Digital Investing Guide and Best Answers to 11 Main FAQs

If you want to know more about Digital Investing, this article is going to be very helpful.

It’s a comprehensive guide to Digital Investing that also answers some of the main FAQs you might have about the subject.

 

First things first…

Depending upon your point of view, some say life has become more complicated.

They would argue that life used to be easy. You get up in the morning, go to work, come home and then start the same routine again for 50 years till retirement.

They would continue to say that you didn’t have to worry about computerized cars that informed you of low tire pressure or other annoying car computer issues.

Even eating was easier without the worry of nutritional labels.

As far as technology making life easier, they would respond by saying that we’re always attached to our portable devices and just when we get the hang of it, there’s a new upgrade or new technology to be downloaded.

It is never-ending.

On the other side of the complicated coin are those individuals who would say that life has become more enjoyable and robust.

They would argue that life has become less complicated because of technology and that we become more engaged with not only our loved ones but a global community.

They would maintain their point of view by saying that life has become simpler.

 

Importance

Differences of opinion are what make the world go round.

Even with the popular subject of money, there can be varying degrees of opinion expressed by individuals.

Some would say that it is a necessary evil while, most likely, the majority of people put money in its proper perspective.

They realize that it is just something that is needed in this world to be part of a community.

Like everything else, investing has been touched significantly by the hand of technology.

One of those modernized ways of investing one’s hard-earned dollar is through digital investing.

 

11 Most Common Digital Investing FAQs and Best Answers

 

1. What is Digital Investing?

Digital investing, as the name implies, is being more directed by technological means rather than by individuals poring over someone’s portfolio and making recommendations. Digital investing extensively utilizes algorithms.

An algorithm is a formula generated by a computer that makes possible suggestions or predictions as to what will occur.

When algorithms are used in the world of investing, a computer program is created utilizing a determined set of instructions when it comes to making a trade for an individual.

The formula for the algorithm takes into consideration the price, quantity, and timing of the stock as it relates to trading. This trading can be buying or selling.

The value of digital investing takes out the human emotional element from the equation as to whether an individual trader likes or dislikes a particular stock.

The trade becomes more analytical based on hard cold facts rather than the sometimes decisions made emotionally by a trader.

 

2. Why Should I Utilize Digital Investing?

Digital investing or robo-advisors is specifically designed to enhance the investing actions of the ordinary individual.

In addition to being an extremely easy way to gain access to the markets, the strategies that are followed and adhered to are best suited for the average investor.

Therefore, the investments made through digital investing will maximize the investment dollars of the individual

Also See: How Much is Enough Money and Nonprofit Bookkeeping.

 

3. Is Digital Investing Safe?

When something new hits the marketplace, it is understandable that individuals will be skeptical about the product and the claims that are expressed.

This is especially true when it comes to trusting our money to something new, and innovative.

However, it is important to realize and trust the financial regulations that have been put into place to monitor such new processes.

Digital investing and the use of a robo-investor are completely safe to utilize.

The process has been under close attention, scrutiny, and the regulation industry to ensure that the investor’s money is safe

 

4. How Does Digital Investing Security Work?

Some investment processes begin with an app that is downloaded. A series of questions are posed to formulate the best investment plan for the individual.

Those questions include how long you have to invest, your risk level, and how much you have accumulated thus far.

The next step is to simply tap the algorithm and the calculations are performed and a diversified portfolio is presented.

Payments can be set up directly with one’s financial institution.

Additionally, the robo-advisor will manage the portfolio and make adjustments, such as tax-loss-harvesting, to offset capital gains.

Rebalancing of the portfolio is accomplished as needed.

Also See: Importance of Retirement Planning & Frugal Living Tips for Seniors.

 

5. What Are the Extra Fees for Digital Investing?

The typical cost before digital investing was not insignificant.

The fees associated with investments by financial advisors were across the board and an investor was fortunate if their fees were less than 1%.

With the advent of digital investing the fees and additional fees have been significantly reduced.

The associated cost for this added dimension of investing has been modest.

The associated fees now vary from investment firm to investment firm and can range anywhere from 0% to .25%.

One would think that the utilization of digital investing would be more expensive. Nothing could be further from the truth.

 

6. What Happens to Human Touch and My Financial Advisor?

Electronic investing minimizes the actions of one’s financial advisor, but allows the advisors to be even more involved with their clients.

The financial advisors, rather than selecting what investments might be the most productive for their clients, are now allowing the digital investing process to take up this labor investing process for them.

Consequently, this allows for the financial advisor to spend more time with their clients on a personal financial level to discuss other important issues.

