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What Is Robo-Investing?

Written by, Marija Petkova

Updated September, 7, 2022

Robo-investing is a great way to take the emotion out of investing and potentially improve your results by automating your investment decisions.

But, what is robo-investing, how does it work, and what are its pros and cons?

Read on.

What is Robo-Investing and How Does It Work?

Robo advisor investing uses algorithms to build and manage your investment portfolio. 

The software relies on algorithms to figure out what kind of strategy you’re aiming for and the risk you’re willing to take and based on that, it makes automatic investments for you. Many robo-advisors also offer additional services like rebalancing and tax optimisation

These companies also have human advisors that you can contact in case you’re having trouble navigating through the software or need advice on how to start.

On top of that, robo-advisors have low to no minimum balance requirements and minimal fees, which makes robo investing great for beginners.

What is a Robo-Advisor?

A Robo-advisor is a type of digital financial planner that gives investment advice or handles investments with little to no human assistance. 

They use algorithms to analyse and estimate investor interests, risks, and targets. They typically do it by asking a series of questions, based on which they create a rough, model portfolio.

Some robo-advisors use machine learning and advanced analytics tools to look at financial transactions such as investments, bank, and credit card transactions to determine investors’ financial behaviour. This helps the software determine how you are likely to act in a given situation in case it needs to make a decision for you.

The best thing about robo-advisors is that they can point you to crucial information that you could otherwise miss, such as more considerable expenditure than expected, missed obligations, or a trend of careful decision-making.

How to Start Robo Investing?

Investing with a Robo-advisor is easy and straightforward. What’s more, you can invest with Robo-advisor from anywhere in the world and in only a few minutes.

Once you create an account, most robo-advisors would usually ask you to complete a survey about your financial goals, the amount you would like to invest, and how much risk you’re willing to take, before making recommendations and authorising investment deposits.

Robo-advisors are low-cost and much more affordable than a human financial consultant, especially for beginner investors. Most platforms charge between 0.25% and 0.50% in yearly management fees. Some, like Sofi Automated Investing, offer their services for free. User-friendly apps and platforms actually encourage more people to start investing.

Best Robo-Advisors in 2022

If you’re planning on using a robo-advisor to start investing, here’s how to choose the best robo-advisor for you and some of the top picks for 2022.

BrokerFeesAccount minimumPromotion
SoFi Automated Investing0% management fee$0
Loan discounts with a qualifying deposit; free counselling
Betterment0.25%management fee     
$101 year of free management with a qualifying deposit
Blooom$45 – $250per year$0$10 offwith code REEETIRE10
Acorns $3 – $5per month$0$10 Sign Up Bonus

Benefits of Using Robo-Advisor

Robo-advisors are becoming increasingly popular in the personal finance field. 

Yet, many people question whether or not these algorithms can truly understand an individual’s preferences and determine what is best for them, investment-wise. 

Let’s take a closer look at robo-advisors’ pros and cons. 


  • Plenty of choice and quality of service

There are many robo-advisors available on the market that offer a variety of services and features to satisfy every customer’s need. What’s more, now that the level of competition is higher, all robo-advisors strive for quality of service. These investment platforms can have varying features and types of investments available.

  • Low cost and ease of use

Robo-invest apps are generally inexpensive and affordable. They have low management and subscription fees and because they automate almost every part of the investment process, are relatively easy to use.

  • No human interaction

If you have a human financial advisor, it’s likely that you’ll have to talk to them on a regular basis to talk about strategy and your investment practices. With robo-advisors, the only thing that requires some level of interaction is the survey you complete upon signing up.  


  • Little or no performance track record 

Most robo-advisors have very little performance track record and largely can’t rely on tactics rather than data.

  • Limited control

Since robo-advisors do all the heavy lifting when it comes to investing, you’ll have little control over your assets and fund choice if you allow them to make all the investments for you.

Bottom Line

What is Robo-investing? It’s the practice of using software for creating and managing a portfolio with no human assistance. Robo-advisors have been a game-changer in the investing world. They’re affordable, easy to use, and a great tool for people who need help with investment management. 

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.