Robo-advisors can invest and perform basic money management functions for consumers today, at a fraction of the cost that most human advisors charge. But for all that they can do, robo-advisors still have their limitations as there are still some functions in which they cannot replace humans. So here's a breakdown of what robo-advisors can and can't do for you at this point in their development.What Robo-Advisors Can DoWhen it comes to making logical financial decisions and performing routine money management chores, robo-advisors are excellent tools that can help investors to stay on track and maintain their initial portfolio allocation over time. They can easily perform such actions as dollar-cost averaging, portfolio rebalancing and harvesting tax losses, where the program will sell losing holdings in order to offset the capital gains that are generated from selling appreciated positions.
This type of algorithmic trading has been around for more than a decade, but it really didn't enter the mainstream market until 2008, when platforms such as Betterment and WealthFront entered the arena. These robos allow even novice investors to create a portfolio based on their risk tolerance, time horizon and investment objectives by simply answering a few simple questions posed by the program that tell it what they want to do with their money. Once they have this information, the robo-advisor will select a group of investments that match up with this information. The investor can then monitor the portfolio at any time by logging in to their account. Read more: What Robo-Advisors Can and Can't Do for Investors | Investopedia http://www.investopedia.com/articles/tech/020117/what-roboadvisors-can-and-cant-do-investors.asp#ixzz4bqXfjlYd Comments are closed.
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AuthorJoshua Nahas Archives
May 2017
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