Power Moves: The 411 on Robo-Investing

I had an awesome, pretty well-rounded childhood. However, I did not grow up learning about money. No one taught me how to spend it wisely, about saving it, and I definitely didn’t learn anything about investing it. It is just in recent years that I am educating myself more about financial growth. One of the most important things I am learning is the importance of knowing where you stand financially, what your goals are, and developing a plan to get there. You do not need thousands of dollars in your bank account to start investing. If you are just getting started, an online financial advisor may be for you. Robo-advising is investment management done online with minimal human interaction. The robo-advisors use advanced software to manage your investment portfolio. Plus, they are much cheaper than having a real person do it. The cost to use one usually costs between 0.25% and 0.90% a year which would be around $25.00 for an account balance with $10,000. But, if you hired an actual person fees could start at a few hundred dollars a month and up for a reliable firm. 

According to Investopedia.com, investing is the act of allocating funds to an asset or committing capital to an endeavor (a business, project, real estate, etc.), with the expectation of generating an income or profit. In colloquial terms, investing can also mean putting in time or effort – not just money – into something with a long-term benefit, such as an education.

There are many different types of products to invest in…

TERMS TO KNOW: 

-Stock – a piece of ownership(shares/equity) in a company 

-Bond –  represents a loan made by an investor to a borrower and are used by companies, municipalities, states, and governments to finance projects 

-ETF (Exchange-Traded Fund) is a collection of securities that can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types and the price.

Companies like Betterment, one of the more “popular” robo-advising companies, takes sophisticated investing strategies and simplifies them through personalized guidance and smart technology.

Their process…

·      They Get to Know You-What are you saving for? Maybe you’re buying a home, paying for college or saving for retirements.

·      They Build A Portfolio for You-They build a personalized portfolio with a risk level and investment mix that suits your goals

·      They Help You Decide How Much To Invest

·      They recommend how much you should deposit initially and on an ongoing basis. Your payments can be automated and they keep you up to date on how you’re tracking to help you reach your goal

·      Their Tech Features Keep Your Money Balanced-They will rebalance your portfolio to maintain your preferred risk level. As your investments produce dividends, they reinvest them for you to avoid cash drag. They will also put the right investments in the right types of account.

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