In recent years, scores of digital investing platforms have been introduced. Originally, these “robo-advisors” were viewed by many as a ploy to attract younger, DIY-inclined investors who were accustomed to simplifying their lives with tech tools.
However, digital investing tools have evolved, and today they are valuable instruments for all manner of clients. Even those who aren’t especially tech-savvy can benefit from using these intuitive, convenient platforms, which offer low-cost investment services and a wide array of benefits.
Generally, these tools provide digital financial advice based on mathematical rules or algorithms and can add a degree of objective logic to your investment portfolio, regardless of the value of its assets. If you decide to give a digital investing tool a try, look for these benefits:
1. Goal-based planning.
With the best digital investing tools, you can prioritize your personal goals — such as funding your children’s college education or retiring by a certain age — and the system will design an investment strategy to help you reach those goals within your prescribed timeline.
2. Budget and spending analysis.
Digital investing tools often go beyond investment services and can double as budget-tracking programs. If you input your ideal budget and contrast that with what you’re actually spending, the tool can help you analyze better ways to allocate your finances and save money.
3. Asset allocation management.*
Regardless of its size, every portfolio can benefit from diversification. Different types of stocks, fixed income investments and even cash have different levels of risk and return, and digital investing tools can allocate your funds into the types of investments that will best meet your specific goals, risk tolerance and investment horizon.
4. Dashboards to track progress.
Most digital investing platforms provide a front-page dashboard that allows for quick insight into how your portfolio is performing. Your personal dashboard may also monitor your monthly spending, forecast retirement savings projections and offer the latest news regarding market shifts and how those developments affect your portfolio.
5. Customized alerts.
Want to purchase more shares of a specific stock when a trend is detected? Want to celebrate when your savings account reaches an amount sufficient enough to fund your child’s college? Whatever threshold, trend or anomaly you’re looking to track, online tools can help you set up notifications and understand where you’re charting in relation to your goals, in real-time.
6. Aggregator tools.
Aggregator tools like Fifth Third’s Life 360, which connects directly to all your bank accounts, allow you to gain a comprehensive view into all your accounts, track your progress toward your goals and store important documents.
7. Convenience and control.
When you manage your investment portfolio through an online platform, you don’t have to wait for a monthly statement or call your investment manager during office hours to gain a comprehensive view of your financial picture.
8. Security protection.
In a financial climate that calls for extreme digital measures, you should expect that the platforms used to monitor your financial investments and transactions will include cutting-edge security features. If you utilize a digital investment platform offered by a financial institution, which falls under strict regulatory requirements in this area, your account will be password protected. Many organizations will require you to change your password regularly, along with other security features, and you can take measures to increase your security by changing your password on a regular basis, such as every six months.
From automated asset allocation* to the benefit of having a 360-degree view of your finances at your fingertips, digital investing tools are certainly worth careful consideration for savvy investors. Consider your situation, short- and long-term goals and preferences when determining the right approach for you.
*Diversification and asset allocation do not guarantee better performance and cannot eliminate the risk of investment loss.