High-frequency trading bots account for around 80% of the daily volume on the stock market. As we’ve progressed with technologies like machine learning and artificial intelligence, we can expand our horizons for trading. Investing is a side of trading that bots are being introduced to through machine learning.
These robo-advisors can help make the same calls a financial advisor would at a fraction of the cost. Robo-advisors are making investment advice more accessible by investing on behavior it learned by being fed millions of pieces of data to analyze the validity of the investment. Robo-advisors often include human financial advisors, but only for services that require a human touch.
Robo-advisors can help make financial planning available to more than just those who have the assets to afford it.
Is Robo-investing right for you?
The answer to that question depends on your net worth, how you plan to invest, and whether or not you want to manage your portfolio yourself. Services like Wealthfront are designed to take the hassle out of investing for first-timers. People who want to invest, but who don’t want to learn the intricacies of the market.
Wealthfront charges 0.25% annual fee for managing any size account, which makes it more accessible than any human financial advisor. For an investor who doesn’t care about the specifics and just wants to see money invested in the market, robo-advisors can be a good start. However, if you want a tailored portfolio that is unique to your risk tolerance, a human financial advisor might still be your best bet for online investing and trading.
You should think of robo-investing as like those old Ron Popeil infomercials. These investments are a “set it and forget it” type of investment that is designed to adjust itself as the market changes without much input from you. Most robo-advisors do offer financial assistance from humans, but you should be prepared to pay more for this service than a meager annual fee.
Looking to get started with a robo advisor? These five are an excellent place to start.
- Acorns – Invests the change from your daily transactions to an investment account. The app costs $1 a month to maintain under $1 million and is entirely automated.
- Betterment – Betterment’s fees vary, but they are one of the few robo advisors that also offers human assisted investing. Their fees start at just 0.15% for non-managed plans or 0.30% for the premium plan.
- Clink – Clink is 100% free right now and completely automated. The service will likely start charging a fee in the future, but right now it is attempting to gain more users.
- M1 Finance – M is another completely automated platform that doesn’t charge a dime. This service lets people build a portfolio of stocks to own and then deposit money into the account. The stocks are automatically invested according to personal tastes.
- Fidelity Go – Even major financial institutions are getting behind robo advisors. Fidelity Go is a suggested investment strategy that invests according to your answers. You can schedule deposits, review account activity, and make adjustments to the strategy as needed.