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Stock Investing 101: What Are Robo-Advisers?

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Robo-Advisers have become increasingly popular and many investors enjoy the features that come along with the investing program. Let’s get a quick view of what they are, how they work, and how they may work for you.

According to Investopedia, robo-advisers are “digital platforms that provide automated algorithm-driven financial planning services with little to no human supervision“. Simply put, it’s a digital financial planning service that manages your account for you- who needs people anyway? Read one of my most recent posts about tech stocks here.

Pros of Robo-Advisers

Robo-Advisers are known for their award-winning software for their algorithm techniques, simplicity, low costs and fees. They offer more affordable fees than human financial advisors and most companies provide 24/7 customer service hours. Annual fees may be as low as 0.2%, whereas fees for “human” managed portfolios have a flat annual fee for 2%. That may not sound like a lot, but a little goes a long way over a period of time.

Cons of Robo-Advisers

There are many advantages advertised for robo-advisors, however, they require online access to operate. If you enjoy day trading, swing trading or options, you more than likely won’t get all of the technical features that come with active trading. Robo-Adviser programs are aimed towards buy-and-hold investors and have their own set of hourly rates/fees involved with the program.

There are many robo-adviser programs that leave investors very satisfied. Two of the most popular companies you may be familiar with are Betterment and Acorns. Robo-Advisers are great and if your interested in opening an account, contrast and compare from other companies and do your own research on what you’re looking for in your investment portfolio.

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