Update 5.2.22: Just when you thought robo-advisers couldn’t get worse, they’re marrying up with ESG investing, which you know from here, here, and here that you should avoid. The target of these two investing fads? Young people, of course. The Wall Street Journal reports:
More young adults are looking to invest in ESG, but many don’t know where to start and can’t meet the investment minimum to work with a full-service financial adviser.
Money-management firms are adding options to attract these customers, for whom investing even small amounts with an environmental, social or governance focus—while paying low fees—is a priority.
While these relatively inexpensive platforms do offer lower investment minimums, ease of use and ESG products, some can lack the ability to target specific themes or causes that investors might be looking for. What’s more, annual fees could still bite into your portfolio’s value.
Originally posted May 20, 2020.
Coronavirus Infects Stock Market: Part L
With casinos slowly reopening (sorry, most buffets are still closed), it looks like gamblers found a home with Nasdaq.
While the world, as we know, has basically come to an end, the tech-laden Nasdaq is up a couple percent year-to-date. Welcome to Planet Hollywood.
One is reminded of the dot.com bust especially when Shopify, a Canadian tech company, trades at a larger market cap than Royal Bank of Canada. Pop quiz: One was founded in 2004, the other in the 1800s.
Recently, I was asked about robo-advisors: You set-up an account with a low minimum, answer a questionnaire, and an algorithm invests you in a basket of mutual funds, ETFs, and/or stocks.
The robos save money on phone reps, have a big marketing spend, and a neat looking website.
But what if there’s a problem? A couple of years ago, when stocks were down 1,600 points, Bloomberg reported that the websites of robo-advisers Wealthfront Inc. and Betterment crashed. This is one of the MANY reasons robo-advisors will NEVER work for investors–NEVER. What a SHAM.
Also, it’s been my experience that investors want regular conversations about their life savings, especially when they’ve made money over a lifetime and it would take another one to replace the losses.
Losing $500 on a company like Shopify might be a cheap education to help a young saver seek out a diversified portfolio with the help of a robot.
Investing your life savings for and during retirement might require a more personal touch, especially when you have a lot more to lose than money.
Read my entire series, Coronavirus Infects Stock Market here.
E.J. Smith - Your Survival Guy
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