Automated investing has been gaining traction in recent years, with more and more investors looking for ways to make their investment decisions simpler and more efficient. Two platforms that have become popular in the automated investing space are Wealthfront and Betterment. With robo-advisors providing digital-first, automated investment solutions to over 650,000 members, it’s no wonder that automated investing has become so popular. But before you jump into automated investing, it’s important to understand the pros, cons, and alternatives available.
The Pros of Automated investing
The first and most obvious benefit of automated investing is the convenience it provides. You don’t need to be a finance expert or spend hours researching stocks or other investment. All you need to do is set up your investment parameters and let the robo-advisor do the rest. Automated investing also eliminates the need to make decisions in the heat of the moment, which can result in costly mistakes.
Another benefit of automated investing is that it is typically less expensive than working with a traditional broker. This is because the costs associated with managing your investment are usually much lower when using a robo-advisor. Additionally, automated investing can help you diversify your portfolio, which can help you maximize your returns and reduce your overall risk.
The Cons of Automated investing
Although automated investing does have its benefits, there are also some potential drawbacks. The biggest downside is that you may not be able to make the same level of customization as with a traditional broker. As a result, you may not be able to achieve the same level of returns as you could with a more personalized approach.
Another potential downside to automated investing is that you may not be able to access certain investment or strategies. For example, some robo-advisors may not offer access to certain stocks or other investment. Additionally, you may not be able to access certain strategies such as tax-loss harvesting or other tax strategies.
Alternatives to Automated investing
If you’re looking for an alternative to automated investing, there are several options available. Schwab Intelligent Portfolios, Merrill Edge Guided investing, Ally Invest Managed Portfolios, and Invest for Amex by Vanguard are all good options. These platforms offer a more personalized approach to investing and can provide you with access to a wider range of investment and strategies.
Fidelity Go and SigFig are also popular alternatives to automated investing. Fidelity Go focuses on providing low-cost, automated investing solutions for everyday 401(k) retirement savers. SigFig is a robo-advisor that offers a seamless way to manage your investment.
Conclusion
Automated investing has become increasingly popular in recent years. With robo-advisors providing digital-first, automated investment solutions to over 650,000 members, it’s no wonder that automated investing has become so popular. But before you jump into automated investing, it’s important to understand the pros, cons, and alternatives available. Schwab Intelligent Portfolios, Merrill Edge Guided investing, Ally Invest Managed Portfolios, and Invest for Amex by Vanguard are all good alternatives to automated investing, offering a more personalized approach to investing.
