What You Need to Know About Investment Robo Advisers

It’s a valid question to ask whether taking investment advice from a machine is a good thing to do.

Probably the answer to this question is in the affirmative given the number of online investment advisers that have cropped up in recently. Of course, the amount of money they manage has swelled considerably too.

Known as Robo Advisers, these programs will generate investment advice while managing your portfolio too. Of course, this is not before you have to answer a few questions that fall into the multiple-choice or the fill-in-the-blanks variety. Most questions pertain to your risk tolerance and time horizon.

The program takes only a few seconds to generate a portfolio that applies modern investing theories about diversification. Also, it gauges the thousands of risk-reward outcomes too.

One of the objectives that these robo advisers meet is to keep funds low. So, they only use low-fee exchange-traded funds so as to build these portfolios. Of course, these firms charge a fee of 0.25% upto a bit less than 1% based on the amount you’ve invested with them. Some of them also charge a flat fee.

In addition, you also have to bear the costs that come with the funds that you own. But you will not pay any commission for trading ETFs.

Now, no two of these robo advisers are alike. Some are fully automated while others provide you with the option to speak with an investment professional by online chat or phone especially if you require personalized advice. Others offer both technology as well as advisers as a full-service experience.

But one must keep in mind that picking a robo adviser requires some thought of understanding where you are in the investing life cycle.