Savings held in a checking account are losing value. In June, for example, savers' money reduced its purchasing power by 1.9% year-on-year due to inflation, despite the fact that there are multiple ways not only to avoid loss, but also to invest and make savings profitable. Robo advisors, for example, are an attractive solution for those who want to invest, but don't know where to start.
It is a team of financial experts who design portfolios of investment funds, ETFs or pension plans, adapted to the different risk profiles. In addition, they invest the money on behalf of the saver and use technology to carry out the execution.
Although in Spain they are not yet so common, from the financial comparator HelpMyCash.com they assure that robo advisors are the most popular investment tool among Americans who are venturing into this world for the first time. Their popularity is due to the multiple benefits they offer to investors. And what are these benefits?
The commissions of independent robo advisors —those that do not belong to a bank— range between 0.5% and 0.7% of the invested balance. This represents, according to the same robo advisors, up to 85% less compared to the commissions charged by banks or financial managers for investing in a portfolio.
For example, one of the robo advisors with the lowest commissions is InbestMe, which charges only 0.66% of the invested balance —it includes both the management commission and that of the funds in which it is invested and that of the custodian entity the investment— and offers one year without a management fee up to the first 15,000 euros. In contrast, many banks charge more than 1.5% just for a management fee, according to HelpMyCash.
A golden rule of investment is to diversify the portfolio, that is, to distribute the investment among various assets, so that if one loses value, that loss is offset by the increase in value of the others. This is especially relevant for those new to investing, as it minimizes the probability of losing invested savings.
In this sense, robo advisors invest savings in highly diversified portfolios, ranging from shares in variable income investment funds to shares in fixed income funds. In addition, they invest in different markets, such as the United States, Europe or Japan and in different sectors.
For a more conservative profile, who is not willing to take big risks, the portfolio in which he invests through robo advisors is mainly oriented towards fixed-income investment funds. On the other hand, an investor willing to take more risks to multiply returns will allocate a greater proportion to equities. In any case, the portfolio will always be diversified.
Some robo advisors, such as InbestMe or Finizenzs, allow you to invest from as little as one thousand euros, while others require a minimum investment of three thousand euros.
"It is usually thought that investment is reserved only for people with large capital. However, any saver who has more than a thousand euros in their account can invest in a robo advisor," they say from HelpMyCash.
In this way, inflation is prevented from reducing purchasing power and, in addition, you have the possibility of multiplying your savings without spending too much time on it.
