Financial Automation - RoboInvesting

[ToxikPH]

I started using Acorns again this past month and realized how easy it is for me to set it and forget it while racking up a nice balance in my portfolio. I'd like to do this on a larger scale rather than $5 a week and change round-ups. I've looked into Betterment and Wealthsimple and am not sure which I would choose over the other. I also know that Chase and Schwab also have robo-investing options.

I guess my questions are, does anyone use any of these or another unmentioned one, and are they better than investing in an index fund? Currently, my Schwab IRA is just the Schwab 1000 fund and I'm wondering if I should be using a robo-investor instead.

If I was to open one I would use both a plain brokerage along with a Roth IRA.

[iced]

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@ToxikPH wrote:

I started using Acorns again this past month and realized how easy it is for me to set it and forget it while racking up a nice balance in my portfolio. I'd like to do this on a larger scale rather than $5 a week and change round-ups. I've looked into Betterment and Wealthsimple and am not sure which I would choose over the other. I also know that Chase and Schwab also have robo-investing options.

I guess my questions are, does anyone use any of these or another unmentioned one, and are they better than investing in an index fund? Currently, my Schwab IRA is just the Schwab 1000 fund and I'm wondering if I should be using a robo-investor instead.

If I was to open one I would use both a plain brokerage along with a Roth IRA.

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I personally don't use a robo-advisor as I'm not a fan of paying a fee for an automated tool to do something I can just as easily do myself. They work well enough, but as your balances grow those fees start to add up.

For simple long-term investing, some solid ETFs are just as likely to win out or even exceed what a robo-advisor will do.

[notmyname]

I have had one account now with JPMorgan for almost a year and the growth has blown me away so I just opened two more with much larger funding. I can't say enough good about the experience.

I would add that the fees are waved in many cases, and are the lowest I have seen anyway. With my returns the fees mean nothing to me. Robo is a cool name of course but remember its algorithum is certainly faster to respond to something as volatile as investing than any one or more tired people who don't necessarily card. I also get frequent offers for free advice sessions even though those are usually reserved for those over 100000.

[iced]

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@notmyname wrote:

I have had one account now with JPMorgan for almost a year and the growth has blown me away so I just opened two more with much larger funding. I can't say enough good about the experience.

I would add that the fees are waved in many cases, and are the lowest I have seen anyway. With my returns the fees mean nothing to me. Robo is a cool name of course but remember its algorithum is certainly faster to respond to something as volatile as investing than any one or more tired people who don't necessarily card. I also get frequent offers for free advice sessions even though those are usually reserved for those over 100000.

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What sort of returns are blowing you away? With money invested between last March and about July, even conservative ETF investing has returned 50%+ and several positions have 100%+ returns, so those mind-blowing returns may just be par for the course.

JP Morgan's robo-advisor is 0.35% fee. It's nothing if you're only talking about $10,000 invested, but as portfolios grow into the hundreds of thousands and millions, those fees start to chew into your gains. Even in my 401k, it has to be a really good fund to entice me to pay a fee above 0.1% (for example, the blended funds I use for my 401k have fees ranging from 0.012% to 0.03%).

What you're describing also sounds more like day trading where you're trying to take profits on micro gains and nothing in your portfolio ever lasts long enough to qualify for long-term gains and/or you're looking to speculate on volatile markets (crypto/meme stocks/timing dips and peaks). That's perfectly fine if that's your goal in investing, and I agree they work well enough in those situations.

For the same reasons that the driver who weaves through traffic almost never gains any real ground over the driver who consistently stays to one or two lanes, the constant fluctuations almost never win out in the long run over parking in some diversified positions and riding them out. They also take on increased risk. (For the curious:  https://abcnews.go.com/Technology/Traffic/story?id=499882)