Tag: robo advisor

  • Robo advisor Portfolio – Start Investing Without Fears

    Robo advisor Portfolio – Start Investing Without Fears

    Robo-advisor Portfolio - Start Investing Without Fears
    Robo-advisors are becoming mainstream, which is good news for investors who are looking for low-cost advice. Investors may find offers for socially responsible investment portfolios, fully digital financial planning tools.

    Basically, the robo advisor portfolio is created by professionals using advanced investment algorithms. These programs enable them to pick investments’ selection that will meet your goals, level of returns you want, risk you are willing to take, etc.

    In other words, robo-advisor is an algorithm that manages your portfolio. The benefit is that your money is invested efficiently. That means you have help to minimize your risk and taxes, hence, your rewards will be maximizing. 

    Robo-advisor can be a great alternative for all of you aren’t DIY types and prefer to rely on an experienced professional. The process is quite simple, all you have to do is to deposit your money into the robo-account. Some will allow you to start at just $500 or less. Based on your answers in questionnaires, for example, investing goals, risk tolerance, when will you need the money, your robo-advisor portfolio will be built. It will pick the assets, usually some low-cost ETFs, and create a suitable portfolio for you.

    The robo-advisor portfolio is very popular these days, and it will be even more in the next few years. 

    Who makes the investment decisions for the robo-advisor portfolio?

    Honestly, it is maybe the best way for Millennials that are terrified of the stock market, to start investing. With the robo-advisor portfolio, technology gave the opportunity. By using some robo-advisors you’ll be able to pick your stocks or funds on your own, that is one solution. The other is to allow professionals to build your investment portfolio.

    The robo-advisor portfolio is handled by investment experts.

    They make investment decisions for you. They can add or remove investment from your portfolio, or adjust exposure to a special asset class. Besides, you will have an automatic rebalancing to keep your portfolio from straying too far away from the allocation targets that are established. Your robo-advisor portfolio will be built to invest in the markets that give the greatest value. 

    How does a robo-advisor work? 

    Let’s say it is a service that uses algorithms, invest your money into suitable investments, make adjustments as your circumstances and the market development. And it will be done cheaper than any human professional investment advisor. The truth is that you may choose any asset class to invest in, but the majority of robo-advisors primarily invest in ETFs. Nevermind, it is easy to find one that is good for you in case you would like to invest in something different. Investing through robo-advisors provides you to take hold of your finances without learning about all outs or ins of bonds, stocks, ETFs. 

    Moreover, your robo-advisor portfolio is built for your personal goals, based on your personal expectations, so suitable only for you.

    Robo-advisor helps you handle your investment without the need to ask a financial advisor or self-manage your portfolio. Everything needed is to open a robo-managed account and then add essential information about your investment goals. Robo advisors then use the data to provide asset allocation and build a diversified portfolio.

    After that, it makes the changes to the investments required to adjust your portfolio to a target allocation. Some robo advisors are able to sell some assets at a loss to balance gains in other assets.

    It is a low-cost software product that provides you to put your portfolio control on autopilot. But you must be well informed to decide whether it is best for your investing strategy.

    Advantages of robo-advisors

    Making a robo-advisor portfolio can be a great answer for beginners or young investors. Since they lack the financial knowledge it could be easy handling their portfolio online with limited or no human assistance. But it is also suitable for professionals who don’t have sufficient time to manage their investment and rather put their portfolio on “autopilot.”

    Robo-advisors are helpful for investors who have a traditional asset allocation with 60% stock and 40% bonds, for example, to rebalance their accounts.

    We would like to highlight the main advantages. The lower fees is one of them. For example, you want to invest $10.000. A professional advisor will charge you 1% or $100 every year no matter if your portfolio is going up or down. Moreover, if such recommends you mutual funds, which are costly,  and stock trading, well it’s more likely you’ll end up in losses. By having a robo-advisor portfolio you will pay (with the same investment of $10.000) less than 0.50% or a lot below $50 which is a fee for ETFs, for example. 

