accounts from one brokerage firm to another. This is relevant when moving assets to or from Betterment.
After-Tax Contributions: Contributions to an investment account made with money that has already been taxed (e.g., Roth IRA contributions).
Allocation: The distribution of an investment portfolio across different asset classes (e.g., stocks, bonds) or specific ETFs. Betterment provides pre-built and customizable allocations.
Annual Percentage Yield (APY): The effective annual rate of return on an investment, taking into account the effect of compounding interest.
Asset Allocation: A strategy of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash, to manage risk and potential return. Betterment uses asset allocation to build diversified portfolios.
Automation: The use of technology to perform tasks automatically, such as Betterment's automated investing and rebalancing.

Bear Market: A prolonged period of declining stock prices, typically defined as a drop of 20% or more from a previous peak.
Betterment Cash Reserve: A cash management account offered by Betterment, designed for short-term savings and cash needs, often offering a competitive Annual Percentage Yield (APY).
Betterment Checking: A checking account offered by Betterment, often with features like debit cards and ATM fee reimbursement.
Betterment Goal-Based Investing: An approach where investment strategies are tailored to specific financial goals set by the user (e.g., retirement, down payment, general investing).
Betterment Planning: Financial planning tools and resources offered by Betterment to help users understand their financial situation and plan for the future.
Betterment Premium: A tier of Betterment service that typically offers access to human financial advisors in addition to the core automated investing features.
Bond: A debt security where an investor loans money to an entity (corporation or government) that borrows the funds for a defined period of time at a fixed or variable interest rate.
Bond ETF: Exchange-Traded Funds that invest in bonds, providing diversification and liquidity. Betterment's portfolios include bond ETFs.
Brokerage Account: An account held at a financial institution, like Betterment, that allows you to buy and sell investments such as stocks, bonds, and ETFs.
Bull Market: A prolonged period of rising stock prices.

Capital Gain: The profit you earn when you sell an investment for a higher price than you paid for it.
Capital Loss: The loss you incur when you sell an investment for a lower price than you paid for it.
Cash Reserve: See Betterment Cash Reserve.
Checking Account: See Betterment Checking.
Compound Interest: Interest calculated not only on the initial principal but also on the accumulated interest from previous periods.
Contribution: Money added to an investment account.
Custodial Account: An investment account set up for a minor, managed by an adult custodian. Betterment offers custodial accounts.
Crypto (Cryptocurrency): Digital or virtual currency that uses cryptography for security. While Betterment doesn't directly offer trading in individual cryptocurrencies, they may be included in some ETFs.

Deposit: An Act of adding funds to an account, whether it's an investment account or a cash management account.
Diversification: A strategy of spreading investments across various asset classes, sectors, and geographic regions to reduce risk. Betterment's portfolios are designed to be diversified.
Dividend: A portion of a company's profits paid out to shareholders.
DRIP (Dividend Reinvestment Plan): A feature where dividends earned from investments are automatically reinvested back into the same investment. Betterment typically offers dividend reinvestment.

ETF (Exchange-Traded Fund): A type of investment fund that trades on stock exchanges, similar to individual stocks. ETFs typically track a specific index, sector, or commodity, offering diversification.

FDIC (Federal Deposit Insurance Corporation): The FDIC is an independent agency of the United States federal government in charge of protecting depositors' money in insured banks in the event of a bank failure.
FDIC Insurance: Insurance provided by the Federal Deposit Insurance Corporation (FDIC) that protects deposits in member banks up to certain limits. Betterment Cash Reserve accounts may have FDIC insurance through partner banks.
Fiduciary: A financial advisor who is legally obligated to act in their client's best interests. Betterment acts as a fiduciary for its advisory clients.
Financial Advisor: A professional who provides financial planning and investment advice. Betterment offers access to financial advisors.
First-Time Home Buyer: An individual who is purchasing their first home. Betterment may offer tools or guidance related to this.
Fund: A pool of money collected from many investors to invest in a variety of securities such as stocks, bonds, money market instruments, and other assets.

Goal-Based Investing: An approach used by Betterment where investment strategies and portfolio allocations are specifically tailored to help users achieve their individual financial objectives, such as retirement, buying a home, or saving for education. The platform considers the user's time horizon, target amount, and risk tolerance for each goal to recommend an appropriate investment mix and track progress.

