With the rise of automation in many aspects of business, it’s no surprise that entrepreneurs and small business owners are turning to robo investing to help manage their investment portfolios. Automating routine tasks using apps and tools is a great way to save time at work, and the same principle applies to investing. By setting up automated deductions from their paychecks each month, individuals can ensure they are regularly contributing to their retirement and savings accounts. However, managing investments can be more time-consuming than anticipated, leading many to explore robo investing through platforms like Betterment and Wealthfront.
Lawrence H. Gennari, a partner at business law firm Gennari Aronson, LLP, emphasizes the importance of investing for entrepreneurs. He believes that investing in oneself is a critical part of self-care, which is essential when facing the challenges of starting and growing a business. By establishing a habit of setting aside a small amount for investment, entrepreneurs can position themselves for long-term personal success. Robo investing can provide access to diversified portfolios without requiring investors to make many decisions, making it an attractive option for busy business owners.
While robo advisors often cost less than traditional investment advisors, there are tradeoffs to consider. The range of strategies and investment options may be more limited with robo advisors, so it’s important to carefully evaluate whether this approach aligns with your financial goals. Factors to consider when deciding whether to automate your investing with a robo advisor include your comfort level with a tech-based approach, the amount of time you have available to devote to investing, and the features that are most important to you in an advisor. With a growing number of robo advisors available, it’s worth exploring different platforms to find the one that best fits your needs.
For entrepreneurs considering automating their retirement funds through robo investing, platforms that support SEP-IRAs may be ideal, with contribution limits set at the lesser of $69,000 or 25% of compensation for 2024. It’s important to prioritize building an emergency fund before diving into investing, ensuring that you have enough liquid cash on hand to cover unexpected expenses without going into debt. Qian Liu, co-author of The Little Book of Robo Investing, suggests accumulating six months of living expenses in savings before transitioning to investing, emphasizing the importance of taking a long-term approach to both entrepreneurship and investing.
As the landscape of robo investing continues to evolve, new platforms with unique features are constantly being introduced. In addition to well-known options like Betterment and Wealthfront, alternatives such as Acorns, Ellevest, JP Morgan Automated Investing, and SoFi Wealth offer different capabilities and target various demographics. Entrepreneurs should take the time to explore the available robo advisor options and select the platform that aligns best with their investing preferences and financial goals. Ultimately, robo investing can be a valuable tool for solopreneurs and small business owners looking to streamline their investment efforts and focus on growing their businesses.
