Is a Robo-Advisor Right for Your Investments?

Robo-advisors are growing in popularity throughout the investment sector of the financial industry. Find out if a robo-advisor is right for you.

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https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Is a robo-advisor right for your investments
4 min read

Key Takeaways

  • A robo-advisor is an online investing solution that recommends and adjusts a portfolio based on your timeline, preferred risk level, and goals
  • Robo-advisors are gaining in popularity for convenience, low fees, and small minimum investments

Chances are, you’ve heard of the “robo-advisors” that are taking the investing world by storm. But what exactly are they? And are you and your portfolio ready for a digital face-lift? Let’s tackle these questions and more. 

What is a robo-advisor?

Robo-advisors are automated investment portfolios that use algorithms to consider your unique needs against outside factors and then automatically adjust your portfolio to help keep you on track. This is different from target date funds, which do not have the same capabilities.

What is a robo advisor - unique needs vs outside factors

Are people really using them?

Despite being virtually nonexistent just five years ago, robo-advisors are rapidly growing in popularity—and they’re expected to keep growing in the years to come.

Growth in Assets Under Robo Management (in Billions)

How do robo-advisors work?

Despite its name, a robo-advisor isn’t a self-aware investing machine—there are skilled, knowledgeable professionals behind the curtain who manage your portfolio’s makeup. (That’s why we call them “managed portfolios.”) If you would like to consider investing in a robo-advisor managed portfolio, TD Ameritrade Investment Management, LLC, offers Essential Portfolios, which are robo-advised model portfolios. Here’s the process for getting started:

How do robo advisors work

Why go automatic?

From the low fees to the low investment minimums and the professional portfolio management, there are many reasons to consider a robo-advisor model portfolio. The convenience of model portfolios can give you additional time to focus on the things that matter most: your family, your career, and all the things that make you smile.

Which level of automation is right for you?

TD Ameritrade Investment Management offers three types of managed portfolios for you to consider:

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  • Essential Portfolios is $5,000 (minimum investment amount for corporate/business accounts is $100,000)
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  • Personalized Portfolios is $250,000 for a portfolio, consisting of one or more individual accounts, each having at least a $50,000 minimum.
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