Have you ever wished there was a robot to do your dishes or help with your homework? With the increase of technology, robots and computers are being used more in everyday life. Are you comfortable with a robot or computer doing some things for you? Would you be comfortable with a computer managing your investment portfolio?
You learned that there have been many technological innovations in investing. One area of innovation is the use of robo-advisors for investments. Robo-advisors are automated investing services that use computer software to build and manage your investment portfolio. There is little to no human supervision. Before robo-advisors, you had two options for investing: do it yourself or hire a financial advisor. Now you also have the option of a robo-advisor. Click the questions below to learn more about robo-advisors.
Robo-advisors seem to serve younger investors because they appeal to those who welcome technology and can't afford a financial advisor. They also work well for those who need some help with investing. |
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A robo-advisor is much cheaper than a financial advisor. You will be charged a small management fee, but you don't pay transaction fees like you do with a brokerage account. |
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The advantages of using a robo-advisor include:
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The disadvantages of using a robo-advisor include:
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Sophie is a first-time investor and uses a robo-advisor. She loves the convenience and ease of use. She has tried convincing her parents to do the same with their investments, but they are hesitant. Why is the younger generation more likely to use robo-advisors than older generations?
Younger people are more familiar with technology and trust that robot-advisors can make better investment choices than they can make for themselves, while also saving time. In addition, there are lower minimums required, which helps younger people who may not have much money saved.
