Investing money is an excellent way to generate more wealth. However, there is a vast choice of investment options available. As a result, it can be challenging when it comes to making the right decision.
Automated investing service providers, also known as robo advisors, help simplify your decision. These automated advisors help build, monitor, and manage your portfolio based on your investment objectives, age, and risk profile. You need to open an account, complete a short survey, and the robot advisor will then invest your funds, and build your portfolio.
Choosing the best automated investing service provider is a difficult choice as there are many companies with such services. Some of the best service providers are:
It is the oldest automated service provider and currently has about $13.5 billion in assets under management (AUM). Betterment is the largest independent robo-advisor company and offers accounts with annual charges ranging between 0.25% and 0.4%. Additionally, based on your initial opening deposit amount, the service provider may offer one year of free management. Some premium account holders, investing more than $100,000, receive additional features for a 0.4% management fee.
There is no minimum initial deposit amount mandated, which is ideal if you are a first-time investor with limited funds. Once you sign up for a new account and complete the survey, the robo advisor provides an automated investment plan.
Wealthfront currently has more than $10 billion in AUM. The advisor levies 0.25% management fee and weighted 0.08% APR as ETF fees, which is the lowest in the industry.
Wealthfront is an excellent option if you want to try robo advisory as the service provider offers free management of the first $5,000. The company is ranked as one of the best automated investing service providers as it relies on Modern Portfolio Theory to develop a low-cost ETF portfolio. Additionally, it offers direct indexing if you invest $100,000 or higher and is excellent for tax-loss harvesting.
Schwab Intelligent Portfolios
This agency is the robo advisory arm of one of the largest investment companies in the country, Charles Schwab. The company has more than $3.6 trillion in AUM with the robo advisory arm managing about $23 billion.
The most attractive feature of Schwab Intelligent Portfolios is that there is no management or advisory fee and you may open an account for as little as $5,000. Once you open an account and complete the survey, the robo advisor creates a diversified portfolio of ETFs. For additional benefits, Schwab Intelligent Portfolios offers tools like automatic rebalancing and tax-loss harvesting.
With Personal Capital, you receive free access to an excellent personal finance management platform. The company offers a combination of robo-human advisory, which may be a little more comfortable than handing over all your finances to a computer.
Personal Capital currently has more than $7.5 billion in AUM with pricing slightly higher than other robo advisors, as the company includes a human touch, too. If your portfolio is up to $1 million, the fees are 0.89%. This rate reduces if your investment exceeds a million.
Robo advisors use technology for the regular maintenance of your portfolio. However, choosing the funds, developing the portfolio, and programming the variables are still done by people.