Robo-advisors typically have two forms of payment. You can either pay a monthly fee, or you can pay a percentage of your total portfolio. The monthly fees will vary wildly from broker to broker depending on your account size, so please check them out before signing up. In terms of percentage, typically Robo-advisors charge anywhere from .2 to 1 percent of your portfolio amount. This is considerably lower than most mutual funds. This is typically due to the fact that Robo-advisors are easier to manage, and have a lower MER.
With the ever changing hype of Robo-advisors these days, try to find a promo code our coupon that will give you some sort of payment deal on your first deposit. Some companies offer you a $50 reward, while others may invest your first $10 000 for free for the first year. I find in this day and age before I ever sign up for anything I typically Google promotion codes or discounts.
So, should you use a Robo-advisor?
The answer to this isn’t necessarily cut and dry. Some DIY investors have self-directed accounts along with Robo-advisor accounts. Saying you have to be 100% on either side of the scale isn’t correct. Even if you exclusively make your own investment decisions on your retirement and investment accounts, you may feel obligated to try one out. Maybe it provides better returns than you are achieving right now?
There is nothing wrong with getting some help when it comes to investing your money, and a Robo-advisor can take some of the stress off your back. Maybe you are too busy to manage multiple accounts and instead want to have someone manage one of them. Instead of paying a big bank or a financial advisor exorbitant fees to manage your money, why not give a low-fee Robo-advisor a chance?
This article was republished with permission from Modest Money.