Why 20 to 40 Year Olds Should Invest With a Robo-Advisor NOW!
As much flack as they’re getting for their breakfast choices (avocado toast, anyone?), millennials are much better with money than they get credit for. In fact, millennials might need to be even more aware of where their money goes than previous generations. And that’s why investment companies are flooding the market with robo-advisors for millennials. We winnowed the growing list of digital investment apps to these 7 best robo-advisors for millennials.
Yet, millennials are up against a few hurdles to financial success including increasing tuition and inflation rates along with Social Security longevity worries.
*Disclosure: 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.
Sure, a lot of millennials are drowning in student loan debt—but it’s not all bad news.
Millennials are making smart choices when it comes to investing, and they can make meaningful contributions toward retirement! In fact, a robo-advisor for millennials might be just the thing to help with these long-term (or even short-term) goals.
Millennial Investing Sensibilities: What’s Important?
Before moving on to specific robo-advisors for millennials, it’s helpful to understand what unique needs millennials are bringing to the investing table. Millennials are hard to classify, because the generation is at different stages in the career process. However, the general consensus is that there are 4 things we need to know about millennials and their financial decisions.
1. Millennials make financial decisions based on their values.
A robo-advisor for millennials would need to be designed with this important factor in mind. Millennials want to put their money where their values lie. Investment options that support this preference might include robo-advisors with ethical investment options in sustainable or developing companies, or allow customized and diverse portfolios.
2. Millennials tend to work a myriad of job types.
With the gig economy in full swing, many millennials make money from non-traditional jobs. Still others with more traditional jobs may not receive the same retirement benefits as their baby boomer parents.
A robo-advisor for millennials would help fill in the gaps that many millennials notice in their retirement options.
3. Millennials are constantly on the go.
No banker’s hours here. Technology is embedded in the millennial life and is helpful in getting things done around unconventional work schedules.
Millennials need financial services that match their 24-7 lifestyle. Robo-advisors are great for this need; they are available after that 2am bar shift or before the early-morning board meeting.
4. Millennials do it themselves.
With the help of Pinterest and HGTV, more and more millennials are DIY-ing it up. Sure, part of this comes from the satisfaction doing something yourself brings. The other part is out of necessity: DIY tends to be cheaper than hiring help, and robo-advisors are no exception.
What Makes a Good Robo-Advisor for Millennials?
Robo-advisors are great investment tools for most people, but choosing a specific robo-advisor for millennials meet the needs mentioned above and offer customizable, flexible, readily-available options that allow millennials to invest based on their values.
Top 7 Robo-advisors for Millennials for Investing
Betterment has no minimum investment amount, although you’ll need $10 to begin investing, which makes it appealing for millennials who want to start investing but are short on cash. While eventually Betterment offers reasonable invevtment management fees of 0.25% or 0.40% AUM based on whether they use the digital or premium version (with human financial advisors).
And Betterment offers SRI or socially responsible investing portfolios for millennials seeking to invest with their values. And users can opt for crypto portfolios too.
Betterment is goals-based. Based on your answers to the sign-up questions, Betterment automatically recommends several goals from which to choose. You can modify those goals to meet your needs. This is a helping hand for those who might need assistance in choosing how to proceed with investing.
Betterments fee-free cash management and stable of financial planning packages, for an added fee, make Betterment among our favorite robo-advisors.
Wealthfront is a robo-advisor with a range of managed investment portfolios, sustainable investing, crypto funds and ETFs for customization. A high yield cash account, borrowing and an awesome digital financial advisor make Wealthfront one our best investment apps for millennials. Wealthfront’s investment management fee is competitive at 0.25% of your account value.
Wealthfront offers hundreds of ETFs and a few crypto funds that can be added to your portfolio. Included in the ETF selection are renewable/natural energy to those dealing with real estate, thus giving you a choice in where your investments are focused. If you’d prefer, you can craft your own ETF portfolio for Wealthfront to manage.
Sign up here and you’ll receive a free cash bonus.
3. SoFi Automated Investing
The SoFi robo advisor is just one of the investment offers on this platform. Known for student loans, SoFi has become one of the most in-demand investment apps for several reasons. All SoFi members have access to fee-free financial consultants, career coaches, and investment management.
