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What are robo-advisors and how do you choose one? 🔍

Robo-advisors: Robo advisors are automated portfolio managers. You can think of them as an autopilot for investors. After initially answering a series of questions about your resources and financial goals, the robo-advisor will make ongoing decisions about how to invest your money.

This means you can manage your investment portfolio without the need to consult a financial advisor or picking and choosing investments on your own.

What do robo-advisors invest in?

Most robo-advisors put small amounts of money into different stocks, rather than in one individual stock. This is known as diversification. Your money is invested in various asset classes, geographies, and industry sectors to help spread the risk on your investments.

The process of getting started:

Robo-advisors will ask you to complete an initial quiz. These questions may touch on subjects like your investment timeline, your risk tolerance, and how much money you have in savings. The process is very straightforward.


How to choose a robo-advisor?

There are quite a few options out there, and it can feel overwhelming. Here we'll present you with the two most popular ones. Both of these are geared largely toward beginners and make it easy to get started.

1) Wealthify

✅ You can start investing from 1£

✅ They have 5 different investment portfolios, from cautious to adventurous.

✅ You can withdraw your money at any time.

✅ They offer an 'ethical plan' offer ethical to invest in line with your values.

⛔️ It can take a couple of days for the money to be transferred into your account.

Setting up:

You will be asked a series of questions and the service will then make recommendations to you based on want you want to achieve in the long run.

The cost

They charge an annual fee of 0.6% for managing your investment. There are no extra fees for deposits, transfers, or withdrawals. There can be an extra fund fee taken directly by the fund provider, which averages around 0.16% annually.

They are very transparent about their fees, and you can calculate what this would look like for you on their site.


2) Nutmeg

Another very popular option, Nutmeg is the more established platform and has been around a little longer.

✅Nutmeg is regulated to give advice, so has a wider range of educational content.

✅ Choose between investment styles ‘Socially responsible’ ‘fixed allocation’ or ‘fully managed’

⛔️ They have a minimum initial investment of 100£ for a lifetime ISA or 500£ for a general ISA.

The cost:

Nutmeg’s managed portfolio fee is 0.75% for amounts from £0-£100,000, so only slightly higher than Wealthify.


*Is my money safe?

Both of these are regulated by the Financial Conduct Authority. This means that the first 85,000£ are protected under the Financial Services Compensation Scheme (FSCS).


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