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Advantages of using Robo-Advisors for Stock Investment Management

Robo-advisors are becoming one of the fastest growing products within the investment landscape. A Robo Advisor is an automated online financial advisor that uses algorithms to automatically allocate, construct, manage, and optimise an investment portfolio. Using the Robo-advisors is very easy, as you need to enter a few simple pieces of information, and it will sort through the available stock options and let you know which one is best for you.

Here are some of the benefits you want to consider when deciding on a robo advisor:

Fees
One of the primary advantages of choosing the robo advisor over the typical financial advisors is a amount of fees. Most robo advisors charge a percentage fee based on the size of the portfolio. The fee is typically low than the average amount charged as compared to the traditional financial advisors. It’s important to keep in mind that the upfront fees charged by robo advisors aren’t the only costs in your portfolio. Some financial firms offer human advisors along with the robo advisors and online tools. They may charge an additional fee for these services.

Resource savings
The ability to do the same amount of work efficiently with the reduced amount of costs lets the robot advisors companies promote themselves to a broader segment and lead to a rapid growth. On top of this, robo advisors usually automate items such as application processing by eliminating a portion of the friction for customers and also help companies lower their human resources, which then turn into savings for customers.

In most cases, the stock broking companies are able to offer robo advisor services with significantly lower fees than traditional human advisors, while still maintaining approximately the same return on investment.

Convenience
The robo advisors offer their services like auto-rebalancing, extremely low or nonexistent minimum investments, and tax loss harvesting at your convenience by making it accessible on multiple devices. Now, you can manage your stocks on the go without a hassle of getting advice from financial brokers in direct.

Minimum Initial Deposit
There will be a minimum amount required as the initial deposit to avail the robo advisor for registration and maintenance of an account.

Single-Stock Diversification
Robo-advisors offer the features to help employees and investors who hold a high percentage of their net worth in a single stock to diversify in a tax-efficient, commission-free manner. Normally, the single stock diversification will involve using dollar cost averaging to minimize volatility.

Direct Indexing
The robo advisors do direct indexing to allow you to directly purchase and own all of the individual securities of a major index as opposed to owning a mutual fund or ETF that tracks an index. Research shows that direct indexing method will effectively save tax than owning the equivalent index funds/ETFs by allowing investors to harvest tax losses on an index’s individual component stocks.
Also, the direct indexing eliminates the management fees of index funds or ETFs to prevent exact replication of the performance of an index investment.

Robo-advisors offer many benefits of investing opportunities to the investors. Choose the best robo advisors in India to plan your investment and grow your portfolio smart and systematically.

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Friday, 06 December 2019

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