Robo-Advisor or ETF: How Do They Compare?
Part of taking control of your finances and planning for the future includes understanding the investment landscape and the options available. When I started learning more about low cost index investing, I had a hard time telling what the difference was between using a Robo-Advisor and investing in Exchange-Traded Funds (ETFs). They both seem to be a broad investment approach that provides portfolio diversity at a low cost, but after trying out both options, I found that each has its unique set of advantages and potential drawbacks, depending on what you’re looking for in an investment strategy. Here’s a breakdown of my findings, which might help you decide which route is best for your financial goals. Robo-Advisors: The Hands-Off Approach A robo-advisor (such as WealthSimple) is an online platform that provides automated, algorithm-driven financial planning services with minimal human intervention. Wealthsimple constructs a diversified portfolio using a mix of low-cost ETFs that include stocks, bonds, and Real Estate Investment Trusts (REITS). Why I Like Them: What Gives Me Pause: Exchange-Traded Funds (ETFs): The DIY Path Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks. ETFs hold a collection of assets, such as stocks, bonds, … Read more
Written by: NGM-FI
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