Consumers rejoice! In a race to the bottom, investment management fees are shrinking. And if low fees aren’t enough, there are a handful of robo-advisors that offer free robo-advisor investment management. The best free robo-advisors typically invest your money in stock, bond and other exchange traded funds in alignment with your risk comfort.
Each free robo will rebalance your account to keep your preferred asset allocation in line with your initial preferences.
Are the Best Free Robo Advisors Really Free?
Yes, and no. A free robo-advisor means that you won’t pay any fees to the robo-advisor firm to manage your investments. Your investments will be rebalanced for free and bought and sold for free.
But, investing is rarely 100% free.
Most robo-advisors recommend investing in exchange traded funds or ETFs. These ETFs have small management fees that go directly to the ETF, NOT to the robo-advisor itself.
So a fee-free robo-advisor means that more of your money is going directly into the investments, not into a managers pockets.
But don’t worry, robo-advisors still make money. Like many online platforms today, they have fee-based add on services as well as partnerships with banks and other institutions that add to their revenue.
If you want more of your money to go into your investments and less to the fund manager then consider a free robo-advisor.
Free robo-advisors are appropriate for beginners to experienced investors. Learn which one is best for you.
1. M1 Finance – Free Robo-Advisor
Minimum investment amount: $100
Who is M1 best for?
M1 is ideal for new investors, with their pre-made investment portfolios as well as experienced investors who want to choose their own stocks and funds.
M1 Finance also offers lending and cash management fortheir clients, in addition to a free robo-advisor.
This robo-advisor is the best for investors who want access to pre-made investing and the opportunity to trade stocks and ETFs. M1 offers over 6,000 investment choices. I have an account with them as well! (Check out my M1 Finance Tutorial video.)
The M1 Finance free robo-advisor is unique in that you choose your investments from thousands of individual stocks and funds. You select the percent that you want invested in each one. Then, every time you add money to your account M1 Finance automatically invests it in the holdings of your choice and in the percentages that you chose. You can edit your investments, add or subtract, at any time.
Or, if you’d prefer ready-made portfolios – M1 Finance calls them “pies” -of investments, there are many to choose from. Similar to other robo-advisors, you can select a pre-made investment portfolio according to your risk tolerance from conservative to aggressive. Here’s a sample of the pre-made M1 Finance investment portfolio categories:
- General Investing
- Plan For Retirement
- Responsible Investing (Socially Conscious)
- Income Portfolios
- Hedge Fund Followers
- Industries + Sectors
- Just Stocks and Bonds
Read the M1 Finance Review
2. SoFi Invest
Minimum investment amount: $1
Who is SoFi Invest best for?
SoFi is great for new investors who want a basic free robo-advisor as well as current SoFi lending customers. SoFi is good if you want to keep all of your investing, borrowing and cash management under one roof.
SoFi is great for DIY investors including those who want to invest in cryptocurrency.
The SoFi Invest robo-advisor or automated investing helps you select investments and then manages them for you.
SoFi Invest incorporates several investing options within this division of the company. You can choose your own investments, invest in crypto or free ETFs on your own.
Here’s a list of all the free investing opportunities at SoFI:
- Crypto Investing – Cryptocurrency trading platform.
- Stock Bits – Free stock market investing, similar to Robinhood and M1 Finance.
- Active Investing – This SoFi stock investing platform allows you to buy shares of stock or even partial shares and get started investing on your own, for free.
- Automated Investing – The SoFi robo-advisor invests your money in diversified exchange traded funds, or ETFs and manages it for you.
- SoFi ETFs – SoFi offers four ETFs: SoFi Select 500 (SFY), SoFi Next 500 (SFYX), SoFi 50 (SFYF) and SoFi Gig Economy (GIGE).
Read the SoFi Invest Review
Minimum investment amount: $500
Who is Wealthfront Best for?
Wealthfront is ideal for investors who want a feature-rich all-digital robo-advisor. This robo investing platform also offers many types of accounts.
Wealthfront offers the best online digital financial advisor questionnaire that we’re aware of. The robo also includes lending and cash management.
Larger investors will benefit from their cost-lowering Single Stock Diversification program, wide range of accounts including a 529 account and tax-loss harvesting (available for taxable accounts).
When you sign up with the link below, you’ll get your first $5,000 managed for free. After that you’ll pay a low annual fee of 0.25% of assets managed. Wealthfront’s digital PATH advisor hones in on your financial goals and situation with detailed questions about every aspect of your life This enable’s Wealthfront to craft a personalized investment portfolio.
