Robo-advisers offer cost-effective investment solutions for investors

How to invest in the stock market using robotic investment advisors However, they lack the personalized touch of human advisers, which is essential for complex financial planning. Robo-advisors prepare a comprehensive plan for investors, depending on their risk tolerance and financial needs

Investing with robo-advisers
Robo-advisers have revolutionised investment management and offer automated, low-cost solutions to help investors manage their portfolios. Here’s how you can avail of this option.

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Signing up
The first step involves registering on a robo-adviser platform. Investors are asked to fill out a questionnaire about their financial goals like retirement or buying a home, risk tolerance, and investment horizon. This helps the platform understand the investor’s needs and tailor an investment portfolio accordingly.

Portfolio creation
Based on the responses, the robo-adviser algorithm creates a diversified portfolio. The investments may include stocks, mutual funds, ETFs, and bonds. The goal is to optimise returns while maintaining an acceptable level of risk. The robo-adviser attempts to ensure the right balance of assets based on market conditions.

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    Fees and costs
    Most robo-advisers in India charge a fixed quarterly or annual fee, or a transaction-based fee.

    Ongoing monitoring ,adjustments
    Robo-advisers provide regular updates on the portfolio’s performance. For any changes to a user’s portfolio in line with the desired asset allocation beyond the initial investment, like re-balancing or tax loss harvesting, the platform may need to obtain explicit consent from the customer for each transaction.

    Points to note
    Robo-advisers lack the personal touch that human financial advisers provide, which can be particularly important for investors who prefer face-to-face interactions or require complex financial planning advice.

    Content courtesy Centre for Investment Education and Learning (CIEL).
    Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta

    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

    This story originally appeared on: India Times - Author:Faqs of Insurances