Many solopreneurs and small business owners are turning to automating routine tasks using apps and tools to get more done at work in less time. This automated approach has extended to investing as well, with some deducting a set amount from their pay every month to contribute to retirement and other savings regularly. However, managing these investments can be time-consuming, leading some to turn to robo investing through platforms like Betterment and Wealthfront. These robo advisors provide access to diversified portfolios to streamline the investing process and reduce the need for making many investing decisions.
Lawrence H. Gennari, a partner at Gennari Aronson, LLP, emphasizes the importance of investing in oneself, especially for entrepreneurs facing the challenges of launching a new business. Investing in yourself is essential to position yourself and your family for long-term success. While robo advisors often cost less than traditional financial advisors, the range of strategies and investment options may be more limited. It is crucial for each individual to assess their comfort with a tech-based approach and the time they have to devote to investing.
For those considering robo investing, some key considerations to keep in mind include comfort with a tech-based approach, the time available to dedicate to investing, and the features that are most important in an advisor. With a variety of platforms like Betterment, Wealthfront, Acorns, Ellevest, JP Morgan Automated Investing, and SoFi Wealth available, it is essential to explore and compare the features of each to find the best fit. New robo advisor platforms are emerging every year with unique features targeting different demographics, so staying informed about these options is crucial.
If planning to invest retirement funds using a robo advisor, a platform that supports a SEP-IRA with contribution limits of the lesser of $69,000 or 25% of compensation may be ideal. It is also important to build an emergency fund before investing to have liquid cash on hand for unexpected expenses. Accumulating six months of living expenses for savings is recommended before starting to invest. Just like entrepreneurship, investing is a long-term game that requires strategic planning and consideration of individual circumstances to achieve financial success.
