make investing easy, even automatic. If you’re a set-it-and-forget-it type person, you’ll love how robo-advisors make investing simplified. You don’t need to understand the market or even choose your investments. Robo-advisors The platform does everything for you. After you answer questions about your goals and time and link your bank account, the platform handles the rest. But you have many options, hundreds of robo-advisors to choose from. Which platform is best for you? We’ve provided our top picks for the best robo-advisors of 2021 below. Why Should You Use a Robo-Advisor? The great thing about robo-advisors is that practically anyone can use them. You can have a quality investment portfolio created for you based on your goals and timeline for a relatively small cost. In the past, most people used to have to be either rich or knowledgable to gain access to the top investments, thankfully today, that is no longer the case. Robo-advisors have so many great benefits compared to , with the most notable one being that your emotions are left out of decisions. When you invest yourself, it can be hard to avoid emotional decision making. If the market crashes, it can cause sheer panic among most investors, leading to irrational decisions. DIY investing Robo-advisors can help avoid those irrational decisions through automatically reallocating your portfolio. Although a crash may feel daunting at first, you should feel safe knowing that the algorithms and computer programmes know the best course of action. If you're new to investing, then a robo-advisor is an excellent way to dip your toes in the stock market. They're low-cost, automated and don't require in-depth knowledge of the markets. Many great robo advisors are out there so don't get too caught up on which one is the best. If you don't like how your account performs or how the platform allocated your funds, then it's very straightforward to change advisors. How to Choose the Right Robo Advisor Before you look at your options, knowing how to pick the right robo advisor is still an important task. Ask yourself: How much do I have to invest? Each platform has a minimum investment requirement. Some are $0, which is great for beginners, but others are as high as $50,000. What is my risk tolerance? Ask yourself what would happen if you lost 10 per cent or more of your portfolio? Could you stomach it? What are your goals? Your timeline plays an important role in what you invest in. The longer your timeline, the more risk you can take and vice versa. Betterment Pricing: 0.25 percent of assets under management annually This is one of the original robo-advisors. Betterment lead the pack with its robo advisor platform and it’s still popular today. We love its options – taxable and retirement accounts, not all platforms offer both. Betterment invests in ETFs after you answer the basic questions about your risk tolerance and goal timeline. You can even open ‘sub-accounts’ if you have multiple goals which makes goal tracking simple. Pros Access to advisors via mobile message even with its ‘basic plan’ You can open a free checking and savings account with your brokerage account (includes a debit card) Automatically rebalances your portfolio Uses tax loss harvesting to minimise tax liabilities SIPC insured 5 portfolio options (including a ‘flexible portfolio’ that allows you to choose your investments Cons Limited investment options You must sign up for the premium account if you want full-service advisor support (0.4 per cent annual fee versus 0.25 per cent for the digital plan) 8topuz Wealth Fintech Pricing: (free) Perfomance Based 8topuz offer are a leading , robo-advisor style software, for trading the FX market. AI-Based trading The 8topuz software is delivering an average yearly ROI of 21% over the last 3 years. They have a range of products to suit retail investors, institutions and traders who wish to diversify risk. Pros Solid Audited ROI of 21% per year for the last 3 years (up to 2021). Easily apply the software to any MT4 platform (MT5 coming) with guidance for those new to trading on how to do this. Trade the FX market using AI-Software. Totally hands-off and where needed, risk-managed (by humans, not Octopuses). Start with as little as $500. Cons You need an existing or new FX trading account with MT4 (MT5 coming) access to benefit from the system. Medium-long term investment outlook. Highest performing product (Dynamic) starts at $10,000. Wealthfront Pricing: 0.25 per cent of assets under management annually Wealthfront is another leader of the pack and was one of Betterment’s toughest competitors when robo advisors first came around. Wealthfront offers a feature Betterment doesn’t – financial planning. Wealthfront’s ‘Path’ programme is free. It helps you get control of your personal finances and carve a ‘path’ to retirement. Anyone can use Path but you’ll get better results if you also use Wealthfront for investing to reach your goals. Wealthfront automatically creates and maintains your portfolio, and provides plenty of advice to help you along the way. Pros Only a $500 minimum opening balance requirement Wealthfront diversifies across eight asset classes Automatically rebalances portfolios according to your goals and timeline Uses daily tax-loss harvesting Taxable and retirement accounts available Cons You can’t pick your own investments No access to human advisors Wealthsimple Pricing: 0.5 per cent of assets under management annually Wealthsimple started in Canada but is now available in multiple countries including the US. Like other robo-advisors, Wealthsimple invests your funds in low-cost ETFs to diversify your risk and meet your financial goals. They offer 3 portfolio types, which is somewhat limited compared to other options but they’re straightforward – Conservative, Balance, and Growth. It’s easy to see where you’d fit in the portfolios, but Wealthsimple still walks you through the process to make sure. Like most robo advisors, they use the to minimise risk and maximise reward. Modern Portfolio Theory Pros No minimum balance requirement Offers social responsibility investment options Automatically rebalances your portfolio if/when needed Automatically reinvests dividends to compound your earnings faster Access to human advisors when you need it Cons Higher pricing structure than most robo advisors No clear goal setting feature to help you stay on track to meet your goals Vanguard Personal Advisor Services Pricing: 0.3 per cent of assets under management annually You probably know Vanguard for its low-cost mutual funds, but today they are so much more. Vanguard has a great robo advisor, which is a cross between a traditional robo advisor and human financial services. If you’re a somewhat passive investor who wants more involvement in your portfolio, Vanguard Personal Advisor Services may provide it. Unlike a traditional robo advisor, the sign up process with Vanguard starts with an interview with a human advisor. They work as fiduciaries (in your best interest) and help set up a portfolio that meets your risk tolerance and goal timeline. Pros 24/7 access to your account and an advisor is just a phone call or email away Customised portfolio based on your individual needs/wants, rather than fitting you into one of a few pre-made portfolios Invests in both stocks and bonds Have multiple accounts for different goals Cons You need at least $50,000 to use Vanguard Personal Services Commission fees are often higher since they invest in more than ETFs What Is the Right Robo Advisor for You? Think about the big picture. How much involvement do you want? Are you comfortable with a robo-advisor picking everything for you or do you want some say? Watch the fees closely and see how they’d affect your bottom line. Fees are inevitable on any platform, it’s how they stay in business, but the complexity of the platform and their investment options determine how much you pay. Determine your in making decisions and/or letting a platform do everything for you and choose with these situations in mind. If tax loss harvesting is a key factor for you, inquire about it before signing up with a robo-advisor as not all platforms offer it. investment risk level There aren’t any set contracts for any of the above robo-advisors so you could try a few, but it’s nice when you find one you’re comfortable with and can use for the foreseeable future.
