The best savings accounts can help you make the most of your cash savings, but investing can help your money grow more over the long term. Robo-advisers are a good place to start. Here are the best robo-advisers worth looking at.
Robo-advisers are online investment platforms, also known as digital wealth managers that automate investing for you.
For beginners to investing, they provide an easy-to-access route as they will invest for you based on how you feel about risk - and costs are relatively low.
When you open an account, robo-advisers will ask you a number of questions to assess your attitude to risk and then serve up a ready-made portfolio for you to invest in.
Some also only require a small amount to get started - with some providers, you can start with £1.
Investing can help you beat inflation as your money can grow at a higher rate than cash saving accounts, but note, investing does come with risk and your investments can go down as well as up.
Below, we explain how robo-advisers work and what the rules are when it comes to investing. But if you’re ready to get started, here is our pick of the best robo-advisers.
All the platforms mentioned here are regulated and come with Financial Services Compensation Scheme (opens in new tab) protection, meaning up to £85,000 of your money is protected if the company goes bust.
The best robo-advisers
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(opens in new tab)How do robo-advisers work?
A robo-adviser is an automated online investment platform that will invest for you depending on your goals and attitude to risk.
When you open an account, you will be asked several questions (it is very much a gamification process) to help the platform understand how you feel about risk.
The platform will then suggest a portfolio and start investing for you.
The platform's algorithms select the investments in each portfolio, monitoring and adjusting them in response to changing market conditions, so all you have to do is pay in when you can, or a set regular monthly amount.
If you're a more confident investor, you can go the DIY route – where you pick and manage your own investments via 'fund supermarkets' like interactive investor (opens in new tab) (ii), AJ Bell (opens in new tab) or Fidelity (opens in new tab), for example. But if you don't want to do this or don't have enough knowledge to do this, then a robo-adviser can be a good starting point
Note: as with all investing, the value of any investment can go down as well as up and you may end up with less money than you started with.
The pros and cons of robo-advisers
Pros
Robo-advisers are known for being low-cost, though the investment options are often limited.
However, they simplify the process and can be great for beginners, because once you have opened an account, you do not have to think about managing the funds - it is all done for you. All you have to do is put money into your account.
Cons
While prospective customers fill in a questionnaire to determine their investment preferences, you can still be placed in a very broad category.
While portfolios run by robo-advisors are usually considered to be quite diverse, they aren’t immune from usual fluctuations that can occur in any portfolio.
Investing need to knows
- Investing is for the long term, so only invest money you can lock away for a period of five years or more. The longer you invest, the better returns you can potentially get.
- Do not invest money that you may need to pay bills or other short term expenses
- Always have your cash emergency built first before you invest. You emergency money should be kept in an easy access savings account
- Invest regularly - by drip feeding a small amount each month, you will smooth out your return, because there are times when the stock market does well and other times when it doesn't.
- The value of investment can down as well as up, but if you invest for a number of years and pay in regularly, you will eventually see an upside,
- Investing is not risk free. You can lose some or all of your money. Make sure you fully understand the risks before you invest.
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