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How to Invest Using a Robo-Advisor in 2020 and Build Wealth

By on March 23, 2021 0

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  • Managed portfolios, sometimes called robo-advisors, are investment accounts that are assigned a professionally designed portfolio based on your investment goals.
  • Robo-advisors offer several great advantages over human financial advisorsincluding better harvesting of tax losses and reduced management costs.
  • If you don’t know much about investing, a managed portfolio is a great way to start with a diversified and professional portfolio.
  • Open an account with wealth front Where Stash today and start investing with the help of a robo-advisor »

If you know you should invest but don’t want to do it yourself, there are several ways to go. The one that is gaining popularity, and for good reason, is managed portfolios. Also known as robo-advisors, managed portfolios are professionally designed portfolios tailored to your unique situation.

These affordable digital financial advisors select a pool of low-fee index funds that match your investment goals. Let’s see how they work and why 2020 might be the right year to switch to a managed portfolio.

What is a managed portfolio?

Before online investment was one thing, probably the best way to manage your money was with a human financial advisor. These experts would understand your financial needs and create an investment plan to help you achieve your goals.

About ten years ago, someone realized that millions of people had virtually the same conversation every day. They could group people based on factors like their age, risk tolerance, and investment goals and come up with a handful of ideal portfolios to match each group.

When you register with a


or a managed portfolio product, you will complete a brief survey listing information such as your age, ideal retirement age, income and how you would react in certain market situations. Based on your results, you are assigned to a professionally designed portfolio tailored to your goals and needs.

Because each wallet is not designed for one person, but for thousands of people like you, the price is much lower. Instead of paying one percent of your assets or more each year, the fees have dropped to around 0.25% with this type of financial advisor. This is a great price for a personalized investment plan.

Advantages and disadvantages of managed portfolios

Managed portfolios are not ideal for everyone. Here are some pros and cons to consider when deciding whether or not managed portfolios make sense for your assets.


  • Semi-personalized wallet: The big advantage of managed portfolios is the ability to get a low-cost portfolio of ETFs weighted to your needs.
  • At low price: Most robo-advisors charge a fee of around 0.25% or even less. The underlying funds they choose are also among the cheapest on the market.
  • Easy to manage: You don’t need an MBA to invest. Simply take the survey, fund your account, and the rest is taken care of for you.

The inconvenients

  • No human advisor: No one takes care of your specific needs. A team monitors the overall portfolio allocation, but you don’t get the upper hand in most cases without paying extra.
  • Not free: Most brokerage accounts are free and charge no fees to trade stocks and ETFs on your own. Managed portfolios have recurring fees.

Where to find a managed portfolio

Many companies today offer managed portfolios. These can be standalone, app-based businesses or an account offered through a traditional brokerage.

wealth front is an example of a managed portfolio company with low fees and great features. It charges 0.25% and uses only low-cost ETFs in client portfolios. Wealthfront also includes tax loss harvesting and adjusts your portfolio based on your risk tolerance and market performance.

If you like the idea of ​​a managed portfolio but still want to manage things yourself, Stash is a unique investment company that includes coaching and education to help you build a portfolio aligned with your goals.

Managed portfolios are a big part of the future of investing

Managed portfolios give scale to something that was once very personal. Contrary to the belief of some, a robo-advisor is not a the computer selects all your investments. Teams of brilliant, professional IT and investment managers design systems to build the ideal portfolio for each user.

If you’re looking to keep costs low and make your investments “work”, managed portfolios could be a great choice for your needs.

Open an account with wealth front Where Stash today and start investing with the help of a robo-advisor »