Canadian value investing is shifting to the Robo Advisor

Young Canadians Understand the Value of Investing

But which is the best investment method option? Traditionally, people have been investing in paper assets.

Paper assets are highly volatile and their returns are very low these days. So this traditional method is less attractive to value investors.

As an alternative robo advisors are becoming more popular.

In a matter of minutes, you can open up a robo advisor account and can get started with your investment journey. There are new companies every year trying to redefine how investors approach their money.

The latest investment planning method that is exploding in Canada is robo advisors .

Robo advisors are a human-assisted online investment service that creates a plan after you have answer key questions about how long you are saving, your investment objective and a whole load of other questions.

Robo advisors tend to charge very low fees (0.5-1%) compared to traditional money managers who often charge up to 2.5% per year.

With robo advisors, you don’t have a human advisor from BoA monitoring your portfolio and making suggestions based on how they see the market, and their personal market insights, which is great, since all you need is an automated service that will select stocks based on data and algorithms.

The younger generation of Canadians are moving toward low cost investing, and it seems there is no end to adopting the new technology for investing on the internet,  Instead of creating portfolios themselves or paying for investment management.

It would be easy to say that this group is lazy and too immature to create an effective investment plan created by a Human Investment Advisor.

Smart child holding a computer tablet in front of a chalkboard with complex mathematical on a chalkboard - Canadian value investing is shifting to the Robo Advisor

Is using Robo Advisors Lazy or Immature?

Two new hot trends are DIY investing and Robo advisors – what’s common? Very low fees, showing how young Canadians are more savvy investors than before

Let’s look at the statistics of young Canadians using Robo Investors as reported by the Angus Reid Institute (ARI):

18-34 Age Group 51% already use Robo Investing and 49% are unlikely or definitely not going to try.

35-54 Age Group 23% (less than half) already use Robo Investing and 77% are unlikely or definitely not going to try.

55+ Age Group only 9% already use Robo Investing and 91% are unlikely or definitely not going to try.

Clearly the answer is a robo advisor  which is not a lazy or immature investment strategy approach.

The 18-34 age group have grown up in an age where sophisticated artificial intelligence or algorithm based systems can be trusted to do a better job than a human doing the same job.

Robo Investing in Canada is clearly not about bypassing or avoiding financial institutions and advisors – it is about getting the best value for the fee you pay to manage your money.

Traditional Money Management doesn’t work for youngsters anymore

Millennials want to invest in ways that make their money work for them, no matter if it’s through a Robo Advisor or DIY.

They don’t like traditional money management tactics because they can no longer afford to give their money to an investment management company with high fees and hope that it’ll work in the long run.

These investors have learned that the traditional managers have their own “canned” package that they like to resell over and over to their clients, not because its good for the client but because its good and easier for the investment house.

Since investment gains can be slim they don’t want to pay a high percentage of the gains in fees.

These young investors are looking to keep a higher percentage of their gains.

The young investor has learned that using a Robo Advisor has these benefits;

1) Low entry cost (low fees)

2) Will handle all investing needs

3) Guided investment strategy

4) Easy to manage and monitor just to mention a few highlights.

Investment Startup Tips for Robo Advisor users

Here are some investment startup tips; The first step in your financial playbook is to save money – no matter how little – set up an automatic saving plan.

Create your investment fund and work a plan with your available resources.

The next step is to get your financial portfolio plan organized – and that’s the place where robo advisor comes into play.

It provides a variety of services and recommendations you can use to get started with your investment portfolio.

Many banks and online trading firms are offering robo advisor to its clients as an added service. In order to use the service, there is normally a minimum investment threshold or fee – as per the robo advisor’s terms and conditions.

Here are some of the most popular robo advisor in Canada: WealthsimpleNestWealth and Questrade Portfolio IQ

Final Words for the Intelligent Investor

All these young Canadian investors can’t be wrong. The swing to Robo Advisors would not continue to rise if this Robo method did not work.

I think it’s time for us over 35 age group to take a step back and give a fraction of our investment fortune to the emerging Robo Advisor approach a try.

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