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Technology is becoming ingrained in our lives. We allow computers to do any number of things for us. Next on the list just might be investing.
USA Today points out that computerized trading is a big part of Wall Street these days. However, it’s not just these major players that are seeing this type of computerized trading. Individual investors can also take advantage of this type of investing with the help of autopilot programs that make the investing decisions for you.
Putting Your Portfolio on Autopilot
USA Today lists sites like Wealthfront, SigFig, and Betterment that use algorithms to help put together a portfolio based on various portfolio theories, usually using asset allocation as the basis. Thanks to index funds and ETFs, it’s easy to base portfolio decisions on asset allocation. There’s no need for stock picking.
Plus, many of these funds are low-cost, so it doesn’t cost much to manage your portfolio. Some of these emerging companies don’t even charge you transaction fees. You pay one low annual fee, and that’s it. The fee is usually much less than an investment adviser would charge as well.
However, even with the conveniences and confidence afforded by these types of sites, the reality is that you still have to have a lot of trust. Do you trust a computer to make decisions about your finances? And are you confident in the security of a site that will ask you to share all of your brokerage account information so that trades can be made? With Betterment, you don’t have to worry about that, since Betterment is the brokerage as well. However, SigFig is a registered investment adviser, so you give up your account information.
Technology is revolutionizing so many things. And now it might change the way you invest.