What is Robo-investing? 5 Highly Recommended robo-advisers that you can try


If you dream of having a new house, a new car, or perhaps securing retirement, maybe it already dawned on you that the low interest your savings earn in the bank is not enough to reach these financial goals. So, what to do? With the information accessible to you with just a click, you probably heard of the word investments, investing, and such. But you maybe are hesitant to dive into such an unfamiliar field combined with the perceived cost of employing an advisor. Lucky for you investing is no longer that complicated and pricy. With the ever-growing demand of people who wants to be part of the financial environment, investing is becoming more accessible and easier than ever. And robo-investing is one of the newest key players in this investing trend. In this article, we'll take a look at the concept of robo-investing and the things you need to know and take note of to start your investment journey.


What is Robo-investing?


With the little amount of interest people earn from their wealth parked on banks, some are now thinking of other ways to gain more. These same reasons combined with the drive to acquire more led other digital natives to think of new ways to capitalize on their wealth or turn their slowly eroding savings into more profitable investments. One such method of transforming passive savings into more profitable investments is through robo-investing.

Robo-investing is a new model of investing where investors utilize a new technology called robo-advisor, sometimes called robo-adviser or simply robo--an AI-powered financial service technology that makes the process of investing easier. It works as a brokerage account that invests investors' money on prebaked portfolios of low-fee exchange-traded funds specially picked based on the information collected from clients, such as financial situation and future goals. In addition, based on the data collected, robo-advisors provide investment advice and automatically invest the investors' assets. They also automate and optimize passive indexing strategies to maximize returns from the invested assets.

Robo-advisors play a crucial role in robo-investing, just like typical financial advisors, since they also guide investors in their investment journey, albeit with added benefits and at a lower fee.  The differences only are that financial advisors are humans, while robo-advisors are digital and AI-powered.

Most robo-advisor offer the same features like easy-account set-up, personalized financial and goal-planning, portfolio management, automated investing, automatic rebalancing, delightful customer service, security features, and other banking services to make investing easier, 




How to start Robo-investing with the help of a robo-advisor?

There are few steps that you should carefully follow before devoting your savings to a robo-advisor, and these are the following:

1.      1. Identify your needs

Before looking for a robo-advisor, you should first know your goals. Likewise, you also need to identify the financial services you need.

2.      2. Look for Robo-advisors particulars

Look for robo-advisors that you can tap to start your investment journey. Know their available services, features, promotions, pros and cons, and other important information that would help you decide.

3.      3. Determine the cost

As every robo-advisor offers its own kind of perks, naturally, they all come at different costs and fees charged for the management and advisory too.

4.      4. Compare your needs to the features of robo-advisors

Compare your needs to the services offered by the robo-advisor, make sure that you will settle for the one you are comfortable with and the one which suits your goals.

5.      5. Determine which is the most cost-efficient

Given their varying yet almost similar fees and financial perks, it would not be easy to weigh which robo-advisor is better in terms of cost-efficiency, but determining the most efficient among them is necessary for starting your investing journey.

6.      6. Pick your robo-advisor

After considering the cost, features, and other necessary information, pick the one that best suits you.

7.      7. Sign-up and Start

After deciding which robo-advisor you will go, sign-up, finish the forms and other relative transactions, and finally start your robo-investing with the aid of the robo-advisor you chose.



5 Highly Recommended robo-advisers that you can try


1.      1. Wealthfront

Fees

0.25% management fee

Account Minimum             

$500

Promotion:      

$5000 amount of assets managed for free


Wealthfront is one of the more popular and more favored robo-advisor. It got the title of 2019 best-robo advisor from Nerdwallet and was crowned as 2020's best robo-advisor from Investopedia. Wealthfront offers a complete package of features that includes goal-setting, planning, and investing in a very easy-to-use and accessible platform. Goal-setting stands out the most among the features of this robo-advisor because of the high quality its planning technology has that is worthy of being implemented on other similar platforms.

