Robo Advisors: An Introduction

Autopilot for investors. Robo-Advisors are automated portfolios managers that make ongoing decisions about how to invest your money. These digital platforms use algorithms to automate your portfolio based on your investment goals and risk tolerance. All you have to do is fill in a survey and you’re good to go. 

Robo-advisors usually offer easy account setups, goal planning, portfolio management, security features, customer service, education, and low fees. If you are unsure of how to manage your investments and find this genre of alternative income intimidating, then Robo-Advisors might just be what you need to start your investment journey. 

How do Robo-Advisors work?

Robo-Advisors although all different, most share a similar process of operation. 

Step 1: The Survey or Questionnaire

Answer a few questions to assess your risk tolerance and investment needs. Are you investing for the future or for short term gains? 

Step 2: Your Investment Portfolio

The Robo-Advisor will build you an investment portfolio. Usually, it’s backed by a team of investors working in the background to help diversify your portfolio. 

Step 3: Rebalancing 

Experts monitor market activity all over the world, and whenever they need to trigger a rebalancing on your Robo-Advisor. This way you won’t have to worry about fluctuations in the market. 

Step 4: Account handling 

Log into your account and track the progress of your Robo-Advisor with your funds. 

Robo advisors benefits

Benefits of using a Robo-Advisor 

Robo-Advisors are a low-cost alternative to Investment Portfolio Managers. Eliminating the human factor greatly reduces cost meaning the bot can function at a fraction of the cost. Robo-advisors are also widely accessible with a fully online experience. You can engage with one from all over the world. 

Low barrier entry is another great reason to use a Robo-Advisor. Banks and Investment brokers usually have a high minimum fixed fee. However, these digital platforms are way more inclusive, as a result, you can start investing with as little as RM100. 

Efficiency is the way to go with digital platforms Robo-advisors. If you’re more of a hands-on client and want to make some investment choices on the fly, hitting a button to execute a trade is a lot easier than calling your broker and asking them to do it. 

If you’re new to the market and are intimidated by regular investments, then with Robo-Advisors you know the trades are made based on your risk profile and you won’t have to worry about monitoring your investments like a hawk. 

Examples of Robo-Advisors available in Malaysia 

There are a fair few digital platforms in Malaysia that offer Robo-Advisor style investments, this is just a couple you may have heard of. 

  1. StashAway 
  2. MYTHEO 
  3. BEST by Bank Islam
  4. Raiz
  5. Versa 

Choosing to invest with a Robo-Advisor might seem like an amateur move, but ultimately it’s better than letting your money sit idle. 

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Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation.  In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorized third party