Robo-Advisor

Robo-Advisors invest based on certain set of mathematical rules and algorithm. You can start investing with Robo-Advisors in as little as 2 steps. Firstly, you would need cash and as for all investment, we suggest to only invest what you can afford to lose, or will not be needing in the near future. Secondly, choose any of the many robo-advisors out there and the portfolio you want to invest your cash in. Usually, a robo-advisor will first ask you to answer a list of questions before deciding the best portfolio for you. Most robo-advisors will also have consultants to help with questions that you might have. Once you have chosen the portfolio to invest in, congrats, you have officially started investing!

 

Pros of Robo-Advisors

Easy and fast to start

As we explained above, robo-advisors are one of the easiest and fastest way to start investing. In fact, it is so simple that it only requires 2 steps.

Removes emotion from investing

It helps to remove emotion during investing that caused many people in the past to buy high and sell low. Many have bought shares that are hyped at high prices due to the fear of missing out only to see the price drop after the hype. On the other hand, many have sold shares when there is a sell off, only to see the price recover the next few days. These share price fluctuation are healthy and normal occurrence in the stock market. Therefore, by trusting your cash with reputable robo-advisors, it can help to remove this emotion and scenario from happening to you.

Minimal effort to maintain

It removes the need for you to spend effort to learn and the time to review your portfolio. Investors investing on their own will review their portfolio every few months and make adjustment. Robo-advisors will usually have quarterly reviews and will do the re-balancing for you so you do not need to spend any effort or time.

 

Cons of Robo-Advisors

Management fees

All the benefits mentioned above mostly comes at a cost which is the management fee. You can expect to pay some management fee which might be 0% to even higher than 1% of your portfolio value. Even in bad years you might be paying management fees on top of incurring paper lost to your portfolio. In a way, its like paying money to lose money. Having to pay management fees also means that you will very likely have less than average stock market returns.

 

List of Robo-Advisors