    Maybe the main advantage of having a robo-advisor portfolio is that robo-advisors almost never demand a minimum balance. That gives anyone over the age of 18 possibilities to invest. Also, you will get a free automatic portfolio rebalancing. Just count how much you have to pay to some professional investment advisors. 

    Robo-advisors are accessible 24/7.

    Disadvantages

    A robo-advisor portfolio isn’t suitable for every investor. For example, some prefer humans. But some robo advisors will offer you live assistance at a higher cost, of course. But that kind of support is completely online, through the web. There is no live person to chat with you. So, if that is what you want, the robo-advisor isn’t for you. Also, investors who need advice on how much to save or how to allocate investments in other accounts would never use robo advisors.

    Benefits of robo-advisor portfolio

    It provides you to avoid investing errors, for example, emotional trading. That is one of the biggest causes of investors to get poor outcomes. Investors are trading led by emotions. The software will never do such a stupid mistake. The other benefit is that you can automate the whole investment process. Do you have to make changes to your portfolio? Is it time to invest less or more in some sectors? Is the right time to set trades? There is no need to worry about that. The robo-advisor will do all of these for you. 

    In fact, advisory companies require a tremendous amount to initially invest and you can be faced with a recommendation that isn’t in your best interest. Robo advisors will never do such a thing.

    Bottom line

    It is more likely that your robo-advisor portfolio will consist of mutual funds rather than stocks since it follows a passive investment strategy based on modern portfolio theory. You know that theory, we wrote about it already, it is about the importance of asset allocation to stocks or bonds.

    Robo-advisors will rebalance your investments automatically. That is a nice feature if the balances of your investment change from your initial pick. The software will buy and sell shares to rebalance the robo-advisor portfolio to your favored allocation. For example, you started with a 60% stock and 40% bond asset allocation.

    But stocks increased the value and your portfolio percentages grow to 80% stocks and 20% bonds. The software will sell some stocks and buy more bond funds to rebalance your portfolio. You will have your portfolio with a 60% stock and 40% bonds.

    Moreover, robo-advisors will sell losing investments and replace them with some others, to offset gains and lessen your tax bill. This strategy for taxable investment accounts is known as tax-loss harvesting. If you are seeking low-cost managing for your investments and alternative to a traditional high fee financial advisor, a robo-advisor can be the right choice for you. Even if you’re a DIY type of investor.

  • Invest in Stocks with Little Money

    Invest in Stocks with Little Money

    Invest in Stocks with Little Money
    Why do you think you must have a lot of money to start investing in stocks? It is completely opposite.

    By Guy Avtalyon

    Many think that can’t invest in the stock market with little money. Honestly, you don’t need thousands of dollars to start investing. Yes, we know a lot of people who believed it’s impossible to invest in stocks with little money.

    Think you don’t have enough money to invest?

    Frankly, you can start with as little as $4. So, the money isn’t the reason why shouldn’t you start earning now. Truth is the opposite, not investing in stocks may be risky. Even a few dollars can go far. It’s understandable why many think that can’t invest in the stock market with little money. That’s because investing can be confusing. Also, there is a belief that only wealthy people can make money in the stock market.

    You don’t have to be a master to invest in the stock market. Also, you don’t need to have thousands of dollars to start.
    There are many tools that can help the new investors do pretty well, especially with limited resources.

    There are a lot of schemes to invest in stocks with little money.

    Many online and app-based platforms making it easier than ever. All you have to do is start somewhere.
    Once you do, it will get easier as time goes on. In the future, you will love what you did in the past.

    Here are some ways to start:

    • Use a robo advisor to automatically invest.
    • Buy individual stocks through a discount brokerage firm.
    • Purchase securities.
    • Find low minimum mutual funds.

    Use robo advisor to invest in stocks with little money

    Thanks to the rise in the popularity of robo advisors, investing is now more available than ever. You don’t have to go it individual, be rich, have a lot of investment experience. You don’t need to hire an expensive financial advisor.

    Why?

    Because robo advisors can do all of this for you and at a low annual fee. Robo advisors, also known as automated online advisors, are technology-based investment platforms that offer fully automated online investing. These fintech firms are developing fast and mostly target new and younger investors, such as Millennials, for example.

