You may have heard the term “robo-advisor” before. As more and more people are turning to their phones and tablets to handle their finances, it’s a word that’s getting a lot of use. But what are robo-advisors, and what do they do? Here’s an overview that can help you decide whether a robo-advisor might be a good fit for your life and finances.
A robo-advisor is an online platform that manages your investments automatically. It’s financial advice that comes from an algorithm instead of a person, and it can take a lot of the time, guesswork, and stress out of owning a portfolio.
When you sign up for a robo-advisor, it’ll ask for basic information about your goals, risk tolerance, and the length of time you want to stay invested.
Then technology takes over to suggest a portfolio for you—but it doesn’t stop there. A robo-advisor also does the actual investing for you, and it’ll manage those investments over time, rebalancing periodically to make sure your asset mix stays on the right track. All behind the scenes, all automatically. It’s pretty cool when you think about it.
A robo-advisor can be a good option for people who don’t want the stress of keeping up with the markets or managing their own portfolios. You can set it and forget it, or set it and check in as often as you want. You get the peace of mind that comes from knowing your money is working hard for you, without all the time and effort it takes to do everything yourself.
Robo-advisors come with another perk. They often charge less in fees than traditional financial advice services, and you can usually start investing with a lower initial deposit.
There are hundreds of robo-advisors out there, and not all of them are alike. That’s why it’s important to research and compare options to decide what works best for you. Robo-advisors do share one important thing in common, though—they’re built to give you the time and freedom to focus on the things in your life that matter the most. After all, this is your journey.