Investing Simple Logo
Menu
Get Started on Robinhood With 1 Free Stock!
Robinhood is offering new users 1 free stock worth between $3 and $225 when you open an account and fund it with any amount of money.
Written by Kevin Mercadante on April 7, 2021
Category: 
FTC Disclosure

6 Best Robo-Advisors For Beginners

Are you confused about how to start investing? If so, you’re hardly alone. The hardest part of investing is just getting started. If you’re just striking out on the financial path of life, you’ll want to take a close look at robo-advisors to help you begin investing. They’re a hands-off, stress-free way to enjoy professional investment management, but with very little money and low- or no-fees.

Interested? If you are, below is our list of what we believe to be the six best robo-advisors for beginners.

But let’s start with something more basic…

Why Robo-Advisors are the Right Choice for Beginners

Though robo-advisors can work for investors at any level, they’re a perfect fit for beginners. A robo-advisor is an online, automated investment service. With a minimal investment and very low fees, they’ll design a portfolio for you, then manage it going forward. This will include periodic rebalancing of your portfolio to maintain target allocations, dividend reinvesting, and even strategies to minimize the tax liability from your investment income.

With a typical robo-advisor, you’ll complete a questionnaire that will be used as the basis for your investment portfolio. It will determine your investment goals, time horizon and risk tolerance. Risk tolerances can range anywhere from conservative to aggressive, with variations in between.

Your portfolio will be constructed using exchange traded funds (ETFs), which are low-cost funds tied to popular investment indexes. Each fund will include hundreds or thousands of individual stocks or bonds, representing a cross-section of the entire investment sector. With just a few funds, you’ll have exposure to the entire investment spectrum, including broad diversification.

You can open an account with just a few dollars and pay an annual advisory fee averaging only 0.25% of your account balance. This means you can have $1,000 managed for just $2.50, or $10,000 managed for just $25 for the entire year. And some robo-advisors charge no advisory fee at all.

Once you set up an account, all you need to do is fund it on a regular basis and watch it grow. That will mean the investment part of your financial life is fully covered by the robo-advisor, freeing up your time to take care of everything else.

That’s why robo-advisors are the perfect choice for investment beginners.

With that in mind, below is our list of what we believe to be the six best robo-advisors for beginners:

1. SoFi Automated Investing

Best for: Best all-around robo-advisor for beginners.

Why SoFi Automated Investing is a good robo-advisor for beginners: SoFi Automated Investing wins our top spot based on being best-in-class in several categories. For example, no minimum investment is required to open an account, and there is no annual advisory fee charged. But they also offer SoFi Active Investing, giving you an opportunity to participate in self-directed investing, including cryptocurrencies. And if that isn’t enough, you’ll have access to certified financial planners at no additional cost.

But there’s another feature of SoFi that may be of particular interest to beginning investors. SoFi is one of the top providers of student loan refinances in the industry. It’s what the company has come up on, and what they’re best known for. If you have student loans to refinance, you can do it through SoFi, while also opening your first investment account on the same platform. SoFi has plenty of other financial products and services to offer for beginning investors looking to get their start in life.

sofi robo investing

SoFi Automated Investing Basic Features:

  • Minimum Initial Investment: None, but minimum of $1 to begin investing.
  • Available accounts: Individual and joint taxable investment accounts, plus traditional, Roth and rollover IRAs, as well as Keogh plans.
  • Investment mix: ETFs invested in US and international stocks and bonds.
  • Fees: No management fees.
  • Customer support: Phone, email and live chat, Monday through Friday, from 8:00 AM to 7:00 PM, Eastern time.

SoFi Automated Investing Pros:

  • No advisory fee to manage your account.
  • No minimum initial investment required to open an account.
  • You can refinance your student loans through SoFi, which is what the company is best known for.
  • SoFi Active Investing allows for self-directed investing, including crypto currencies.
  • Access to certified financial planners at no additional cost.

SoFi Automated Investing Cons:

  • No tax loss harvesting offered on taxable investment accounts.

2. Fidelity Go

Best for: Robo-advisor with the ability to transition to self-directed investing with the same company.

