Robo-advisors are automated investment portfolio managers. They’re software platforms that can help users manage their investments without the need to self-manage their portfolio or consult a financial advisor. Robo-advisors are a low-fee alternative to traditional financial advisors. They may be structured as a fixed monthly fee as low as $1 or a percentage of assets, roughly ranging from 0.15% to 0.50%.
A new customer signing up for a robo-advisor will begin by providing basic information about their investment goals through a series of questions online. These questions will touch on investment timelines, risk tolerance, and how much you have in savings. The robo-advisor will then run those answers through an algorithm to provide a specific approach and portfolio of investments that meet your goals.
Once your funds are invested, the robo-advisor will make ongoing decisions about investing your money and rebalance your portfolio accordingly to ensure that it remains on track with your goals.
Choosing which robo-advisor is right for you depends on your investment goals if you want access to a financial advisor, and what your current portfolio looks like. If you’re considering using a robo-advisor, here are a few we recommend:
- M1 Finance
Robo-advisors are best for investors who want to set and forget their investment portfolios but still get active portfolio management. If you don’t know much about investing or don’t want to spend too much time on it, a robo-advisor is perfect for your needs.
However, some experienced investors could find value in a robo-advisor as well. The low-fee structure and automated features could be ideal for long-term goals and retirement investing accounts.