You don’t have to be a rocket scientist nor have a Ph.D. in economics to invest in stocks. You can get good information about investments through stock market news and research tools. If you want to know more about airline stocks or Warren Buffett stocks, you can find out what you need easily at marketbeat.com. You can also get real-time analyst ratings, dividend information, earnings results, financials, headlines and insider trades information.
You do not have to spend thousands of dollars on stock picking seminars or be continually watching the stock market ticker tapes. Who has time to be doing all of this? You might want to consider a robo-advisor.
What’s a robo-advisor?
According to thecinnamonhollow.com, a robo-advisor is an offsite technology that helps select stocks for you based on your level of risk, how soon you need the money, and what level of returns you desire. With a robo-advisor, chances are you will pick the same stocks that you would have bought after all of your analysis.
How much do robo-advisors cost?
Naturally, the price will vary, but typically, a good robo-advisor will have management fees of 0.25 percent to 0.5 percent of your assets on an annual basis, and funds expense ratios from 0.05 percent to 0.65 percent, costing $5 to $65 annually for every $10,000 invested. This information is according to Bankrate.com, Best Robo Advisors in December 2019.
That means on a $10,000 portfolio, you’ll pay between $25 and $50 per year on a service that costs less than a dinner for two at a decent restaurant. Heck, a subscription to the Wall Street Journal will cost you $20 a month for the first year and close to double that for the following year.
Some benefits of using a Robo-advisor
- Excellent quality portfolios at a low cost
Robo-advisors tend to go for low-cost index funds. While there is no guarantee that you will make a ton of money with this type of portfolio, you get invested in low-cost index funds, and then you stay with them. With this type of strategy, you will outperform 80 to 90 percent of the market.
- Ease of use
The fantastic thing about robo-advisors is that the companies that supply them make them super easy to use. There are no complicated investment charts to go through, no historical average rate of return articles to read. Nothing like that.
You open your account, answer a few basic questions, invest your money and get on with the business of enjoying your life
- Tax efficiency
Most robo-advisors provide ways to reduce your tax burden that your CPA will applaud. Without a robo-advisor, you often feel like you need an accounting degree yourself to understand what your year-end tax bill will be.
- Low minimum balances
Some robo-advisors have no minimum balance at all, while others have a low minimum such as $500. This means you get good, solid, investment advice even if you are investing only $25 per week.
And this is precisely what investment experts advise. Don’t put off investing under the mistaken notion that “it’s only $1,000 per year.” Getting into the game as quickly as possible, even if it’s only $1,000. It makes much more sense than just keeping the money, which for most people gives them an excuse to blow it on an expensive vacation.
- Access to financial planning
Here there may be a substantially higher minimum balance, but if you have, say, $25,000 invested, robo-advisor companies will not only continue to help you pick investments but for a minimal fee, they will offer you detailed financial planning management and advice.
These financial planning services go far beyond what you can expect to reap from merely letting the firm select investments for you. For many people, this is their first real look at what financial planners can really do.
After getting a detailed look at how your finances could look like in 10, 20, even 30 years from now, you’ll have a better understanding of whether you are on track or not.
Of course, you’ll want to take a good look at the returns your robo-advisor provides you after one or two years. It may be time to switch to another firm or to change tactics altogether. But at the least, robo-advisors will get you on solid footing.