The Simpler, More Affordable Way To Invest
North American Precis Syndicate
Don't have the time or expertise to manage market fluctuations? Consider new technologies that can help you grow your savings efficiently. (NAPS)
(NAPSI)—Just as innovation is changing how people order food, shop
and make travel arrangements, financial services companies have found a way
technology can make investing more convenient and affordable.
This latest trend is often referred to as automated investing. Before
jumping in with your own finances, however, it’s important that you
learn the details to determine if an automated investment advisor is for you.
• What’s automated investing?
An automated investment advisor (sometimes referred to as “robo investing”) uses sophisticated computer
algorithms to offer low-cost managed investments. Users answer a series of
intuitive questions about their financial goals, risk tolerance, and
investment time horizon, and the automated advisor recommends a personalized
investment portfolio suited to those needs. These portfolios are comprised of
a diverse set of Exchange Traded Funds (ETFs)
designed with low-cost diversification in mind. The financial services
company executes the investment and automatically manages it for a fraction
of the cost of a traditional advisor.
• How does it make investing
easier and more accessible? Not everyone has the time or know-how to
manage an investment portfolio, or the inclination or ability to pay
potentially hefty fees for a portfolio manager to do it on their behalf.
Access to an account professionally managed by human advisors, however, was
historically a problem for those who did not meet their high minimums,
oftentimes $500,000 or more.
Enter the automated advisor, which automatically monitors your investment
portfolio and, as the stock market fluctuates, rebalances holdings based on
your risk tolerance, projected investment timeline and wealth outlook, to
help keep you on track with your goals.
“Some people are very good at managing their own investments,”
said Rich Hagen, president of Ally Invest, the online brokerage and wealth
management arm of Ally Financial. “Others just don’t have the
time or expertise. Younger investors, in particular, often don’t have
the assets needed to get the attention of a top portfolio manager. An
automated advisor can solve the disconnect by making
professionally managed portfolios accessible to more people.”
Automated advisors sift through thousands of ETFs
to invest your money into a range of diversified low-cost index ETFs. Like mutual funds, ETFs
pool the money of numerous investors to purchase a group of stocks. Like
index mutual funds, most are passively managed, which means they work to
mimic the performance of a specific index such as the S&P 500 or the Dow
Jones Industrial Average.
• What do they cost? With
an automated advisor, you don’t have to pay exorbitant fees, earn a
six-figure income or have thousands of dollars in savings to reap the
benefits of a professionally managed investment portfolio. Industry average
fees for a human financial advisor hover around 1.02 percent, meaning costs
start to add up as your investment portfolio grows. Generally, automated advisors
provide customized portfolios more affordably. For example, at Ally Invest
Managed Portfolios, the annual advisory fee is 0.30 percent of account
assets. That means for an account with a $10,000 balance, the monthly fee is
$2.50. Plus, there are no trading fees and you can start investing with just
• Can I talk to a person?
A purely automated service isn’t always enough, even when 24/7 phone
support is available. Some firms, such as Ally Invest, provide customer
service from knowledgeable professionals.
• How can I learn more about
automated investing? Visit www.Ally.com
and click on “managed portfolios.”
On the Net:North American Precis Syndicate, Inc.(NAPSI)