Investing when you have no time 🤷♀️
We think about this question all the time. How can we invest when we know that life is as busy as it is? So we decided to host the investment platforms that are making it easy: eToro, Moneyfarm and Scalable Capital (some of which are on our new app) at #Finimized: New Age Investing in London.
When it comes to investing, it’s hard to know where to start. We’ve all heard that passive investing over the long term will, on average, outperform an expert investor. We’ve also heard our friends investing in crypto and making a ton of money overnight. But even when you do make the decision to invest, there are so many platforms to choose from, how can you possibly decide who to trust? Not to mention the fact that time is tight.
So, we end up doing nothing, which is inevitably the worst outcome. But there are options that can make it easy! Platforms, like robo-advisors, give you the opportunity to invest and chill. It just comes down to which platformis right for you: a pure robo-advisor like Scalable Capital, a hybrid robo-advisor like Moneyfarm or a social investment platform like eToro? Let’s break it down.
The difference between robo-advisors and copy funds
Simply put, a robo-advisor takes your money and invests it for you in one of their portfolios. The portfolio is updated on an ongoing basis to make sure it continues to fit your chosen level of risk. You select a certain amount of risk, and the robo does the rest. This “set it and forget it” approach means you can just focus on building up cash and depositing it into the account, no hands on required. Scalable Capital does this without having to interact with humans, whereas Moneyfarm gives you the option to speak to a real person to help you out along the way. It’s a low key way to start getting into investing. You don’t need to do much except sign up. 👌
eToro has taken a different approach. You can invest directly in the markets, or, if this is too much for you, they allow you to copy the pros that are actively investing. You can even diversify by investing in a group of active investors. People with an account can see what others portfolios are, including returns. Oh, yeah.
Which is better?
Tough question. The event painted a clearer picture on where the future of investing is headed, keeping varying expectations and involvement in mind. (You can watch our live stream here).
When it comes to investing, it depends on your expectations. Giovanni, Co-Founder & CEO of Moneyfarm, touched on setting those straight before investing. “Long-term investing is boring. It should be”, he said. You’re not going to see dramatic returns right away. It’s more about a waiting game than anything else.
Adam, Director of Scalable Capital reiterated Giovanni’s comment, saying, “if you live by performance you will die by it”. Focus your expectation on long term gains and you’ll be sorted if you decide to invest with a robo-advisor.
This model is pretty similar to that of traditional wealth management, they take an annual fee (roughly 0.5–1% of the money you have in the account) in return for managing your money through the ups and downs of the markets. While the robos have been successful at using technology to improve the experience and manage portfolios at huge scale, Iqbal, Managing Director at eToro, argued that robos have not gone far enough. Encouraging our audience to have higher expectations from their robo-advisors, while adding that “they’re more similar to Hail-o than Uber”. Essentially robos have simply improved the user experience of an old industry — the next stage will be to disrupt the underlying products and instruments used to invest, with full transparency.
eToro uses it’s community to drive it’s social trading platform. This goes some way to giving you that ‘active’ feel without making the individual investment decisions. eToro will also enable you to run a virtual portfolio, again allowing you to ‘try before you buy’. This gets to the heart of the difference in opinions — eToro is encouraging you to take an active role in your investments, whereas robos fundamentally believe it is not your job to manage your money. You decide.
We wanted to hear what Finimizers were most interested in, so we had users submit questions for the speakers. Shay asked why people should choose robo-advisors over other investment options, which Adam and Giovanni happily answered. It depends on whether you want to passively or actively invest!
Skye, an American user, emailed in and asked how much influence the political climate had on the stock market, which was touched on in the talk. The tariffs alone (more here), imposed by Trump, have caused reactions within the markets.
Sophia said that customers find it difficult to understand volatility and risk. Could there be a better way to communicate these concepts to customers? Absolutely right. We’ve learned this as well with the Finimize app. Making it as simple as possible is the way to a successful product.
The Finimize App
One month ago we launched the Finimize app, which compiles user reviews of financial products to help you choose the best product available when it comes to investing. Currently we have a robo-advisor section built out, and we’re working towards expanding it to include other money trading platforms!
~Anna, Community at Finimize