In a world dominated by technology, robo-advisors are an extremely interesting innovation. In the last decade, a lot of us have started using automated software to help us make better investments.

Robo investing makes it easier for people who are looking to build wealth and to invest but do not have the resources necessary for hiring a human advisor. Allowing people to start investing with very little money is one of the most important benefits of automated robo investing.

When should we use robot-advisors?

Robo-advisors collect our data and by using complex algorithms, are able to create updated portfolios and analyze our risk profile. Consequently, robot-advisors are extremely efficient when we are just starting out in the investment industry or when we are planning our retirement or other long-term goals.

Automated investment platforms are a good choice for investors who are building retirement portfolios using dollar-cost averaging. High-quality robo-advisors will change the investors’ asset location as they approach retirement and use index ETFs to come up with optimal asset allocations.

Robo-investing can work really well for people who are new to trading and who cannot afford to invest large amounts of money. These innovative platforms are perfect for those who are learning the ropes of financial investments. According to Money Sense, Canadian robo-investments currently hold US$5.5 billion in assets and are expected to reach US$14 billion by 2022.

It is important to mention that as the investment portfolio expands, robo-advisors might not be sufficient to help manage the accounts appropriately. This is especially true for those who are starting to diversify and to have more investment goals. Once investors are able to make more plans with their assets, and once their portfolios become bigger, they will most likely need personalized advice that can only be offered by human advisors. However, taking into consideration just how far artificial intelligence has come, it would come as no surprise if, in the near future, robo investing would become even more efficient.

What are some of the most notable benefits of robo investing?

Custom management – If we are not eager to invest all our money in assets, robo-advisors are a great alternative to large financial consulting firms. Each case, be it small or large, requires a wealth manager to analyze potential market opportunities, to do in-depth research, to define the optimal industries and to provide different types of investment plans. That is a lot of work that requires a lot of time, effort, and resources and if we are only investing a small amount of money, most human advisors will offer a ready-made portfolio and will avoid wasting time to offer customized solutions.

Luckily, robo-advisors are a cost-effective alternative and they provide personalized solutions even if our investments are under $500. The software analyzes all the different market opportunities, develops complex reports, and provides the best and most profitable ways to grow our ROI.

Lowest fees – Professional financial advisors charge investors anywhere between 1 and 5 percent, depending on the complexity of the portfolio and on the investment industry. If we want to minimize the risks and invest in a wide range of projects, we might end up paying thousands of dollars in financial consulting fees. Furthermore, the great majority of professional investment companies have a preset minimum investment amount of at least $500,000, making it almost impossible for small and medium investors to start out.

The excessive costs associated with market-leading financial investment companies prevent small investors from having access to personalized solutions, so they end up relying on their own skills and knowledge, which isn’t always a great idea. The good news is that some of the most popular robo investing platforms have a $0 limit, so investors can start investing even if they only have $500 in their pockets.

Some financial investment companies have even started to combine the benefits of digital and human consultancy, allowing investors to choose the advice that they want to follow.

Minimal involvement - High-quality robo investing platforms do not require any involvement on the part of the investors. Investing using robo-advisors works similarly to cooking using a crockpot: clean and cut the ingredients, throw them in the pot, and let them cook. The platform will do everything:  analyzing the requirements, finding the best opportunities available on the market, and making the investments. The only thing that the investors need to do is check their accounts every once in a while.

Flexibility – The most popular automated investment platforms, such as ModernAdvisor, Nest Wealth, and Wealthsimple, are designed to make financial investments affordable to anyone. Now, even people with little to no experience in wealth management can use financial services without having to pay enormous fees. The best thing about robo-advisors is that the entry limit is so low, that people can start investing with only a few hundred dollars. By eliminating a lot of barriers, robo investment software is a flexible and affordable solution.