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- 1 Technology has given a push to investment and made it possible for everyone.
- 2 By using online brokers or robo-investors, traders can achieve several feats.
- 3 Traders must know the benefits and drawbacks of both to make a wise choice.
Investment is not limited to a few elites anymore. Thanks to awareness and technology, everyone is doing it now. But putting money into volatile markets and making profits is easier said than done. In fact, it takes great expertise and knowledge to do that. Everyone has heard the disclaimer that markets are subjected to risks and so on. Thus, even in-depth insights can’t avert losses for sure.
So, people get help from experts who can minimize losses and maximize profits. For decades, brokerage agencies have been taking care of it. In the 21st century, technology has taken charge of it. So now, aspiring investors can get help from robo-advisors. The robo-advisor is an AI-based software that does everything for traders at their beck and call.
However, the world hasn’t stepped into a sci-fi era yet, so there are online brokers too. The platforms facilitate trade and let investors do all the research and decision-making. Choosing between the two can be a tedious job as they have their own benefits. Hence, one can make a wise decision only after knowing them well.
Comparing Online Brokers and Robo Investors
Online brokers are appropriate for those who want to take reigns of their trading. The platforms provide tools for in-depth research. It offers news, charts, and comparative analysis, among other things. The robo-advisors do everything on their own on the user’s behalf. They might give traders an option to take control. But that would fail the purpose of using a robo-advisor in the first place.
Robo-advisors are automated programs that use algorithms to function. Before starting with the application, users tell them about their risk tolerance and objective. Based on that information and market insights, these mechanized apps make decisions. Since they offer so much ease, they become the go-to option for newbies. Also, they’re the first choice for super-busy people who don’t want to deal with agents frequently.
On the other hand, online brokers are suitable for experts as well as learners. In addition to that, they bring more flexibility to the trade. They certainly take some time but they ensure that the user is aware of everything. Moreover, they come with some very comprehensive tools. The programs enable the users to gain expertise and knowledge. They encourage financial literacy and help investors learn the various nuances.
But before making a final choice, the investors must know their pros and cons.
Pros and Cons of Online Broker
Pros
Flexibility
Low-cost or commission-free
Good for learning
Gives authority to traders
Cons
Stipulates self-discipline
Challenging for beginners
Allows emotion-driven decisions
Pros and Cons of Robo-Advisors
Pros
Fully-automated
Cheaper than traditional advisors
Consistent analysis
Cons
Lack of flexibility and personalization
Limited options and strategies
No scope for learning for traders
Both options continue to be useful for their target investors. Thus, they need to choose between the two after doing the homework. After carefully deciding how they want to approach markets, they should take the next step. If the decision is right, the trading will certainly be fruitful.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
