What Robo Advisors Do for You?

Robo advisors are a new breed of financial advisors designed to make investing easier for consumers. These automated investment services are popping up all over the place, but what does this mean for you? Should you use one? How do they work? In this article, you’ll get answers to these questions and more.

What are Robo Advisors?

Robo advisors are automated investment advisers. They use computer algorithms to manage your investments and typically charge a flat fee for their services or a percentage of the assets you have with them.

Robo advisors are good for people who want to invest in low-cost index funds but don’t feel comfortable doing so independently. They can also be an easy way to diversify across asset classes if you don’t have any expertise in investing yourself. You can take help from a robo advisor for stocks too!

How Do Robo Advisors Work?

Robo advisors are automated investment services that use algorithms to make investment decisions and provide financial advice. They can help you save money on fees by implementing a low-cost, highly diversified portfolio made up of ETFs (exchange-traded funds).

Bogleheads is a community dedicated to the philosophy of Harry Bogle and his investing ideas: buy low-cost index funds, hold them for the long term and don’t try to time the market.

Robo advisors have been around for decades but have exploded in popularity recently because they’re relatively inexpensive (you pay between 0% – 0.30% per year), easy to use and accessible from any device with an internet connection.

What Do Robo Advisors Do for You?

Robo advisors are Robo-like in their approach to investing and planning for the future. They help you save for retirement by analyzing your current finances (income, expenses, etc.), considering any debt you have and then recommending a specific portfolio of investments to invest in. 

Robo advisors also help investors manage their portfolios by choosing when to sell or buy stocks based on market conditions, thus preventing you from making emotional decisions that could cost you money in the long run.

While most Robo advisors focus on stocks, there are some that will handle bonds as well — the important thing is that they’ll be able to handle both types of investment so you can diversify your portfolio appropriately.

How Much Do Robo Advisors Cost?

The cost of a Robo advisor varies based on the platform you choose and the specific service you need. For example, some Robo advisors charge a flat fee for setting up an account, while others may have monthly maintenance fees or transaction charges.

In general, Robo advisors are cheaper than traditional financial advisors because they don’t charge for their advice in the same way that humans do (that is to say, by billing clients for meetings and phone calls). A typical human financial advisor charges around 1% per year on assets under management (AUM), which can easily add up to tens of thousands of dollars over time. Robo advisors charge lower fees—typically between 0% to 0.25%. 

As per SoFi advisors, “Investing is for anyone that can afford to do it—which is why you can start with as little as $1.”

Robo advisors are a great way to access financial advice without having to pay for a traditional financial advisor. They can help you make better decisions about your investments, retirement planning, and other financial goals without having to worry about paying an advisor directly.