Truly, Wealthfront is a hassle-free robo-adviser that lets clients invest their savings to grow and have long-term wealth. Same with others, the process here is automated. They provide a personalized, globally diversified portfolio fit for the risk profile of the client. On the other hand, the client has the freedom to choose whether to use the recommended portfolio or customize their own depending on their liking and preference. After this, Wealthfront will handle all thee trading while keeping the portfolio balanced and profitable.

They offer all of these for a 0.25% advisory fee. Wealthfront also utilizes a tax-loss harvesting strategy to cover their annual fee of up to 3x of their recommended portfolio. Furthermore, what's good about this is that they do not have any trading and account fees.


2. Betterment

Fees

0.25% management fee

Account Minimum        

$0

Promotion:      

A maximum of 1 year of free management is provided for a qualifying deposit

Betterment has only one line to say to you if you ever chose them to be your robo-advisor, "Your Satisfaction is Guaranteed." This platform is best for you if you are just starting your investing journey as it boasts a platform that is easy-to-use and straightforward.

Clients just need to specify their investing goals, and the system will automatically suggest a diversified portfolio that is right for the client's age, annual income, and goal. The platform also has added benefits like portfolio rebalancing and asset allocation at no extra cost for the client.

 

1.     3. Vanguard

Fees

0.15% approximate fee per year

Account Minimum             

$0

Promotion:      

Free advisory (no advisory fee) for the first 90 days (requires $3000 to enroll)


Vanguard's digital advisor goes to simplicity and sophistication with a proven experience and expertise. The latest proof of this experience and expertise is the 84% of its funds that outperformed the average of competitors for a period of 10 years that ended last June 30, 2021.                                             

This robo-advisor gives clients suggestions and advice tailored to their retirement savings and other financial goals. Some of their features are financial profile aggregation, payment strategy, investment optimization, and retirement plan outlook.

 

1.     4. Stash

Fees

$1 - $9 per month

Account Minimum             

$0

Promotion:      

$510 in credit to invest provided that the client invested a qualifying deposit into a taxable account.


Stash is one of those affordable personal finance applications that are currently present in the market. What's good about this robo-advisor is the features such as fractional shares that allow anyone to invest in the stock market for $5 or less.

This platform also has three plans that users can choose from depending on their experience and goals. These three plans are affordable plans that range from $1 to $9 per month.


1.     5. SigFig

Fees

0.25% management fee

Account Minimum             

$2000

Promotion:      

First $10 000 managed for free


SigFig is the robo-advisor you are looking for if you want an intelligent, tax-efficient, and diversified portfolio. Like other robo-advisor in other platforms, SigFig offers its services at a much lower cost than traditional advisors. SigFig prides itself on a system that continuously looks to reduce the client's taxes, reinvest dividends, and monitor allocation drift.


Some things to consider to see to see whether a Robo-advisor is right for you.

1.      1. The help you need

If you are a millennial planning to start investing for your financial goal, then robo-advisers would be a wise option. With a bit of fee and affordable plans, robo-advisors can help you reach the potential of the modest amount you have. On the other hand, financial advisors are better for you if you need help managing more extensive investments, say those in 5 digits.

2.      2. The service they offer

Robo-advisors, just like financial advisors, are different from one another. There are differences in fees, expertise, features, and the likes. If a robo-advisor meets your needs, then the likeliness that robo-advisor is right for you, given that the amount you will invest is in sync with consideration #1, will increase.

3.      3. Minimum Investment Requirement

Some robo-advisor requires a minimum investment while others are not so, if you think you are okay with it, then go.

4.      4. Convenience and Accessibility

One of the perks most robo-advisor boasts is the convenience and accessibility they offer. With just a click, clients can have the advice they need. If you like this kind of feature, then robo-advisor is good for you.

5.      5. Trading

If you are looking to invest in stocks and bonds, you must choose either a robo-advisor or a financial advisor. While some platforms have trading features, their number is very few, and if their other features and services are not fit to you then, you better opt for the latter