3 Ways to Save Money in the New Year – ConsumerReports.org

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For anyone who wants investing help, it’s easier than ever to get advice at low cost—that is, if you’re willing to trust a computer to manage your portfolio.

Traditionally, investors have had to pay high fees for financial planning and asset management. Typically, the median annual fee is 1 percent of your investing portfolio, according to the 2017 Inside Information Advisory Fees Survey. So if you have a $500,000 portfolio, you would give up $5,000 to your financial adviser.

But in recent years a new option has emerged: robo-advisers, which use computer algorithms to manage your portfolio, with results that can be as good as or better than what a human adviser delivers. Plus, their fees are lower, typically ranging from 0.15 percent to 0.5 percent annually.

Betterment, for one, charges annual fees of just 0.25 percent to 0.4 percent. At Wealthfront, accounts pay no fees for the first $10,000; larger accounts pay 0.25 percent. Increasingly, traditional investment firms, including Schwab and Vanguard, are offering their own robo services, or hybrid versions that include phone access to financial advisers.

Robo-advisers typically invest your money in low-cost index funds or exchange-traded funds (ETFs). A typical stock index ETF might cost you just 0.04 percent yearly. By contrast, the average annual cost of an actively managed stock fund is 1.17 percent, according to Morningstar Direct. That cost advantage can help you hang on to more of your savings.

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