You probably never imagined taking financial advice from a computer program, but that’s exactly what a lot of people are doing these days. These programs are called robo advisors, and the best robo advisors have the potential to help you invest your money more effectively.
How to Robo Advisors Work?
These programs use computer applications to collect pertinent data like current financial information and ultimate financial goals from their clients. They then use algorithms to help them choose the best investments to meet those goals. Some robo advisors even automatically make investments based on the clients’ information.
Benefits of Using a Robo Advisor
The most common reason people opt to use a robo advisor instead of a human financial planner is cost. It’s generally less expensive to use an app than it is to hire a person to give financial advice.
These computer programs are also more accessible. Anyone with a reasonable amount of money to invest can use them at any time, day or night, every day of the year. Users can act quicker than they could with an in-person advisor.
What’s a Robo ETF?
An ETF, or exchange-traded fund, is a type of investment fund that owns the assets contained within it and splits that ownership between investors. A robo ETF is an ETF where the financial decisions are made by a computer algorithm. It’s another popular way people are investing based on computer software rather than the potentially biased views of an advisor.
Finding the Best Robo Advisor for You
There are several popular and successful programs out there that can help you invest your money to reach your financial goals. Some of the top robo advisor firms are Wealthfront and Betterment, which you can compare in our recent article. If you’d like to evaluate a comprehensive list of robo advisors, take a look at some of the best options, as put together by Nerdwallet below.