The SoFi Investing features include:
- 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.
- IPOs – Access to competitive initial public offering shares of new companies.
- 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 ETFs: SoFi Weekly Dividend (WKLY), SoFi Weekly Income (TGIF), SoFi Select 500 (SFY), SoFi Next 500 (SFYX), SoFi Social 50 (SFYF) and SoFi Gig Economy (GIGE).
Investors seeking managed investment portfolios, free financial consultants and access to crypto, stocks and ETFs might check out SoFi.
The Stash app is a good pick for beginner investors. For just $5, you can start investing in a Roth IRA or a brokerage account.
Stash offers both customized pre-made portfolios and do-it-yourself investing. Millennials who want to put their money where their values are will be happy to see that Stash encourages users to invest according to their values. Investors who care about the environment can invest along side those who want to invest in startups—both knowing that their money is supporting a cause or business type they care about.
Stash users can learn while they save and invest with good educational resources, round ups and a stock back back debit card. If you’ve got a few dollars and want to start building wealth for tomorrow, check out the Stash app.
5. Schwab Intelligent Portfolios
The Schwab Intelligent Portfolios has a higher minimum investment than some of these other robo-advisor options, but they also have billions of assets under management (AUMs), which makes them a tried and true option for millennials with a bit more money to invest. Although you need $5,000 to begin investing, the robo-advisor management fee is zero. That’s right, it’s free!
As you increase your investments with Schwab, you will get extra benefits. Accounts valued at a minimum of $25,000 can sign up for the Schwab Intelligent Portfolios Premium and gain access to a human financial planner.
Schwab offers a variety of accounts, including trusts, brokerages, and retirement accounts and one of the most diversified robo-advisors in the sphere.
Acorns is an app that helps investors make small investments over time instead of requiring large up-front deposits. Acorns takes your spare change from everyday purchases and invests the money in ETFs (exchange traded funds). This “spare change” feature means Acorns boasts no minimum investment amount.
Acorns is affordable with monthly fees ranging from $3 to $6. The round ups mean that after you link your accounts, your spare change is going into an investment account. This is a good way to begin building up your net worth for future goals.
Although other apps also allow you to save spare change, Acorns allows an unlimited number of debit or credit cards to be linked. If you use store-specific credit cards to earn bonus points, this means not missing out on saving your spare change.
As a robo-advisor for millennials, Acorns offers easy-to-use, quick investment strategies, set-it-and-forget-it investing, low-cost management, and seamless integration into daily life.
Visit the Robo-Advisor Selection Wizard, take a quick quiz, and find out which robo-advisor is the right one for you.
7. M1 Finance
M1 Finance is great for investors who want to choose from up to 60 pre-made investing portfolios. The strategies range from typical diversified stock and bond robo-advisor portfolios to hedge fund followers, retirement and income portfolios. Those millennials who want to dip their toes into do-it-yourself investing also can access thousands of ETFs and individual stocks. The screeners help users choose the best investments for you.
The cash account and lending round out the platform. Minimums are only $100 and rebalancing back to your desired asset percent mix is free. If you want a few additional perks, like higher cash yields, lower borrowing costs and an additional trading window, then you can sign up for M1 Plus at a low annual fee of $125.
Which is the Best Robo-Advisor for Millennials?
Depending on what you value, any one of the above robo-advisors would be a good choice for a millennial investor. There is some overlap, too.
SoFi and Schwab are some of the top free robo-advisors, making them great choices for someone looking to get started without overpaying on portfolio management.
If you like a human touch to your robo-advisor, Betterment and SoFi offer the best of both worlds.
Of course, you might also try getting started with less than $500 to give robo-advising a low-stakes test run. If you’re looking for a robo-advisor for millennials that also lets you start with a small amount of money, you might try Betterment, Acorns, Stash, or M1 Finance.
The most important decision you’ll make when choosing a robo advisor investment app for millennials is the choice to start now. More important than the platform you pick is that you begin saving for your future now, rather than later. The earlier you begin investing, the less money you’ll need to save, to reach your financial goals.
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