The best robo-advisors for beginners are those that allow you to invest with a small amount of money, have low fees, and a sound reputation. If you want to begin investing and grow your wealth then a robo-advisor is an ideal place to start.
Investing is a proven way to build long term wealth. Imagine investing just $500 per month beginning at age 25 and never increasing that amount. At age 66, your $6,000 annual or $216,000 lifetime investment could be worth nearly $900,000 (assumes an annualized 7% return). Now that’s a nice chunk of change to supplement Social Security. These beginner robo-advisors can get you started investing today!
- 1. M1 Finance – Best for Stock/ETF Pickers
- 2. SoFi Automated Investing – Best for Those Seeking Financial Advice
- 3. Betterment-Best for Those Who Want to Text with an Advisor
- 4. Wealthfront-Best for Techies
- 5. Ally Invest Cash Enhanced Managed Portfolios-Best for Those Who Want More Financial Services
- Beginner Robo-Advisors Wrap up
Although, you don’t need a robo-advisor, you could invest on your own. But if you’re seeking a set-it-and-forget-it investment plan, then robo investing is worth considering.
Most robo-advisors ask you a few questions about your goals, financial situation, and comfort with risk (or the possibility that your investments will go up and down). Based upon your answers to the quiz, you’re presented with a portfolio of stock, bond, cash, and alternative investment funds, in an asset allocation that fits your preferences.
If you’re a new or intermediate investor, seeking an easy way to save for retirement or a long-term goal, then you owe it to yourself to check out a robo-advisor.
I’ve been studying robo investing for more than five years and have invested in several myself. I appreciate the professional management, expert portfolios, and low fees offered by the new digital investment managers.
|Robo Advisor||Management Fee||Investment Minimum||Sign up|
|0.25% of AUM||None||Sign up|
|0.25% of AUM ($5,000 managed for free)||$500||Sign up|
|None (with 30% cash) - 0.30% (without cash allocation)||$100||Sign up|
1. M1 Finance – Best for Stock/ETF Pickers
Best for – Investors who want to choose their own pre-made investment portfolio, and have it rebalanced, for free. Those who want access to more than 6,000 stocks and ETFs and have those rebalanced back to your preferred asset allocation.
Minimum – $100
Fees – FREE: no management fee (M1 Plus – upgraded plan costs $125 per year)
M1 Finance is one of the most unique robo-advisors because you can invest in scores of ready-made investment portfolios and individual stocks and ETFs, all under one roof. So, if you’re just starting out, you might want to choose a simple ready-made stocks and bonds portfolio. M1’s pre-made investment portfolios offer choices for most investors including socially responsible choices, dividend portfolios, retirement funds and even hedge fund-like choices.
Once your investing confidence grows, you can branch out and add stocks and ETFs to your investment portfolio.
The main distinction between their pre-made portfolios (called them M1 pies) and other robos offers is that you choose from among all the pre-make offers. There’s no “quiz” to direct you to the best investment portfolio.
So M1 is better for those with a bit of investment knowledge.
Read the M1 Finance Review
2. SoFi Automated Investing – Best for Those Seeking Financial Advice
Best for – Investors who want access to financial consultants and might like to try trading on their own. SoFi offers many lending products as well.
Minimum – $1
Fees – FREE: no management fee
SoFi Automated Investing is the robo-advisory arm of the larger SoFi Invest platform. The standout feature of SoFi is that all clients have access to financial consultants along with career coaches. This is a great beginner robo-advisor for newbies, with investment questions.
The risk-adjusted portfolios are diverse and include global stocks, corporate, government, and high yield bonds, and a real estate fund. We like the diversified choices. Another advantage of the platform is that the SOFI Invest vertical offers other types of investing including stocks, funds, crypto, and fee free index funds.
Read the SoFi Automated Investing Review
3. Betterment-Best for Those Who Want to Text with an Advisor
Best for: Investors who want ready access via text to financial advisors. Those seeking broad diversification and who think they might want to purchase a financial planning package for specific goals like college or retirement planning.
Minimum – Digital Plan – No minimum. Premium Plan with Certified Financial Planners requires $100,000.
Fees – Digital Plan 0.25% of amount invested. Premium Plan 0.40% of AUM.
Betterment is one of the first robo-advisors and continues to be the one to beat. All investors can text with financial advisor. This is great for those on-the-go and seeking quick money advice.
Betterment is a typical goal-based robo-advisor with lots more! After taking the initial quiz, you’re presented with a recommended portfolio of up to 14 stock and bond funds. The funds span the US and international markets with allocations to investments that have outperformed in the past like value and small-cap. The asset allocation at Betterment is among the most diversified and based on proven investment research.
In addition to the basic portfolios users can opt for specialty investing including income, socially responsible, and smart beta. Users have acces to low-cost financial planning packages and the premium service offers unlimited financial advisors.
Read the Betterment Review
4. Wealthfront-Best for Techies
Best for – Investors comfortable with a predominantly digital investment platform. Investors seeking Smart Beta portfolios, which strive to beat the market. Those who want low fee borrowing and cash management products.
Minimum – $500.00
Fee – 0.25% of account value. Click below for fee-free $5,000 management.
Wealthfront is one of the earliest robo-advisors, with an impressive investment committee, best-of-breed Path financial advisor, and excellent investment choices. Wealthfront has one of the most comprehensive investment interviews. The Path digital financial advisor comparable to speaking with a human financial planner. This indepth analysis of your investment goals, financial situation, and risk tolerance leads to a recommended portfolio ideal for you.
The investment choices are widely diversified and include allocations to real estate and energy, as well as typical stock and bond funds. Wealthfront is possibly the only robo with a 529 college savings plan account.
A secret about Wealthfront that they don’t advertise is that all customer support staff are credentialed stock brokers and some are even Certified Financial Planners.
Read the Wealthfront Review
5. Ally Invest Cash Enhanced Managed Portfolios-Best for Those Who Want More Financial Services
Best for – Those who want to access the Ally Banking services. Investors seeking wide diversification. Conservative investors might be more comfortable with greater cash allocations. Individuals looking for muni bonds and socially responsible investing.
Minimum – $100
Fees-No management fee with 30% cash allocation, otherwise 0.30% AUM fee
Ally Invest is the offshoot of the 2016 acquisition of TradeKing. Like other robo-advisors Ally offers five managed portfolios based upon your risk tolerance from Conservative to Aggressive Growth. The index funds within each portfolio span the US and international stock markets, US and international bonds, plus cash. We like the allocation to international bonds, which is not found at many robo advisors. We also appreciate the allocation to mid- and small-cap stocks, and the well-diversified bond offers.
The management fee is free, with a catch. In order to avoid management fees, you must hold 30% cash within the portfolio. That’s a large allocation to cash and may hurt ultimate investment returns. Without the cash allocation, management fees are higher.
Read the Ally Invest Review
Beginner Robo-Advisors Wrap up
If you’re ready to begin investing for the future, but don’t know where to start, then using a beginner robo-advisor makes it easy. The recommended digital investment advisors walk you through the set up so that you will have an investment portfolio that fits your age, financial situation, goals, and risk tolerance. Each of these companies offer exchange traded funds which are low fee and diversified. Some provide socially responsible, smart beta, income, and even individual stock and ETF investing. Each platform offers customer service, mobile apps, and sound security. We’ve thoroughly reviewed every offer and spoken with company representatives.
When investing, starting sooner, will compound your future wealth!
*Disclosure: Please note that this article contains 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 believe is valuable.