Robo-Advisors are quickly becoming the new standard for people who want to invest without getting too involved. The first Robo-Advisors appeared around 2011, and they’re becoming more popular every day. Many financial experts predict that within 10 years or so, Robo-Advisors will probably manage almost all of the investments in the U.S. Let’s take a look at why you should buy a custom robo.
Reasons You Should Buy Custom Robo
Automation
One of the biggest reasons Robo-Advisors are so popular is because they automate most parts of your investment portfolio. Suppose someone doesn’t have time to keep up with their investments. In that case, there’s no need to worry because automated algorithms can do it for them, And even if an investor learns about the market, they can choose to invest their money in a portfolio already created by an expert.
Artificial Intelligence
The algorithms that are used to automate your investments are based on artificial intelligence or AI for short. Different types of AI have evolved over time, but most Robo-Advisors use something called “Supervised Machine Learning.” This type uses statistics and existing data sets to make predictions about other data points without being explicitly programmed to do so. As more data is collected, the algorithm will make better predictions about other data sets.
Low-Cost Portfolios
Because automated parts of investing are becoming more popular, many Robo-Advisors offer what’s known as a “low-cost index” portfolio. This means that instead of choosing investments manually, you simply choose a certain percentage to put into different types of low-cost index funds. The custom robo takes care of the rest and adjusts your portfolio as the market changes.
Investment Advice
Although Robo-Advisors can manage your investment portfolio, they also offer advice based on your risk profile. If you want to invest without having to learn about finance yourself, or if you don’t have time to keep up with the markets, then Robo-Advisors may be right for you because they can handle everything from A – Z.
Better Returns
Most experts agree that automated investing is probably better than trying to pick stocks yourself. Because most Robo-Advisor algorithms are based on complex AI and supervised machine learning, there’s a significantly lower risk of user error and better returns. Some Robo-Advisors even claim that over time, their portfolios will beat human or other non-automated ones.
Investments in the Future
Another common reason people use custom robo – advisors is that this type of automated investing allows them to invest in peer-to-peer lending and cryptocurrencies. This also means that if you’re someone who wants to invest your money for multiple years, then Robo – advisors may be the right choice for you since they can adjust as new technologies come out.
No Fees
Finally, another benefit of using a Robo-Advisor is that it doesn’t charge any trading fees. As long as you’re using your robo – advisor for automated investing, then you won’t have to worry about paying high fees when it comes time to sell or trade certain assets. In most cases, investors pay between 0 and .25% of the total value of their portfolio each year, which is a lot less than what traditional financial advisors would charge.
Good for Diversification
If someone is new to investing and they want to make sure their money isn’t in just one type of investment (like only stocks), then robo-advisors are good for diversification. These programs can invest your money into multiple types of investments that may not all move together at the same speeds but usually balance each other out. The reason for this is because most robo-advisors typically set up what’s known as a “balanced portfolio,” which invests your money in different assets depending on whether or not they’re performing well.
