What are the different ways to start investing?

Basically there are 2 different ways in which one can start investing. First is the DIY or the DO IT YOURSELF way of investing. You can invest through this method if your financial goals are clear & well defined and if you possess basic knowledge of the financial markets, economic events, investment avenues & instruments. One should remember that in this mode of investing you are completely on your own w.r.t to chalking out your goals, selecting the right investment instruments & finally putting together a plan & executing & monitoring the same. If you think you either do not have the time or the expertise to do all this, you can approach a professional advisor who will hand-hold you with your entire financial planning & execution journey.

Now a days professional advisory also has further options – you can either go in for a ROBO Advisor or the Traditional Brick and Mortar Financial Advisor. Robo Advisory is essentially advice based on statistical & algorithmic calculations powered by artificial intelligence. Human Advisory on the other hand is more personalized & holistic in the sense that the advisor completely understands your current financial situation, your future goals, there is ample room for communication & discussion. There is an element of emotion attached to traditional advisory.

What is Robo Advisory?

Robo Advisors as a new class of online investment advisors catering mostly to young & tech savvy millennials. Investment suggestions or recommendations are provided by them based on pre-programmed algorithms & statistical models, keeping human intervention to the minimum. By leveraging technology, Robo Advisors are in the position to provide custom made advice to their clients. All you have to do is provide some basic financial and demographic information & the Robo Advisor will present you with baskets of investment options suitable to your investment goals or objectives. They essentially remove the human bias element from the advisory function & provide solutions which are based on pre-tested mathematical models. 

These can be easily used by young and tech savvy investors who are just starting their investment journey. They help you get up and about with your investments in no time & little cost.

Can they completely replace Human Advisory?

Well the answer is NO. Even though Robo Advisors can help you kick start your investment journey, they may not be able to completely eliminate the requirement of a human advisor. Somewhere along your journey, as your portfolio size increases & complexities arise you will find the need to pick up the phone and speak to an expert. Designing a financial plan is an art as well a science. It’s about understanding the requirements of the investors along with their aspirations, fears, goals and other psychological aspects which can be known only through personal interviews and one on one discussions.

So, to conclude lets put it this way, while Robo Advisors are a good option to begin your investment journey, personalized expert advice are absolutely essential to help you get the required traction & momentum to reach your financial goals.

Happy Investing.