Why Fidelity Go is a good robo-advisor for beginners: This robo-advisor has the built-in advantage of being part of one of the largest investment groups in the country, Fidelity Investments. As a beginner, you can start out investing through Fidelity Go – with no minimum initial investment and no advisory fees on your first $9,999 – then open a brokerage account where you can take part in self-directed investing. In that way, Fidelity Go gives you the ability to grow as an investor without the need to transition to another investment company.

Though Fidelity Go is a robo-advisor, it does include investment management from a team of strategic advisors. That makes it something of a hybrid, providing the benefits of both automated investing and human guidance. Also, your account will be invested using Fidelity Flex Funds. These are a mix of active and passively managed mutual funds with no fund expenses. That alone gives you the potential to outperform other robo-advisors using Fidelity Go.

fidelity go

Fidelity Go Basic Features:

  • Minimum Initial Investment: None, but $10 to begin investing.
  • Available accounts: Individual taxable investment accounts, and traditional, Roth and rollover IRAs.
  • Investment mix: ETFs in US and foreign stocks and bonds, as well as short-term investments.
  • Fees: None on balances under $10,000, then $3 per month on balances from $10,000 to $49,999, then 0.35% on balances of $50,000 and up.
  • Customer support: Phone support 24/7, live chat Monday through Friday, 8:00 AM to 6:00 PM, plus 140 branches nationwide.

Fidelity Go Pros:

  • No advisory fee on the first $9,999 under management.
  • No minimum required to open an account, and only $10 required to begin investing.
  • Your account will be invested in Fidelity Flex Funds that have no fund expenses.
  • 24/7 customer service access by phone.
  • As part of Fidelity, you can transition into a self-directed investment account, with commission-free trades on most investment, when you feel ready to make the jump.

Fidelity Go Cons:

  • No tax-loss harvesting offered on taxable investment accounts.
  • No alternative investments, like real estate and commodities, are offered.
  • Advisory fee of 0.35% on account balances $50,000 and up is higher than the fee charged by other robo-advisors.

3. Betterment

Best for: Comprehensive financial management, including high interest savings and no-fee checking.

Why Betterment is a good robo-advisor for beginners: Betterment was the first robo-advisor and remains the robo all others are trying to beat. That’s in no small part due to the fact that Betterment has been steadily evolving their platform since it was launched over a decade ago.

Betterment offers two plans, Digital and Premium. As a beginning investor, you’ll start with the Digital plan. It requires no minimum initial investment and charges a fee of just 0.25% of your account balance. The Premium plan is available with a minimum account balance of $100,000, and gives you access to live financial advisors. This plan will take the robo-advisor concept to a higher level, bringing human financial advice into the picture.

Betterment also offers an interest-bearing cash account paying interest of 0.40% APR, which is many times higher than what you’re probably getting at your local bank. They also offer multiple account options, such as retirement, emergency savings, and accounts for near-term spending, like saving for the down payment on a house. They even offer a no-fee checking account, complete with a Visa debit card.

betterment robo

Betterment Basic Features:

  • Minimum Initial Investment: None for Digital, $100,000 for Premium.
  • Available accounts: Individual and joint taxable investment accounts; traditional, Roth, rollover and SEP IRAs; trusts and a high interest cash account.
  • Investment mix: ETFs invested in US and foreign stocks and bonds.
  • Fees: 0.25% annual advisory fee on the Digital plan; 0.40% annual advisory fee on the Premium plan.
  • Customer support: By phone and email, Monday through Friday, 9:00 AM to 6:00 PM, Eastern time.

Betterment Pros:

  • No minimum balance requirement to open a Digital account.
  • Offers a high interest cash account, currently paying 0.40% APR.
  • Some ETFs are invested in US value stocks, giving you the potential to outperform the general market.
  • Provides tax-loss harvesting on all taxable investment accounts, at no additional charge.
  • The Premium plan gives you access to live financial advisors.
  • Offers no-fee checking account with a Visa debit card.

Betterment Cons:

  • No alternative investments, like real estate and commodities, are offered.
  • The advisory fees, at 0.25% and 0.40%, are only at about the middle of the robo-advisor fee range.

