Sunday, July 03, 2016

Can Robo Advisers Save Investors From Themselves?

Betterment and other online investment services make investing easy. Novice investors define their goals and time frame. The robo adviser puts their money in a mix of ETFs expertly calculated to best meet their needs. Couldn't be simpler: set and forget.

"Forget." That proves to be the hard part. Novices tend to assume investing requires market timing. When Betterment briefly suspended trading during the Brexit market scare, some of its investors were exhibiting distressingly short-term behavior.

"Sell low, buy high." Mutual fund investors lose around 4 percent per year trying to predict swings in stock prices. How can robo advisers help their customers avoid the same fate?

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