We’re living in exciting times where you can become an investor with just a few taps on your phone – that’s robo-investing for you! Also known as robo-advisors, robo-investing services are automated investment platforms that invest on your behalf. If you’re looking to take the plunge into investing using an online investment service, make sure it’s the right choice for you by comparing the pros and cons of such platforms.
Pros
They’re for everybody
With online investment platforms, investing is becoming accessible to everybody. Unlike traditional investment management services that target wealthy people who can invest a sizeable amount of money, robo-investing platforms, like Wealthify, let you start with as little or as much as you like, whether it’s £1 or £100,000+.
They’re easy to use
It’s often assumed that you need to be a financial wizard to start investing. If you’re picking your own investments, it might be a good idea to spend some time reading financial news, scrutinising how markets are behaving, and analysing companies’ annual reports to make informed investment decisions. With robo-investing, there’s no need for financial knowledge since investment experts will be doing the hard work for you, from building your Plan to making adjustments if needed.
They make investing affordable
Regardless of the investing route you take, you’ll have to pay fees and charges for the service you’re using. If you’re opting for a traditional wealth management service, fees are likely to be high since you’ve got one person looking for investments and monitoring what’s happening across markets. Conversely, robo-investing platforms use computers to process market data, along with an investment team, which allows them to keep costs low. At Wealthify, we charge a management fee that covers everything we do – it never exceeds 0.7% and can be as low as 0.4%. Also, as we invest in funds (hampers filled with investments), a small charge is directly taken by our fund providers and transactions costs apply as well – visit our fee page for more information.
Cons
They’re not financial planners
Robo-investing services aren’t always designed to give advice. At Wealthify, for example, we are not regulated to give advice on whether investing is right for you. If you’re looking for someone to thoroughly analyse your personal situation or tell you what investments to favour, online investment platforms might not be the most suitable option for you. However, if you want to use a tool that helps you dip a toe in the investment world, robo-investing is a good choice.
You can’t choose your own investments
When you invest with an online platform, you don’t get to choose your investments, it’s up to investment experts to choose where your money goes and typically, you can’t get a bespoke plan. However, that doesn’t mean you don’t have a say or any choice. Robo-investing platforms offer a diverse range of investment products, like Stocks and Shares ISAs, Junior Stocks and Shares ISAs, and Ethical Plans. Also, they let you choose how much you wish to invest and the risk level that suits you. Based on the information you’re giving, investment experts will build you a plan with a mix of investments suitable for your risk appetite.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