4. Wealthfront

Best for: Comprehensive financial management with broader diversification, including high interest savings and no-fee checking.

Why Wealthfront is a good robo-advisor for beginners: Wealthfront is Betterment’s primary competitor, so it’s no surprise the two robo-advisors nearly match one another in service and features across-the-board. Wealthfront’s primary distinguishing feature is that it offers advanced tax-loss harvesting on taxable investment accounts balances over $100,000 – though that won’t matter to most beginner investors. What may matter more however, is that Wealthfront provides broader diversification, offering allocations in real estate and natural resources.

Like Betterment, Wealthfront also offers a high-yield cash account, as well as no-fee checking with a Visa debit card. You can add all your financial accounts on the Wealthfront app to provide you with a comprehensive view of your entire financial life.

Wealthfront UI

Wealthfront Basic Features:

  • Minimum Initial Investment: $500.
  • Available accounts: Individual and joint taxable investment accounts; traditional, Roth, rollover and SEP IRAs; trusts and a high-yield cash account.
  • Investment mix: ETFs invested in US and foreign stocks and bonds, real estate, and natural resources.
  • Fees: 0.25% advisory fee on all account balances.
  • Customer support: By phone, Monday through Friday, 8:00 AM to 5:00 PM, Pacific time, as well as email responded to within one business day.

Wealthfront Pros:

  • Provides tax-loss harvesting on all taxable investment accounts, at no additional charge.
  • High-yield cash account, currently paying 0.35% APR, which is well above what you can get at your local bank.
  • Alternative investments, like real estate and natural resources, offers broader diversification and the ability to benefit from inflation.
  • No-fee checking account with a Visa debit card.

Wealthfront Cons:

  • Does require a minimum of $500 to open an account.
  • Annual advisory fee of 0.25% is at the middle of the robo-advisor fee range.

5. Acorns

Best for: Beginning investors who are also looking for help with saving the money needed to invest.

Why Acorns is a good robo-advisor for beginners: Acorns is a robo-advisor, but more importantly, it’s also a micro-savings app. Not only will it manage your investments for you, but it will help you accumulate the money you need to invest. Best of all, that accumulation will take place automatically, and largely out of sight.

They do this through a process known as “round ups”. Using your mobile device, you can connect the Acorns app to spending accounts, like credit cards and bank account debit cards. Each time you make a purchase through a connected account, Acorns will round it up, and move the “change” into your investment account. For example, if you make a purchase for $6.25, your spending account will be charged $7, with the remaining $.75 going into your investment account. However, you can also make regular direct contributions or even lump sum contributions to your investment account.

Acorns Spend comes with a heavy metal Visa debit card you can use for round-up purchases.

acorns account value

Acorns Basic Features:

  • Minimum Initial Investment: You can open an account with no money, but you will need at least $5 to begin investing.
  • Available accounts: Taxable investment accounts; traditional, Roth, rollover, and SEP IRAs.
  • Investment mix: ETFs that invest in US and foreign stocks and bonds, as well as a real estate investment trust index fund.
  • Fees: Acorns Lite (basic taxable investment account) $1 per month; Acorns Personal (basic taxable investment account and IRA), $3 per month; Acorns Family (accounts for the whole family), $5 per month.
  • Customer support: Limited to email with a response time of one or two days.

Acorns Pros:

  • The ability to build savings through round ups on purchase activity is the strongest feature of this robo-advisor.
  • No minimum initial investment required, but $5 to begin investing.
  • The fees of $1 per month on the basic investment account, or $3 per month on the basic investment and IRA accounts, will be a real bargain on high account balances compared with other fee-charging robo-advisors.
  • Adds real estate to the usual robo-advisor mix of stocks and bonds.

Acorns Cons:

  • The fees of $1 per month on the basic investment account, or $3 per month on the basic investment and IRA accounts, will be high on very small account balances.
  • You’ll be required to open a basic investment account to be able to open an IRA account.
  • Customer service is limited to email only, with a response time of up to two days.

6. M1 Finance Expert Pies

Best for: A robo-advisor that lets you choose your own investments.

