Robo-advisors are automated financial services that use advanced programs and computer algorithms to control your investment portfolio. Some sites also offer re-balancing and tax optimization. Though the programs require minimal human interaction, some have individual advisors to handle your queries. Robo-advisors cost less than financial consultants with most companies imposing fixed monthly charges or taking a 0.25-0.50% cut from your assets. You can even enjoy platforms like SoFi for free. Unlike traditional portfolio managers, robo-advisors don’t demand hefty starting balances. You can open a Betterment, Fidelity Go, and Wealthsimple account without a cash balance. The low costs also extend to cheap deposits and withdrawals. However, you’re supposed to meet the underlying investment fees, for instance, ETF and mutual fund expense ratios. Such charges are subtracted from the asset funds before the investor gets the returns. Don’t mistake robo-advisors with financial planners. As such, you need personal approaches to unique investment strategies. What’s more, they’re not effective in managing multiple accounts.
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