Why Robo-Advisors Are a Great Choice for Millennial Investors

girl-320262_640Today we have a guest post for you from Frugal Rules about why millennials should consider using robo advisors to invest. Enjoy!

If you are a millennial interested in investing, you probably aren’t looking only at the standard ways your parent’s generation invested. Instead, you may be more likely to look for alternative methods to help you with your investment needs, like robo advisors that have become more popular in the past few years. There are several reasons why robo advisors are a great choice for millennial investors.

1 Automated Investing

Robo advisors use computer algorithms to help with investing. Investment advisors are also sometimes utilized, but automating your investing is one of the great things robo advisors have to offer. Automated investing allows the millennial the ability to invest without the guess work involved in other investment methods. This is a great tool for the beginning investor and will allow you to begin investing even when you aren’t sure where to start. Although some robo advisors are too inflexible in their fund choices, others, like Motif Investing allow you several choices. You can invest through a pre-set group of funds but you also have the choice of choosing some of the funds for yourself giving you greater flexibility and control as an investor.

2 Time

One of the things many millennials hate is wasted time. Using a robo advisor to automate your investing can help you save time and also help you decide on your investment options. Allowing the robo advisor to determine your investments frees up your valuable time because you don’t have to spend it researching and learning about different fund choices so you can decide which is better.  Many robo advisors will also rebalance for you and send out trading alerts, both of which can also increase your time savings. In addition, you don’t have to spend time meeting with investment advisors one on one.

3 Deposits

The deposit amounts required to get started with robo advisors can be different depending on which company you are considering. The minimum with some companies is a few thousand dollars, but others require far less. For the millennial without a lot of starting capital, that is just one more reason robo advisors are a good investment option. In fact, Motif Investing can get you started investing with only a few hundred dollars instead of the thousands required by other robo advisors.

4 Easy to Follow Fees

Robo advisors usually offer low trading fees. Of course, these can be different from company to company, so you should check into what each charges before making any final decisions on which robo advisor to use for your investing needs. The last thing you want is a charge you weren’t expecting because you didn’t do your homework before you chose which robo advisor to use.

5 Cash in Your Pocket

Some robo advisors pay dividends in cash rather than reinvesting them. This could be considered as either an advantage or a disadvantage of investing through a robo advisor, depending on your unique financial situation. Of course, you always have the option of reinvesting that money on your own or through other investment options.

Need more help when it comes to investing? Want to do it on your own? Check out these articles.

Have you ever thought about using robot advisors to help you invest?

Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.

 

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One thought on “Why Robo-Advisors Are a Great Choice for Millennial Investors

  1. I heard some pros and cons about robo advisors, and I think one important factor to consider is to still have an effort to be well informed about strategies or advice that we’re using or following. In all, robo advisor is really for people who are more on dependent on strategies/services assessed and applied by a third party.

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