The truth is that Robo-advisors are not for everyone. Although it is low-cost, other disadvantages would hurt your investment goals. Consider the following if you want to invest using this Robo-advisor.
Take a look at this robo-advisors comparison.
First, The Level of Advice You Need
If you seek professional and complex ideas and planning in investment, then we’re sorry to say that Robo-advisor alone might not be the right one for you. For example, if you ask for advice regarding estate planning, the exercise of stock options, and tax planning, you need to seek a human, financial advisor.
On the other hand, if you only need some asset allocation advice, basic and uncomplicated help from the Robo-advisors can be beneficial.
Second, The Robo-Advisors According to Your Needs
Just how the human financial advisors are not the same, that same goes with the Robo-advisors. They have several purposes, serve different types of investors, and vary from individual investors’ basic budgeting. For example, Learnvest charges from $70 to $400 as a one-time payment with low monthly charges for their ongoing support.
On the other hand, Personal Capital focuses more on targeting investors with portfolios ranging from $250,000 to $1 million or more. But if you are a student or someone who want to try investing using Robo-advisors, then I advise you to take Acorns, which only require $5 to get started. It has the essential tools for your purchases in your portfolio and rounding-up their spare change.
Third, The Convenience, Flexibility, and Availability
Online advisors are easy to access compared to traditional financial advisors. Simultaneously, you can deposit and track your investments in real-time according to your time preferences. You can also access online advisors 24/7.
What’s more, they are fully automated with little human involvement. Instead of human doings, all the calculations and working on your portfolios and investment choices through algorithms.
Fourth, Study Their Advice
One of the downsides of Robo-advisors is that not all advice is good. They solely depend on the algorithms and show suggestions according to the data provided. Once they offer investment recommendations, it is essential to study them first. You can ask your investor friends questions, and you can look up the investment methodology to see if their recommendations will work.
Fifth, Their Credibility When The Market Heads Down
Sadly, most Robo-advisors do not give too much assurance to the investors when the market falls. When the torrid market has been going since March 2009, more online advisors are adding up. But what will happen to these firms and to the people who invested during the bear market?
Are you someone who wants to take risks? Then, you can continue using Robo-advisors. Then, you can hire a financial advisor at the same time to talk about the risk and possible returns in investing.
Learn more at ROSHI Singapore.