What do you think of RoboAdvisers?

[gimmethesimplelife]

Just curious, what do you think of the new Roboadviser sites out there, such as Betterment or Wealthfront or others similar out there? Gotta say I'm liking the concept overall, and with one of the two companies above down to a $500 minimum investment, i can possibly even partake in a few months.....I like the idea of the whole thing being based on algorithms and computerization (which is a 180 for me, I know) as there really seems to be so much of a conflict of interest in financial advisement and how advisers are paid. And with my money, lol, i don't know to worry about anyone wanting to sit down and convince me to sign up with them as an adviser - I guess I'm spared that. It's almost as if the system wants me to go this route (or completely on own) if I am able to invest and for once I'm OK with that.

What's your take on RoboAdviser sites? Rob

[bae]

It's not rocket science (exactly), and I don't see any reason to pay anyone for this sort of service.

[gimmethesimplelife]

It's not rocket science (exactly), and I don't see any reason to pay anyone for this sort of service.I don't represent Wealthfront here in any way - just want to make this clear here and now. With them, the first 15K is "managed" for free - no fees whatsoever. It'll be awhile before I have to worry about their fees lol. Rob

[bae]

$15k shouldn't require any real "management"...

It's worth the time to read a short book or two on the topic, and do it yourself.

[gimmethesimplelife]

$15k shouldn't require any real "management"...

It's worth the time to read a short book or two on the topic, and do it yourself.Fair enough, Bae. Something interesting is that I did log onto their site and I did take their questionnaire and for no fee whatsoever, they will tell you where they would put your money and I thought that was interesting. But I'd also agree that for smaller amounts of money like I am talking about there is less complexity and it would be easier to do it all on your own, yes. Rob

[freshstart]

I am not a finance person, but this worked very well for me. At my first job, I had a 401k, I was 22 and knew nothing about which funds to choose. I read lots of books, particularly the ones by John Bogle, started Vanguard. Everything I read was so convincing that for someone like me, various index funds to cover different sectors, with very low fees was the way to go. I managed my own portfolio, ran my plan through the finance advisor at work every year and worked with Vanguard to help me choose the right mix of funds. Started a Roth IRA. This worked very well for me over the 23 yrs I did that. I cannot work now so I can no longer contribute but it is amazing how small contributions grow with compound interest. I don't watch my funds like a hawk, I rarely vary from the plan, view when stocks are down as an opportunity to buy more on "sale" rather than panic and take my money out. I buy and hold for the long term. And it is amazing to see how a 1% difference in fees can make a huge difference in your portfolio over the long term.

anyway, my point is if I, barely out of college as a nurse, no finance experience at 22, if I can do it, I'm sure you can as well. Fees from whatever this plan you're thinking of using, may be $0 for 15k, but where do the fees go from there? And after reading and reading, I truly think I did well for someone of modest means and no experience. Now I am at the point where I would be very unlikely to let someone else manage my money and choose my investments, no fee or not.

It can't hurt to read one personal finance book before you do this so whatever choice you make, it's a fully informed one.

[sweetana3]

My husband and I came from families without money and without much discussion of money. However, we were generally risk adverse and savings oriented. We followed a balanced approach with complete diversification. We now use index funds with a variety to achieve the asset allocation that we want. We saved a generous % of our income and used a 1/3,1/3,1/3 protocol for surprise funds. If we did not have a debt to pay, we would use 1/3 on current savings, 1/3 on investing and 1/3 on spending(if we had something to spend it on.) We went to a fee based advisor and she said we were well set up and only needed an updated will and maybe a trust set up.

Start small, invest regularily and study. We did not get involved in trading but investing and holding. We were not interested in the latest new thing and were very skeptical (due to a lot of lessons learned) to not get in when the population or family and friends said whatever was a "sure thing".

Have short and long term goals to work towards. We also suggest keeping a permanent diary of your decisions, reasons, and goals. They can change over time but it helps to remind you why you are doing something. I see too many who save a bit and then have forgotten about why and want to spend it right now.

[iris lilies]

One of these outfits has recently begun advertising on one of the radio stations I listen to. It might even be Rush
limbaugh's show that carries this ad, can't really remember.

I look with with skepticism at any financial "system" that causes me no work, only to reap all of the rewards.

put your money in an index fund or two and there is no "work" required. Of course, there is risk, but the algorthims won't save you from that.

[rodeosweetheart]

I would avoid Betterment et al and do the thinking yourself--it is easy enough to learn enough as you go. Spend some time on the Bogleheads forum.

I would not want to pay them for what they do.

Pay yourself!

[gimmethesimplelife]

Interestingly enough, when I originally posted yesterday, the amount you could invest with Wealthfront before incurring fees was 15K. Sometime over the past 24 hours, this was reduced to 10K....interesting. Rob

[LDAHL]

$15k shouldn't require any real "management"...

It's worth the time to read a short book or two on the topic, and do it yourself.

Absolutely. I recommend Bill Bernstein's excellent "Investing for Adults" series.