Why M1 Finance Expert Pies is a good robo-advisor for beginners: Though we’ve put M1 Finance Expert Pies in only sixth place, it can just as easily be first. That is, if you prefer to choose your own investments. If so, M1 is clearly the best option in the robo-advisor universe. But since this is a list of the best robo-advisors for beginners, we’ve made the assumption you won’t be quite ready to choose your own investments, which lowered the rank.

M1 Finance Expert Pies is a completely unique provider in the robo-advisor space. They work on a system referred to as “pies”, which are actually mini-portfolios. Each pie can include up to 100 ETFs and/or individual stocks. You can either select from one of 80 prebuilt pies or create one of your own. In fact, you can create as many pies as you want, each built around a specific investment theme. Once a pie has been created, it will be fully managed for you, including periodic rebalancing to maintain target allocations.

If you have any desire to engage in direct investment selection, M1 Finance Expert Pies is the robo-advisor for you.

M1 Finance Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

M1 Finance Expert Pies Basic Features:

  • Minimum Initial Investment: None to open your, but at least $100 to begin investing.
  • Available accounts: Joint and individual taxable investment accounts; traditional, Roth, rollover, and SEP IRAs.
  • Investment mix: ETFs and individual stocks.
  • Fees: No annual advisory fee and no trading commissions.
  • Customer support: Phone, Monday through Friday, 9:00 AM to 5:00 PM, Central time.

M1 Finance Expert Pies Pros:

  • No minimum initial investment required, though $100 is required to begin investing.
  • No advisory fee or trading fees.
  • Ability to choose the investment that your pie(s) will hold.
  • Choose from one of 80 prebuilt pies (portfolios) or create your own custom pies. Either way, your pie(s) will enjoy automated investment management.

M1 Finance Expert Pies Cons:

  • Investment options are limited to stocks and ETFs – no bonds or mutual funds are available.
  • Though you may be drawn to trade individual stocks on the platform, this capability is not offered. Stocks can only be purchased to be held in pies.
  • No tax-loss harvesting on taxable investment accounts.

Bottom Line

If you’re just coming out of the financial starting gate in life, you probably don’t have the bandwidth to begin managing your own investments. But you need to begin investing as soon as possible to build a solid financial foundation for the future.

Using a good robo-advisor will turn investing into an automatic and stress-free process. You’ll provide the funds to invest, and the robo-advisor will do all the heavy lifting for you. There’ll be no need to design a portfolio, select individual securities, make buy and sell decisions, or manage your account – the robo-advisor will do all that for you.

The most important step in investing is to begin. And a robo-advisor is the very best place to do that.

Robo Advisor Comparison

Robo-Advisors Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

roboadvisors for beginners
Article written by Kevin Mercadante
Kevin Mercadante is a freelance professional web content writer for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has extensive backgrounds in both accounting and the mortgage industry. In fact, it was his career crash-and-burn from the mortgage business in 2008 that led him into blogging and freelance professional web content writing. Kevin and his family live in New Hampshire, after long stints in New Jersey and Georgia.

Latest Posts

Power Your Investing

Choosing the right product and service is essential for your investing. Here are some of the tools and services to help your portfolio grow.
Robinhood
Robinhood provides an easy-to-use free trading platform for beginner investors. Robinhood has $0 account minimums. Get a free stock when you open an account below.
Try Robinhood
M1 Finance
M1 Finance offers a free investing platform where users can build portfolios of stocks and ETFs. Users can also choose from a variety of pre-built portfolios offered for free.
Try M1 Finance
Fundrise
Passively invest in private real estate deals with as little as $500. Fundrise allows you to own residential and commercial real estate across the U.S. starting at a 1% annual fee.
Try Fundrise
© Copyright 2018 - 2020 Investing Simple LLC. All Rights Reserved. Investing Simple is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that investment markets have inherent risks, and past performance does not assure future results. Investing Simple has advertising relationships with some of the offers listed on this website. The information on Investing Simple could be different from what you find when visiting a third-party website. All products are presented without warranty. For more information, please read our full disclaimer.
Developed by Stallion Cognitive
magnifiermenucross-circlechevron-down-circle
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram
Copy link
Powered by Social Snap