Investing as part of an overall financial plan is an important way to save for the future and build wealth over time. However, some people worry about their decisions. That’s why many seek professional financial advice to help them develop an action plan based on their specific financial goals, investment time horizons and individual tolerance for risk.
While some people prefer meeting with an advisor, others seek out do-it-yourself solutions. This is where robo-advisors and investing apps come in. The important thing to remember is that it does not have to be an either/or situation. Meeting with an advisor at least once a year can be a great way to address your financial goals and keep you on track. And as a Member, it’s a benefit of your Membership.
What’s a Robo-Advisor?
A robo-advisor is an automated online platform that helps people invest with little or no human interaction. The investor chooses a provider and fills out a questionnaire regarding their financial aspirations. Then the robo-advisor builds an investment mix based on their goals and risk tolerance using advanced software and computer algorithms.
Robo vs. Real
Robo-advisors are popular because they offer low account minimums and fees, but like any technology, they do have their limitations. That’s because they focus more on investment management than financial planning. A robo-advisor won’t act as a sounding board when you are tempted to make decisions that could hurt your finances, or guide you when your circumstances change. For instance, it’s easy to stop investing and keep your money on the sidelines because you think the market’s too risky. Or you may decide to buy too much car or home for your income, which could derail your long-term goals. A financial advisor takes a personal approach to help you stay on track, answer your questions and help you work toward building lasting security.
Investing Apps on the Rise
With more people relying on their mobile device to manage financial transactions, it makes sense that investing apps would become more popular. There are all types of apps on the market addressing every type of investing personality, including beginners. If you decide to use an investment app, do your homework first. Select one that will provide the type of investment guidance that best matches your investment needs. And make sure you understand the risks, especially if you intend to purchase individual stocks. The best ones offer top-notch security, educational resources and robust customer support.
When to Meet with an Advisor
Most experts agree that any time you have a major life change, getting guidance from a financial advisor is a smart move. Even if you’re just starting out in your career, an advisor can help you identify opportunities to invest and save for your future. If you marry and have children, you’ll want to safeguard your family’s security by creating a will, trust or both. You’ll also want to ensure you’re saving enough for retirement. A financial advisor can address these topics and more to help you build your own financial road map. Then you can check back in with your advisor periodically to review and update your financial plan if you need to.
Get Financially Fit This Year
No matter where you are in life, there are things you can do to improve your finances. Whether you meet with an advisor, use a robo-advisor, or choose to do it yourself for now, set some attainable goals such as creating a budget, tackling debt, starting or boosting an emergency fund, contributing to a retirement plan and creating a safety net for you and your family with a will or trust. Visit the advice tab on our website to see all the educational resources we offer to help you make the most of your money.
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or GreenPath Financial Wellness counselor who can help tailor a solution for you.
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