Insurance: A contract that protects against financial loss. While Betterment doesn't sell insurance products, they are relevant to financial planning.
IRA (Individual Retirement Account): A tax-advantaged savings account for retirement offered to individuals. Betterment provides Traditional, Roth, and SEP IRAs.

KPI (Key Performance Indicator): A measurable value that demonstrates how effectively a company or individual is achieving key business objectives.

MAGI (Modified Adjusted Gross Income): A calculation used to determine eligibility for certain tax benefits, including Roth IRA contributions.
Modern Portfolio Theory (MPT): A theory that guides how to construct a portfolio of investments to maximize expected return for a given level of risk. Betterment's investment strategies are rooted in MPT.
Mutual Fund: A professionally managed investment fund that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Net Worth: The total value of your assets (what you own) minus your liabilities (what you owe).
Navigation (in the context of macros): Refers to the specific path or menu options within the Betterment platform that a user would follow to perform a certain action (e.g., opening an IRA).

Opt-Out (in the context of the Ellevest transition): The action taken by Ellevest clients who did not want their automated investing accounts to be transferred to Betterment.

Personalized Advice: Tailored financial recommendations based on an individual's specific goals, financial situation, and risk tolerance. Betterment Premium offers access to personalized advice from human advisors.
Portfolio: A collection of investments owned by an individual or organization.
Pre-Tax Contributions: Contributions to an investment account made before income taxes are deducted from your paycheck, which can reduce your current taxable income (e.g., Traditional 401(k) contributions).
Principal: The original amount of money invested or borrowed.
Program Banks: Banks that Betterment partners with to provide FDIC insurance for Cash Reserve accounts.

QA (Quality Assurance): Processes used to ensure the quality and accuracy of customer interactions and service. QA appeals are a process for disputing QA results.

Rebalancing: The process of adjusting your investment portfolio to maintain your desired asset allocation. Betterment automatically rebalances portfolios.
Retirement: The period of life when one stops working, typically due to age.
Risk Tolerance: An investor's ability and willingness to experience potential losses in exchange for potentially higher returns.
Robo-Advisor: An online platform that provides automated, algorithm-driven investment management services. Betterment is a robo-advisor.
Rollover IRA: An IRA used to transfer funds from another retirement account, such as a 401(k), without incurring taxes.
Roth IRA: A type of IRA where contributions are made with after-tax dollars, and qualified withdrawals in retirement are generally tax-free.

SEP IRA (Simplified Employee Pension IRA): A retirement plan for self-employed individuals and small business owners.
SIPC (Securities Investor Protection Corporation): A nonprofit corporation that protects investors against the loss of cash and securities if a brokerage firm fails. Betterment is a member of SIPC.
Socially Responsible Investing (SRI): An investment strategy that seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.
Stock: A type of security that represents ownership in a corporation.
Stock ETF: Exchange-Traded Funds that invest in stocks, providing diversification across different companies or market sectors. Betterment's portfolios include stock ETFs.

Tax-Advantaged Account: A financial account that offers tax benefits, such as tax-deductible contributions or tax-free growth and withdrawals (e.g., IRAs, 401(k)s, 529 plans).
Tax-Loss Harvesting: A strategy used to offset capital gains with capital losses to reduce tax liability. Betterment automates this.
Traditional 401(k): An employer-sponsored retirement plan where contributions are made with pre-tax dollars.
Traditional IRA: A type of IRA where contributions may be tax-deductible, and withdrawals in retirement are taxed as income.
Transfer: Moving assets from one financial institution or account to another. Betterment facilitates account transfers via ACAT.
Trust: A legal arrangement where a trustee manages assets for a beneficiary. While Betterment doesn't directly offer trusts, they are relevant in estate planning and wealth management.

User Interface (UI): The visual elements and interactive features through which users interact with the Betterment platform (website or app).

Vesting: The process by which an employee earns non-forfeitable rights over employer-provided benefits, such as employer contributions to a 401(k).
Volatility: The degree to which the price of a security or market index fluctuates over time.

Withdrawal: The act of taking money out of an account.

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