Don't stop saving. Follow your budget - you can add money to your account whenever you want. Transfer the money you've saved and place an order to buy additional ETF shares.
Check your account once a year.
- Is your ETF portfolio performing well?
- What fees are you paying?
- Is this approach still right for you?
WHAT is it?
ETFs (exchange-traded funds) are baskets filled with equity and / or fixed income securities. ETFs can also be filled with other ETFs.
'Exchange-traded' means that shares of ETFs trade on the stock exchange, in the same way as shares of individual companies.
A robo-advisor ETF portfolio consists of 6-10 individual index ETFs and represents an asset mix that reflects your risk appetite.
Robo advisors use software to mimic the role of a full- service investment advisor at a lower cost. Their computer programs:
- Help each client choose an ETF portfolio with an asset mix that matches the client's risk appetite.
- Create and manage these portfolios based on historical investment performance data and financial theories, trying to achieve the best possible investment income for each level of risk.
Robo-advisors often use index ETFs. Index ETFs buy all the stocks or bonds in a given market - they mimic the entire market.
- Index ETFs are accessible, easy to understand, and often less expensive than other investment products.
- In contrast to index ETFs, active ETFs have professional portfolio managers who pick and choose stocks or bonds they believe will do better than the market. These ETFs have higher fees than index ETFs. It is debatable whether over long periods of time anybody can consistently outperform the market after investment fees.
Start by researching and choosing a provider. Use our research tables to choose one.
Are you cashing out / changing providers? Learn to sell your ETF shares and close investment accounts.
What's it like to invest
Robo-advisor accounts are opened online.
While you're opening an account, your provider will ask you to complete a risk appetite questionnaire and recommend a ready-made ETF portfolio. It's asset mix will be based on your answers. You can follow their recommendation and buy the portfolio or choose another.
Once the account is open, the robo-advisor will buy the shares of the ETFs it recommended in proportions that represent your asset mix.
Own your investments, step-by-step.
Robo-Advisor ETF portfolio
What's an asset mix?