    But which ones are the best choice for your investment?

    Robo advisors have a big advantage. They have lower minimums than financial advisors have. By having minimums as low as $0, robo advisors dispense previously unaffordable retirement planning and portfolio balancing advice to a broader selection of people. Robo advisors generally cost 0.25%-0.5% of the portfolio. They are algorithms that ordinarily look for the lowest cost solution to fit a client’s needs.

    It will always be available as long as you have access to the internet.

    Robo advisors also will offer you an advanced feature, tax-loss harvesting, to balance gains in a portfolio. The divested security is then replaced by similar security, helping you to maintain the optimal asset allocation by keeping a portfolio’s diversification. Due to their value proposition, robo advisors are growing very fast.

    Trading apps allow investments as low as $5 for a list of funds.

    Buy individual stocks through a discount brokerage firm

    Opening a brokerage account is so easy. Just fill the account application, present proof of identification, and decide how you want to fund the account. You may fund your account by mailing a check or transferring funds electronically.

    At most brokers suitable for new investors, stock trading commissions run between $5 and $10. Low commission costs are important to active traders, those who place 10 or more trades per month.

    Having a lot of individual stocks inside a single investment gives you prompt diversification. Also, it minimizes risk over time. The stocks owned within a fund may go down, that’s the truth. But they can be compensated by others that rise. You should look for terms like large-cap, mid-cap, and small-cap in the names of stock funds.

    What is the cap?

    Cap is short for market capitalization. That is the value of a company’s stock shares. Hence, a large-cap mutual fund means that it only owns shares of big companies.

    Low minimum mutual funds

    Mutual funds are investment securities that allow you to invest in a portfolio of stocks with a single transaction. That is excellent for new investors.

    The problem is many mutual fund companies require initial minimum investments of between $500 and $5,000. If you’re a new investor with little money to invest, those minimums can be a problem. But some mutual fund companies will ignore the account minimums if you agree to automatic monthly investments of between $50 and $100.

    Purchase securities

    Assume you want to invest with the lowest imaginable risk. Well, treasury securities are good for you.  They have a fantastic advantage. The securities do not change as the market does. Treasury securities are predictable.

     

    Each security has its own maturity date. They vary from 30 days to 30 years.

    Make sure to only invest money you can divide with until the maturity date. If you cash the bill in earlier, you risk losing a portion of the principal.

    Start to invest in stocks with little money

    If you don’t have a lot of extra money at the end of the month, it’s easy to put off long-term needs like investing.

    Your delusions about investing may be holding you far away from saving for your future.  The myth is that you must have a fat wallet to use a brokerage account.

    Contrary, there are so many online brokerage firms allowing investments lower than $1,000.

    Some brokerages ignore their minimum investment demand in exchange for regular monthly deposits, as we said. All you have to do is to sign a contract to agree to a specific monthly deposit. You can easily find firms that offer minimum deposit requirements of $100 per month. And with really low initial investments.

    You could invest $100 in a diversified fund. Why wouldn’t you take that chance? Diversification in your portfolio is the best way to reduce your risk. Moreover, it’s not for rich investors only. Many companies offer ETFs. So, it is possible to invest in a mixture of investments with little money. Think about the S&P 500 index.

    Buying ETF shares gives you a piece of the portfolio of the complete index. Some stocks in the index may play well, but others may do unsuccessfully. They balance each other out. That lowers your risk.

    You are not limited to penny stocks until you earn big money.

    Of course, being a new investor, you don’t want to invest in extremely volatile penny stocks.

    Yes, penny stocks are stocks trading for less than $5. But they’re priced low for a reason. The companies behind them are just starting out. Investing with little money is better with blue-chip companies. The highs and lows are normally less volatile than penny stocks. Our opinion, here in Traders Paradise, is that everyone should invest. But we will never tell when the right time is for you. Only you know when the time is right.

    Don’t invest if you have a card debt. Never start without an emergency fund.

    But the earlier you begin the faster you can grow your capital.