5 Benefits of Automated Investing and Who Should Use It

5 Benefits of Automated Investing and Who Should Use It

An increasing number of investors are opting for automated investing tools, commonly known as robo-advisors. These automated tools put the management of your portfolio in an autopilot mode.

Here are five benefits of such automated investing platforms:

Affordable

Before robo-advisors, you needed to pay hefty fees to an investment advisor to assist and manage your portfolio. Several of the best automated investing platforms, such as Betterment, Wealthfront, and Charles Schwab Corp’s Intelligent Portfolios offer zero to 0.25% management fees, making it an affordable option.

Profitable Investment Models

Most of these automated investing advisors use the best practices of investment theories, which strive to deliver the highest returns at the lowest risks. Moreover, it eliminates human intervention that may result in biases leading to errors.

Meeting Various Investment Goals

Different kinds of robo-advisors cater to the varied needs of investors. You may choose from advisors that are sector- or industry-focused to robo-advisors that offer an affordable and diversified portfolio of exchange-traded funds (ETFs). Several automated investing platforms may offer tax-loss harvesting and claim rebalancing.

Low Minimum Balances

You may not have a large amount of investible surplus. Some of the best automated investing platforms offer services, even when you maintain a low minimum balance. Advisors such as Betterment, Wise Banyan, and Folio Investing have no limitations on minimum balance.

Simple and Convenient

Most of the robo-advisors are very simple with easy user-interface and straightforward processes. Additionally, these platforms provide you with the convenience of investing from any time from any location as these are web-based. Moreover, you do not have to spend hours researching different investment options, which makes investing less cumbersome.

Having understood the advantages of robo-advisors, let us now examine who will benefit from using such platforms.

Young Investors or Beginners

Making accurate investment decisions is a tough job and requires detailed analysis and research. As a beginner, you may not have the understanding and the technical expertise necessary to do your research. An automated investing platform is the right choice as it manages your portfolio to suit your investment goals and risk profile.

Busy Professionals

Regular monitoring and periodic review of your portfolio are crucial to make profitable decisions. However, your job may be very time-consuming, leaving you with limited or no time to periodically monitor your investments and make modifications as necessary. A robo-advisor platform allows you to put your portfolio in an automated mode.

Simple Strategy Investors

You may not need the services of an expensive financial advisor if you follow an uncomplicated and straightforward investment strategy. An automated investing platform will do the rebalancing as and when required to suit your goals.

You Do Not Want to Hire an Advisor

You may not have a large amount to invest or the assets that require the services of an experienced financial advisor. However, you may still not want to make your own investment decisions. In such an instance, an automated investing platform makes a good choice as it will select the right investment products, execute trades, and rebalance your portfolio as needed.

If you are fine with no human interaction or need high customization, an automated investing platform may not be ideal for you.

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