Roboadvisors are undoubtedly a welcome name in the contemporary investment world. A lot cheaper than traditional portfolio managers, these online tools assure extremely professional and convenient portfolio management. The best part is that roboadvisors dish out a dynamic investing scenario where you can enjoy up till 7 percent average returns- way higher compared to what you get with plain savings account. If you are aspiring to render a new edge to your investment portfolio, it’s better you bank on modern roboadvisors now.
The post below offers insights on the crucial things to keep in mind while choosing a roboadvisor.
Get a comparative study
Roboadvisors have been in the market for nearly a decade now. Scores and scores of roboadvisors have already surfaced up but then not all would be compatible for you. Experts suggest getting a comparative survey on different roboadvisor companies online before the final sign-up. If you find checking out each website too tedious, take to the roboadvisor guides or directories over the web. These websites host information on multiple roboadvisor firms in one platform to save your time. You will get reviews, ratings and a glimpse of main features of the roboadvisors at a glance.
The one you choose should be a highly reputed name in the market, backed by great ratings and happy investor-users.
Affordable or no management fee
Most of the roboadvisors charge management fees from the users. It’s good if your chosen one is flexible for free management. Some leading roboadvisors do not charge management fees for first $10,000 assets. It’s a great option to try & test the roboadvisor if you want to start with small amount.
Even if your chosen roboadvisor is charging management fee, make sure it’s a reasonable amount. Settle with something between 0.25% a year to 0.30% a year or maximum 0.50%.
Minimum account size
Don’t forget to check the minimum account size asked by your chosen roboadvisor. Different firms ask for different account-minimums. While some demand a minimum balance of $5,000- a handful of others will allow you to invest with as little as $1. Check how much you can afford to save as your account minimum.
However, roboadvisors that demand high account minimums generally assure many additional services which is not always viable with those that are flexible with rock-bottom account minimums.
Remember your investment portfolio must be rebalanced at regular intervals. This helps to ensure the asset allocation is in terms with your specific investment goals & risk tolerance capacity. Now, not all roboadvisors around will extend automatic rebalancing. This is an extremely important feature and you must make sure your chosen one is flexible for this facility.
Free tax-loss harvesting
Tax-loss harvesting implies offset of taxable gains through sale of securities running on loss. Some leading roboadvisors extend free tax-loss harvesting daily. Check out beforehand whether your chosen one supports such services.
Finally, it’s great if the roboadvisor promises some degree of human advisory. Robotic tools are no doubt great for smart investment management but complex issues do call for human intervention.