Automatic investment strategies, also known as ‘Robo advisors’, are when a platform invests your money automatically, turning the financial markets into a passive income stream for you. While some people shy away from automation, assuming that humans must be better at using the stock market, this is far from the truth.
In fact, over the last 15 year period, almost 90% of stock market brokerage funds failed to beat the S&P 500s return. This means that someone who put all their money in an index fund that followed the trend of the market would have had a higher return than those who pay a professional to invest for them.
This rather amusing fact calls into question the need for stock market investment brokers in general, further signaling the power of an automatic investment. As more people realize the utility of automatic investment over more archaic investment bankers’ funds, there has been a movement towards platforms that completely automate the process for you.
These prepacked investment strategy platforms allow users to passively manage their finances, with the platform itself automating investment based on their selected strategy. In this article, we’ll be taking a look at the best three platforms that offer prepackaged investment strategies.
Why Should I use A Platform That Offers Prepackaged Investment Strategies?
One of the first barriers to entry that someone who is thinking about investing in the stock exchange encounters is fear. Nearly 70% of people are too worried about the stock exchange dropping in value to invest any of their money, leaving all of their savings in cash.
There’s certainly a case to be made for the difficulty of the stock exchange, with a steep learning curve often leaving people lacking the confidence they need to commit to investing. This is one of the ways that automated investing can transform the financial stability of many around the globe.
Instead of having to learn about the stock exchange, someone that uses an automated investment platform doesn’t have to learn at all. Simply by allocating their money to the platform, the system will take care of the rest.
Considering that the majority of these automatic platforms also offer different levels of risk tolerance, even the most worried investor will be able to find an investment solution that suits them.
Using an automatic investor:
- Simplifies finance – You’ll not have to learn anything yourself, removing this barrier to entry.
- Makes investing passive – For those that understand investing, these systems can turn investing into a passive form of income, liberating your time.
- Rebalances – With continual rebalancing, your portfolio will always stay on track to reach your goals.
We’ve selected three platforms that make investing a breeze, with their innovative automatic solutions ensuring that you can watch your money grow without lifting a finger.
Best For: Those looking for a comprehensive system.
Starting off with one of the largest players in the world of automated finance, Wealthfront is a Canadian Robo advisor that offers incredibly low fees.
When you sign up for an account with Wealthfront, you’ll go through a list of financial questions, discussing your income, your investment goals, and your idea of a good financial strategy. These will assess your level of risk and then calculate a path to reach your long-term financial goals.
Whether you’re looking to save for a house, pay a large quantity for something, or just put some money into the market for retirement, there will be a plan for you to follow. The automatic system, named ‘Path’, will calculate the best investment strategy for you.
From there, you’ll be able to completely automate your investing, with Wealthfront automatically balancing your portfolio and investing amounts that you set aside at regular intervals.
This application is very much a set-it and forget-it financial service. You’ll even be able to automate payments from your bank account into the service, meaning you never have to think about saving again.
Best for: Those looking for an innovative platform.
Launched in 2021, HyperDex is a new name on the scene of automatic investment, but one that’s making a big splash in the market. HyperDex is a DeFi (decentralized finance) management platform, allowing its users to invest in a range of assets with an innovative new system.
HyperDex asks users to select one of three ‘Cubes’, with each cube representing a different style of investment. You’ll be able to access:
- Fixed Income Cube – A more stable form of investing which returns dividends in stable coins or crypto to the investor over time.
- Algorithm Trading Cube – Based on HyperDex’s statistical arbitrage algorithm, automatic trades are made in the name of the user, generating income passively.
- Race Cube – Based on market prediction, this more aggressive form of investing has higher risks and much higher rewards.
Once you select the cube you want to put your money into, you’ll then select a time period, getting different reward and risk calculations based on the amount you’re entering and the time period you’re investing for.
HyperDex’s system is truly innovative; this Cube form of asset management breaks down investing into something that everyone can understand. A user only needs to sign up for an account and read each of the cubes before making their decision – the app will do the rest.
Although new to the industry, HyperDex is definitely a company to look out for.
Best For: Those interested in fractional shares or with less starting capital
Stash is a fairly new investment management platform, but one that’s full to the brim with excellent automatic investing tools. Much like Wealthfront, when you sign up for an account, you’ll answer a range of questions. These questions are aimed to reveal the amount of risk you’re willing to take.
From there, Stash calculates and then recommends a huge range of ETFs that suit your investment strategy. You’ll be able to select some of these EFTs, with Stash taking care of the rest. With automatic transfers and rebalancing by Stash, you’ll never have to think about saving again.
One thing that allows Stash to stand out from the crowd is that they offer their investors the ability to invest in fractional shares. A fractional share is where you buy a fraction of a share with only part of the total cost. This is perfect for those that don’t have large sums to start off with. You’ll be able to buy fractions of your favorite shares, meaning you don’t miss out.
As stock prices continue to rise, fractional shares are a wonderful tool. Looking at stocks with values of over $1000 and beyond, being able to put in the amount you can afford is an excellent aspect of Stash.
Stash also offers budget tips, connecting this tool to your bank to then get a summary of ways you can improve your budget and save more money.
Final Thoughts on Automated Investing
If you’re looking to take the plunge into the stock market for the first time, or are simply wanting a passive form of income, then automated investing tools will be perfect for you.
On this list, we’ve documented the best platforms currently on the market, making sure you’ll find one that suits your investing goals.