AMA The Fifth Person
Asked by Anonymous
Asked on 20 Feb 2019
I've recently answered a similar question and did a thorough analysis here! Do take a look :) At the end of the day, ask yourself the usual questions before investing:
Ultimately, diversification is key! So you can actually invest in BOTH Robo-Advisors and ETFs at the same time :)
Robo-advisor buys ETFs for you. You pay more fees to robo compared to ETFs for them to help you manage your investments. DIY ETFs on the other hand is slightly cheaper in terms of expenses and you can customize it more differently compared to robo with fixed allocations based on your risk appetite. Both are mainly for passive investors just that DIY ETFs will have to buy yourself through a broker every time you want to invest more. If you wan more flexibility in ETFs and ok with doing research yourself and buying monthly yourself through a broker, go for DIY ETFs. If you want to do a totally hands free investment and ok with paying abit more fees and abit less flexible, go for ROBO.
I think you should consider ETF over robo advisors because there are extra fee involve for robo advisors.
Both roboadvisors and ETFs are good to invest for younger investers. Roboadvisors actually invests in ETFs that are recommended for you based on your portfolio. Si I think the question would be more on whether to invest in ETFs yourself or using Roboadviosrs. If you are more of a passive investor and is comfortable with letting these roboadvisors doing your investing for you, then investing in roboadvisors would be a good choice. If you are more comfortable with actively monitoring the markets and take an active approach towards investing, then investing in ETFs yourself would be a better choice.
Hope this helps!
Robo advisors can be a great solution for beginner investors, young professionals who want to put their portfolio on automation. Robo advisors are not financial planners and are generally good for basic financial assistance.
ETFs on the other hand is also good for investors. Traded like stocks, these can broaden the diversity of portfolios a person manages. In ETFs trading fees can quickly add up and affect your investment's performance. Lack of liquidity is another major concern with ETFs.