What Is Robo-Advisor? Meaning & Example
Definition
A robo-advisor is an automated investing service that builds and manages a diversified portfolio based on your goals and risk tolerance. Fees are usually lower than traditional advisors.
Related terms
An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
RebalancingRebalancing is adjusting your portfolio back to its target mix after market moves cause it to drift. It keeps risk in line with your plan.
Risk ToleranceRisk tolerance is how much investment loss and volatility you are willing and able to accept. It depends on your finances, goals and emotional comfort.
What is Robo-Advisor?
A robo-advisor is an automated investing service that builds and manages a diversified portfolio based on your goals and risk tolerance. Fees are usually lower than traditional advisors.
Can you give an example of Robo-Advisor?
After answering a short questionnaire, a robo-advisor might place you in a portfolio of low-cost ETFs and rebalance it automatically.