One of the earliest robo-advisors, Wealthfront has many unique features:
- Smart Beta investing
- Risk Parity Fund
- College planning guidance
- Individual stock investing or direct indexing (for accounts worth over $100,000)
- Typical investment portfolios from conservative to aggressive
Read the Wealthfront Review
4. Ally Invest Cash-Enhanced Managed Portfolios
Minimum investment amount: $100
Who is Ally Invest best for?
If you’re seeking free investment management, then Ally Invest is best for individuals who are comfortable with holding 30% of their portfolio in cash. (If you want less cash, then you’ll need to pay a small management fee.) The cash portion of your portfolio earns a high interest rate.
Ally is good for any investor who also wants a one-stop shop for robo advisory management, DIY investing, banking, and lending services.
Ally Invest is great for investors seeking socially responsible investment portfolios and excellent diversification among ETFs.
Ally shines among the free robo advisors with a well diversified portfolio of ETFs. Like M1 Finance, you can also choose to have part of your portfolio professionally managed and trade stocks, bonds, and ETFs through Ally self-directed trading.
Ally Invest features include:
- No advisory fees, annual charges or rebalancing fees when you maintain 30% of your portfolio in high-yield cash assets.
- Four distinct types of investment portfolios: core, socially responsible, income, tax-optimized.
- Access to all the well-regarded features at Ally Bank including loans, mortgages, CDs and DIY investing.
Read the Ally Invest Review
5. Schwab Intelligent Portfolios
Minimum investment amount: $5,000
Who is Schwab Intelligent Portfolios best for?
Schwab is best for investors from beginners to advanced with $5,000.
Schwab also has a wide range of account types.
Cost-conscious investors seeking a robo advisor with one of the big financial firms should choose Schwab Intelligent Portfolios, as most of the other large financial firms charge an investment management fee.
The Schwab Intelligent Portfolios robo-advisor offering has a lot going for it. They are similar to to many other robo’s and begin your investment process with an online questionnarie to determine your risk tolerance levels. Schwab creates your personalized investment mix by integrating your goals and risk comfort level. Using your responses to a brief questionnaire, the platform recommends a diversified investment portfolio, in accord with your preferred risk level.
Unlike M1 Finance, with access to thousands of investments, Schwab crafts your investment mix from a pool of approximately 30 diversified funds. It even includes a small allotment to gold, which we haven’t seen in other robo investing.
Unique features include:
- Gold ETF included in portoflios.
- Cash of approximately 8% included which stabilizes the portfolio volatility and makes it easier to rebalance.
- With Schwab’s large branch network, it’s easy to contact a representative for questions about the platform. Although for detailed advisory investment guidance, you’ll need to sign up for the paid plan, Schwab Intelligent Advisory.
- 24/7 support.
Read the Schwab Intelligent Portfolios Review
Best Free Robo Advisors Wrap Up
Choosing the best robo-advisor for you involves understanding your own financial goals and and the type of platform that you’re most comfortable with. Management fees are one piece of the investment selection puzzle. Other considerations also include features like tax-loss harvesting and high yield checking accounts and cash management.
If you want the opportunity to have part of your money managed by a robo advisor and part by you, then consider one that offers both managed and DIY investing.
If you’re seeking to invest with your values, than look for a robo with socially responsible investments.
If you want a robo that is part of a big investment firm, then there’s a free choice for you.
If you’re seeking live financial advisor access along with a robo-advisor, then consider the hybrid robo advisor. Many offer complete financial plans.
There’s no right or wrong decision. Each of these digital linvestment managers are from safe and responsible firms.
The key is to get started investing now, so you have more time for your money to work for you.
A robo-advisor is an investment manager that will help you select appropriate investments according to your goals and risk tolerance. Most robo-advisors charge lower fees than traditional financial advisors and offer a variety of services. To learn more read our robo-advisor FAQ.
Robo-advisors work by asking you a few questions about your goals, financial situation, and comfort with risk. In this case, risk means falling investment prices. Robo-advisors aren’t all the same and vary according to fees, minimum investments, features. Learn more in this article, “How do robo-advisor work?“
First, list the features that are important to you. Then examine minimum investment amounts and fees. Then choose the best robo-advisor for you. Use our robo-advisor wizard to help you choose.
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Disclosures: I have accounts at M1 Finance and Schwab Intelligent Portfolios
Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.