Some of those important issues include estate planning, legally minimizing individual taxes, and other financial planning issues.

Also See: Best Investment Plans for Monthly Income.

 

7. I Like the Personalized Touch of Digital Investing, What Happens Now?

Most financial advisors would agree that digital investing will only enhance and increase the personal touch that investors want and demand from their financial advisors.

 

 

8. What Is the Minimum Balance Required?

The minimum amount needed to take advantage of digital investing may vary from investment firm to investing firm.

For example, Vanguard requires a minimum of $3,000 to enroll in this program while some companies may not require a minimum investment at all.

 

9. What Is the Cost of Digital Investing and How Do I Pay?

The typical annual advisory fee for a digital advisor is at .15% of the investor’s portfolio. Therefore, for a $3,000 portfolio, this figures out to be $4.50 a year.

Having said that, the investor needs to do their homework and compare a variety of digital investing opportunities and the use of robo-advisors across the industry spectrum.

This preliminary assessment of the various products offered from a variety of firms should include their track record with digital investing, whether they are on the leading edge of this investment technology, and the ease of the investor utilizing the technology.

Other factors that should be considered include management fees which are usually assessed as a percentage of the investment.

These investment fees can range anywhere from 0% and on up to roughly.25%.

Another important element of investing is the requirement of any minimum amount that is needed to start the process.

This again varies from company to company ranging anywhere from zero dollars needed and on up.

Also, to gain your business, some of these investment firms and institutions will offer various promotions to entice the individual to invest with them.

Some of those promotions offered could be career counseling, loan discounts, or the number of assets that are managed at no cost.

Also See: How to Save $10,000 a Year and How to Save $3,000 in 3 Months.

 

10. Do I Have Any Flexibility With Digital Investing?

Of course you do.

The beauty of digital investing is that the investor can continue to invest in a portfolio that resonates with them.

The investing process allows for that flexibility and enhances the process.

For example, if the investor is interested in certain investment opportunities, such as weight loss or weight loss products, the digital platform will formulate a portfolio comprised of those companies.

The investor then can decide on how to proceed.

Other flexibility options may include rebalancing or addressing the harvesting of tax loss.

Additionally, there are subsets offered with the digital investing format. Like a vehicle, a single and focused model may be chosen or a hybrid.

Also See: Best Way to Invest and Make Your Money Grow in 6 Months.

 

11. How Do I Know if Digital Investing Is Right for Me?

It would seem that the comfortableness of individuals utilizing this investment process can be broken down into various generations.

For example, the baby boomer’s experience was more with a financial advisor, somewhat reticent to investing on their own, and would heavily utilize the role of professional financial advisors.

However, the millennials, are a bit more tech-savvy and reliant upon this technology (no offense baby boomers).

Therefore, millennial’s in understanding this new technology; realize that the high fees associated with using personal financial advisors were an added assessment that was not necessarily required.

Therefore, with their comfort level of technology and wishing to reduce fees taken from their portfolio, the millennials are far more comfortable with digital investing or the use of a robo-investor.

Perhaps, other generations not so much.

Therefore, a long answer to the question about if this investment process is right for the individual is completely up to that person.

They simply need to take advantage of whatever system they are most comfortable with and will give them the most peace of mind.

 

With Digital Investing, the Future is Now

The future has arrived when it comes to our investing.

As part of the automation evolution, it seems for almost all interactions in our life, the opportunity to invest monies, manage investments, rebalance portfolios, and reduce tax implications on capital gains tax has arrived.

The role of the financial advisor is still a critical part of the investment team staffing.

As with the promise of all automated possibilities in our life the argument is that it will free us up to do other more important things.

So, it seems for the financial advisor who now will not have to worry so much about rebalancing his client’s portfolios but work on other and equally important financial issues in his client’s investment present and future.

For some, robo-investing may seem like a tricky venture. After all, it pertains to computer technology, the use of mathematical formulas and equations, algorithms, etc.

However, the use of digital investing also takes the human element of the subjectivity out of the equation. This can be a good or bad thing.

However, the decisions to buy or sell or rebalance should not be based on our opinions but based on the hardcore reality of facts and figures as demonstrated in various financials provided by the company.

 

Conclusion

Variety is the spice of life.

Digital investing is another part of that variety menu in which an investor can leave the known method of investing and place it in the hands of technology.

This technology can analyze information at an incredibly rapid pace.

It would appear that robo-advisors and digital investing are here to stay and indeed is the tidal wave of the future.

For the investor perhaps it’s time to ride that tidal wave into the investment future of not only the way investment is handled globally but on a personal level flowing into your portfolio future.