Taylor Larimore wrote: ↑Sat Sep 16, 2023 1:16 pm
I have never used a Robo-Advisor
, but the more I learn about them the more I am convinced that they are worthwhile for many investors.
Morningstar has researched several of the best known Robo-Advisors
and recommends Vanguards' Robo-Advisor
. Bogleheads can read the Morningstar report here:
https://www.morningstar.com/financial-a ... ne-worst-2
It would be informative to learn the experience of Bogleheads who have used a Robo-Advisor
Personally, I welcome your post since you mention you are learning about them and are getting more convinced that they may be worthwhile for some investors. Once we move beyond our workplace retirement plans (401k/403b/457b) and venture out into tIRA/Roth IRA, UTMA/UGMA, taxable account, etc. investing there are a variety of options available to make it passive, automatic, and rather simple to do thanks to the advent of mobile app technology, competition, and marketing. Low initial investment amounts, pre-chosen lazy portfolios, and the ability to quickly set it up and have it all run on automatic pilot with minimal fuss, out of sight - out of mind all adds up to winning combinations for many investors.
I am not so concerned with which three robo-advisors are the best, or which one is the worst. Rather, which ones match and fit the needs of the actual investor who is signing up for the service.
I use two robo-advisors for a portion of our investments. All of our workplace plans have been on automatic pilot for decades, but our brokerage accounts were not. That led me to seek out alternative solutions.
Our family has been using Acorns for the past 7 years. I also wanted to get my young adult children who were about to finish college involved in saving/investing in a passive manner, so the Acorns robo-advisor platform was a sensible option for recurring investments as I challenged them to set aside a daily recurring amount, out of sight - out of mind. The portfolios at Acorns were designed by Harry Markowitz (RIP) and use Vanguard and BlackRock ETFs. I opted to join in with my kids and opened up an account for myself to give it a test run, and have stuck with it.
I use their Aggressive Portfolio (80/20) which is automatically rebalanced and completely passive for me. It is as close to the Three Fund Portfolio (using total US approximation like most of us do in our workplace plans) that I could find at the time when I opened the account(s):
Approximated Total US Stock Market Index
47% - VOO (Vanguard S&P 500 Index)
6% - IJH (Blackrock Mid Cap S&P Index)
3% - IJR (Blackrock Small Cap S&P 600 Index)
24% - IXUS (Blackrock MCSI Total International Stock Index)
14% - AGG (Blackrock Core Total US Bond Index)
6% - ISTB (Blackrock Core 1-5 Year US Bond Index)
I also use the passive robo-advisor M1 Finance where I hold your Three Fund Portfolio at a 70/30 AA, Paul Merriman's Ultimate Buy & Hold Portfolio at a 70/30 AA and a few other investments.
Compared to workplace plans where the majority of our investing goes out of each paycheck, the robo-advisor investing is an excellent vehicle to have it all run on automatic pilot into taxable and or IRA, UTMA/UGMA accounts.
M1 has no fees which I enjoy and have been using for six years. Acorns does have a $3 per month fee on top of the ETF ER fees. When the account was opened, the fee was only $1 per month. Regardless, the balance is high enough now that the $36 per year is rather insignificant. In 99% of the robot-advisor platforms, there is no free lunch as fees are part of it.
"Save like a pessimist, invest like an optimist." - Morgan Housel |
"Pick a bushel, save a peck!" - Grandpa