How to Invest With a Robo Advisor?

Robo advisors are one of the advanced investing tools. They are known for their easy accessibility, low cost and hassle-free services. Therefore, it is crucial to understand ‘How to invest with them?’. This article will provide necessary information regarding the key information you need to know about investing with a Robo advisor. At the same time, guiding you through different aspects of the same.


How to invest with a Robo advisor?

  • Selecting the robo advisor

  • Setting up Robo Advisor

  • Key things to take care about

Selecting the Robo Advisor :

How to select the best Robo advisor?

To proceed with a Robo adviser, it is crucial to understand and determine the following factors.

Preferences and needs :

It is important to be clear about your investing goals and needs before you choose a good robo advisor. Robo advisors are not a perfect match for everyone. Once you are clear with your goal, you can find a Robo advisor that fits your needs. In-person consulting may be necessary for tasks like managing stock options for a corporation or estate planning. If you prefer services of both robo advisor as well as financial advisor, you can choose a Robo advisor that provides Hybrid robo advisor services.

Investing Experience :

To invest with Robo advisors, you don't require any prior knowledge about investment. Anyone with zero idea about investment can use robo advisor and start their investing journey. Therefore, Choose a robo adviser made for younger investors if you're younger and have just begun the process of investing your money. However, if you want to be sure about your investments, you can opt for Robo advisors which provide professional financial advisors on demand.

If you are confused between Robo advisors and Financial Advisors, it is wise to know both perspectives and understand which is more suited for you by reading our article on “Robo Advisors vs Financial Advisors ”.

Budget :

Robo advisors are known for being affordable. However, not all robo advisors are cheap. Inspect closely all possible charges that a Robo advisor may charge you (charges for other services). In addition to that, it is important to check the minimum deposit requirements. It is a known fact that robo advisors come with very low minimum requirements. There are Robo advisors who have zero minimum deposit requirements. Additionally, find out if an advisor charges commissions when you buy and sell funds. If that's the case, find out how much of your money will be lost to commission.


Key Advices for selecting robo advisors :

  • Find Robo advisors who have an emphasis on stock investment.

  • If you already have an investment, opt for robo advisers who assess your current investments and offer advice based on moving money around.

  • Select robo advisors who provide a wide range of services.

  • Make sure the robo adviser you use has a clear data protection policy.

Before we understand steps in setting up a Robo advisor, it is advised to learn more about Robo advisors by reading our article on “A Guide to Robo Advisors” .

Setting up Robo Advisor :

How to set up your robo advisor?

  • Answering the questionnaire

  • Depositing your initial fund

  • Choosing control over your portfolio

  • Completing the set up

Now that you have chosen an ideal robo advisor, let's learn about how to set up a robo advisor step by step.

Step 1- Answering the Questionnaire :

The first step of setting up your robo advisor is answering the questionnaire. The advisor ought to guide you through the questionnaire and clarify any of your questions. However, you can always call the helpline which the platform provides to assist you with the questionnaire.

Before answering the questionnaire, you should be aware of all the information related to your financial situation, including your bank account information, total assets, and any loans you may have. It is important that you provide the most accurate data. Keep in mind that this is the most crucial step, since your portfolio will be built using the data you provided.

Step 2- Depositing your Initial Fund :

After completing the questionnaire, you should deposit the necessary minimum amount, if required. However, if no such minimum deposit is required; you can deposit funds that you are planning to invest. Now, Robo advisors can actually manage your funds.

Step 3- Choosing Control over your portfolio :

After making your initial deposit, it is time to choose your control over your portfolio. You can either choose an automated system or semi-automated system.

  • Automated system : This system enables the robo advisor to manage your money. Here, the Robo advisor makes decisions for you based on algorithms.

  • Semi-Automated System : You may decide which investment and advice to follow through on in a semi-automated system, and which to ignore.

If you like the hands-off approach, then it is recommended that you opt for an automated system. Robo advisors are built using economic models which are practically proven and accepted throughout the world. Hence, you can trust Robo advisors to make decisions for you.

However, you can always go with a semi-automated method if you are unsure of the recommendations made by robo advisers. Because under this system you receive guidance from both a robo adviser and a qualified financial advisor. Therefore, choose a system which is well suited for you.

Step 4- Completing the set up :

Making sure you have read the terms and conditions is the last step. Finish the setup and go over the important steps one more time. Because any errors could have a negative effect on your portfolio in the future. Therefore, it is advisable to double examine the information and steps.