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Robo-Advisors: A New Way to Invest

Authored By: Genisys Credit Union on 11/30/2022

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While there are many avenues to invest money in the markets today, the two most popular are either doing it yourself or with the help of a financial advisor. Going solo could save you money on fees but also adds risk if you’re unfamiliar with the markets. Financial advisors bring a wealth of knowledge and know-how but also cost more (and often require clients to have larger initial balances). 

To bridge the gap between doing it yourself and partnering with a financial advisor, fintech and investment companies are creating a new way to invest through sophisticated programs called robo-advisors. 

What are Robo-Advisors?

Robo-advisors are highly sophisticated programs that allow you to invest in the markets without needing a traditional financial advisor. Using a series of mathematical rules and algorithms, robo-advisors can instantly rebalance and diversify your investment portfolios based on specific market conditions. 

When you begin working with a robo-advisor, you’ll typically fill out a survey or questionnaire to gather information about you and your specific financial goals. For instance, you’ll usually be asked your age, income levels, risk tolerance, net worth, and short- and long-term goals. 

The robo-advisor will use this information to create a plan and portfolio of ETFs (exchange traded funds) and mutual funds that align with your financial goals. 

Benefits of Robo-Advisors

Creating and managing investment portfolios with advanced software isn’t an entirely new concept. Financial advisors have been using similar software for decades. The only difference is that this technology was very expensive. Financial firms would purchase it for their advisors, who then used it with their clients.  

Robo-investing brings this sophisticated technology directly to you – opening a slew of financial perks and new opportunities.

Drawbacks of Robo-Advisors

While technology can simplify complex processes and save time, there are always limitations. It turns out that the “human” aspect is also an essential part of investing wisely.

Who Should Use a Robo-Advisor?

One of the greatest perks of robo-advisors is that they are accessible to everyone. But that doesn’t mean they are the best option for all. Typically, this investment option works best for:

Takeaway

Every day new technologies emerge that simplify complex problems. Robo-advisors are giving everyone the opportunity to invest and save money with ease. While this service packs substantial fiscal perks, it also comes with limitations and potential risks. 

Before making any investment decisions, you should always weigh the pros and cons. If you’re unsure, ask for help or consider only dipping your toes into robo-investing at first. The combination of using both a robo-advisor and a traditional financial advisor might be the best of both worlds. 

We’re Here to Help!

Investing in the stock market or other avenues is not without risk. Most investments are not federally insured, and you can lose money. Before deciding which option is best for you, it’s always wise to learn more and understand the risks. 

If you’re interested in investing or long-term financial planning our financial advisors are available to answer all your questions and help you make the best fiscal decisions.

To speak with a financial advisor, please stop by any of our convenient branch locations or call 248-322-9800 extension 5 to schedule an appointment today.   


 

© Genisys Credit Union and www.genisyscu.org, 2022. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.



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