A robo-advisor is an online investment platform that uses algorithms to manage your portfolio automatically. It provides financial planning and investment management with little to no human intervention, usually at a lower cost than traditional advisors.
How It Works
When you sign up, you answer questions about your goals, time horizon, and risk tolerance. The robo-advisor then builds and manages a diversified portfolio, typically using ETFs. It automatically rebalances your portfolio and may include features like tax-loss harvesting.
Benefits
- Low cost: Fees are usually much lower than traditional financial advisors.
- Accessibility: Easy to use for beginners and requires little investing knowledge.
- Automation: Handles portfolio management tasks automatically.
Final Thoughts
Robo-advisors make investing simple and affordable. They are best suited for people who want hands-off investing at low cost, though they may lack the personalized guidance of human advisors.