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We’ve got robotic vacuum cleaners and self-driving cars, so why not automated investing? It turns out that the investment automation revolution is already well underway with tools called robo-advisors, which Investopedia defines as “digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision.”

It may sound tempting to turn your money over to a robo-advisor and walk away. But starting to invest before you understand your goals doesn’t fit with the Heels & Yield approach and I don’t recommend it. Whether you’re investing automatically with a robo-advisor, with an in-person financial planner, or on your own, you’ll need to do some work up front to develop an investment strategy that’s consistent with your long-term financial goals and that fits your risk preferences. That way, you can avoid the temptation of too-good-to-be-true investments and can stay focused on your plan.

Take time to prepare

The investment world is a colossal engine fueled by human emotions. No one can predict what will happen next — and you shouldn’t believe anyone who tells you they can.

This means investing has to fit into the bigger picture. When I work with clients to help them get in shape financially, our priorities are:

  1. Getting debt free
  2. Saving for future needs
  3. Investing surplus savings
  4. Diversifying investments for safety

In my 10-plus years of experience, I’ve found the wisest investment strategy is to assemble some lower risk investment combinations that yield about the same returns over time as higher risk ones. People who want to get rich quick without a goal often get trapped by foolish investment schemes that promise immediate returns. Then they’re disappointed — or worse, lose big — when the schemes don’t pan out. I recommend that you have objective criteria for decision making, a broadly diversified portfolio, and a long-term, get-rich-slow perspective.

Rely on tested strategies

Two tried-and-true strategies form the basis of good investing. And neither one is about making a quick buck or guaranteed profits! They’re about protecting you from fluctuations and extreme volatility and making the best of an uncertain situation — in other words, they account for the realities of the market.

  1. Dollar-cost averaging, or investing the same amount at regular intervals (for example, monthly or quarterly), protects you from overreacting to market fluctuations and from selling too soon or buying too readily. And because you are buying during market dips as well as highs, you’ll naturally get more value without having to time your investments.
  2. Diversifying investments prevents you from being overinvested in a part of the market that might be hard hit by whatever financial storm blows through and ensures you’ll have at least some investments in parts of the market that are profitable at any given time. Putting all of your investment eggs in one basket is unwise; a single investment, whether in one stock or one market segment, could lose big.
3 Ways to invest your money

There are three ways you can invest: 1) do it yourself, 2) use an automated investing approach such as a robo-advisor or app, or 3) employ financial advisors or private banks. The graphic below shows a sampling of different companies offering different paths for investing.

A few factors affect your decision, as a first-time investor, about how to invest. Here are some questions to consider before you decide which way to go.

  1. How much money are you looking to invest?
  2. How much time are you willing to spend managing your investments?
  3. How much do you know about the market?

Answer these questions and look at the chart below to see where your answers fall.

The DIY approach offers low costs (fees) but requires you to spend more time researching and managing your investments. Doing your own investing allows you to pick the stocks and funds you want to invest in, but will require you to dedicate time to following them and making decisions about buying and selling. Falling prey to investment psychology traps, such as panic selling during a downturn, also may affect the outcome of your investments.

Financial advisors charge high fees and require minimum investments but necessitate less time and research on your part. For a private bank, this usually means maintaining a minimum account balance of more than US$1 million. On top of that you will pay annual fees ranging from 0.75% to 2% of the total invested. Most financial advisors are also typically insurance companies, which means your investments aren’t 100% investment focused.   Specifically, financial advisors work for insurance companies, your dollars may not be completed invested in financial instruments for future gain. Instead, a certain percentage may be diverted to funding insurance products.

Using robo-advisors for automated investing hits the sweet spot between variety/flexibility and time/cost to invest. Although their investment offerings are more limited, you’ll put in less time and spend less money with a robo-advisor than by investing on your own or with a financial advisor.  

Starting out with a robo-advisor

I suggest beginning- and intermediate-level investors start by investing with a robo-advisor to support good investment habits. Robo-advisors follow an algorithm to decide when to buy, sell, or hold based on your risk preferences (rather than relying on intuition, subjective judgment, or anxiety). A robo-advisor not only helps you choose investments that fit your situation and goals, it helps you control losses and diversify your portfolio, with minimal work on your part.

Are you ready for a robo-advisor?

If you’re new to investing or to the idea of a robo-advisor, now is a good time to start thinking about both. Warren Buffet famously once said, “If you don’t find a way to make money while you sleep, you will work until you die.”

Investing is a good way to make your money work for you, even if you’re on holiday or getting some shut-eye. Automated investing is a quick and easy way to dip your toe into the world of investing. And it can be a great starting point to learn more about the market without paying excessive fees or spending too much time worrying about investment decisions.

Read more about robo-advising in our next blog post.

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About Heels & Yield


Heels & Yield empowers women to manage their finances and to nourish their health and their wealth through its proprietary holistic wealth management practices. To help clients achieve holistic wealth with guidance and accountability, Heels & Yield offers services including group workshops and private wealth mentoring that combines financial education with personal financial coaching.




This blog and its contents were created by Heels & Yield Limited. Our blog and its contents are for general guidance and informational purposes only and should not be treated as legal, accounting, financial, investment or tax advice. For specific questions related to your financial, legal or tax situation, please consult your own attorney, accountant, and/or independent financial advisor for expert advice and carefully consider all relevant risk factors. Heels & Yield Limited is a financial education company and not a financial advisory firm or a law firm or a certified public accounting firm. Please visit our website for full terms of our disclaimer and terms conditions of use. Please read our full disclaimer here.

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