Adventures in choosing the right robo-advisor
September 30th, 2016
Desirae Odjick was ready to invest.
She had a savings account and deposited money into it every month. She had a checklist she called her Money To-Do List. Her next move was to actually start investing.
“My first attempt - if you can call it that - was asking my bank how to invest,” she remembers. “I was told I didn't have enough money.“
And with that, Odjick’s first foray into investing ended. “I was like, ‘Cool, I accept that,’” she says after being turned away at her branch.
For many first-time investors, that experience will sound familiar.
The wrong way to the right outcome
The common line of thought for investment novices is that financial advisors are for people with a lot of money and it’s probably best not to worry about investing until later on. That was what Odjick might still believe today, had she not stumbled upon Wealthsimple.
With a robo-advisor, Odjick found a way to invest - one that wouldn’t turn her down.
Wealthsimple is way to grow money in exchange-traded funds (ETFs) without having to pick a single stock. Odjick heard about robo-advisors as a stress-free way to invest, and found Wealthsimple “literally after Googling ‘robo-advisors for Canadians,’” she admits. “I did exactly what I'd tell people not to do when choosing a robo-advisor.”
Robo-advisors like Wealthsimple, WealthBar or NestWealth allow anyone to invest in ETFs. All you do is fill out a short survey of your tolerance for risk – how much money you are willing to lose and how much money you are looking to make – and the rest is automatic.
After she got started with robo-investing, she researched more. And more. And more. She says she even checked out books from the library on the subject of investing - an unheard-of move for a millennial!
But in the end, she stuck with a robo-advisor. “I go on vacation, Brexit happens and I'm just like, shrug. I literally don't have to think about my investments at all, which suits me just fine,” she says.
What to look for
Odjick began her investment journey as someone “who could not have told you how to buy an ETF to save her life” to someone who writes about personal finance extensively. Her site, halfbanked.ca, is about her efforts to save a full 50% of her income.
Odjick says there are three basics everyone should know as they get into investing, robo-advisor or not.
1. Know what compound interest is.
2. “The fact that high-fees are a bad thing.”
3. Avoid managing your portfolio, picking stocks or otherwise getting into territory you are unfamiliar with.
One of her online courses on finance sums up her experience in investing perfectly – Zero To Investing Hero.