Robo investing apps have transformed the way people manage their money. Investment apps connect users with automated financial advisors. Robo-advisors use an algorithm to build you a customized investment program. They create a diversified portfolio for the app user based on individual risk and return specifications. Robo investing apps bring money management systems directly to the consumer. They make investment resources more widely accessible. They also provide a variety of customizable services to help people manage their money. If you are an app user interested in investing, continue reading to learn about five ways robo investing apps can help you mange your money.
Robo investing apps use low cost dollar rounding systems to help manage your money. These apps charge a flat fee of $1 – $3 per month and have no minimum for investment. They are ideal for college students or people who are just getting started. Dollar rounding apps link to your checking account or credit card. The app rounds up the money spent on everyday purchases to the nearest dollar. This change is automatically invested into exchange traded funds (ETFs). These apps also offer “found money” partnerships with existing brands. When you spend money at these partner brands, money is automatically entered into your investment account. Robo investing apps make you money by investing your spare change into a customized ETF portfolio.
Another feature available through robo investing apps is tax-loss harvesting. App algorithms regulate your portfolio regularly. They do this through buying and selling securities. These robo investment services let app users take advantage of any capital losses on their investments to offset gains on other investments. This helps to capture tax losses. Tax-loss harvesting also lowers the capital gains that you owe to the IRS. Over time, this tool adds up large savings for app users. Robo investing apps use tax-loss harvesting tools to close the gap between money made and money owed at tax season.
Hybrid Investment Tools
Investment apps also offer hybrid investment tools for app users. A hybrid approach means that app users occasionally work with a licensed investment advisor through the app. This helps app users define their goals and balance their portfolio. This service is offered primarily through large mutual fund company apps. These companies specialize in low-cost, passive investing. Hybid investment apps offer a combination of online tools and personal attention from licensed financial advisors. They are geared towards app users with larger portfolios. Robo investing apps cater to customers with hybrid tools that connect users to licensed financial advisors through the app.
Robo investing apps also offer various ethical investing tools. Socially responsible investing features allow you to choose the companies in your portfolio based on your values. They offer tools that let you align your portfolio with your ethical beliefs. You can choose only to invest in companies that promote affordable housing, have low carbon emissions, or support gender diversity. Other robo investing apps allow users to focus primarily on women investors. They offer customizable features that help app users invest in companies with similar values and beliefs. Robo investing app users have access to tools that assist in ethical investing.
Retirement Portfolio Management
Robo investing apps can can also be used to manage retirement portfolios. These apps offer integrated tools that cater to retirees. As users near retirement, robo advisors shift their funds from a stock-heavy to a bond-heavy portfolio. This is a lower risk option that is designed to match the cash flow needs in retirement. Retirees are using their portfolio to support basic living expenses like medical bills, housing, dining, and travel. Intuitive tools ask app users to enter their age, how long they expect to live, and how much they need each month. The app then calculates the best money management system for their needs. Robo investing apps offer specialized tools to help retirees with portfolio management.
Robo investing apps offer users many tools to help manage their money. These apps round up money spent on everyday purchases and invest the change in ETFs. They use tax-loss harvesting to help lower your capital gains tax. Robo investment apps offer hybrid services that connect users with licensed financial advisors. They help retirees optimize their portfolios to pay for their living expenses. Ethical investing features allow app users to invest their money according to their values. If you are interested in the tools that robo investing apps use to manage your money, consider the points mentioned above.