Even though the recession is behind us, this is a tough time to be a homeowner. Mortgage rates are still on the rise, and another financial crisis may be on the horizon. It can be hard to make ends meet. You may find yourself wondering how you will ever be able to afford to make improvements to your home, pay off your mortgage in full, and retire in comfort.
You are not the only person in this position however. A lot of Millennials are struggling to get by on low and middle incomes while living in an economy with high prices not just for housing, but for everything else. Older generations are struggling as well.
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Thankfully there are new products out there geared at consumers just like you. One of those products is called a “robo-advisor.”
Just what is a robo-advisor, and how can it help you to improve your home budget? A robo-advisor is a software program which provides you with custom investing advice. With it, you can quickly and easily set up low-risk, reliable investments.
Investing is an area where a lot of young homeowners have a hard time. You may barely be able to afford your mortgage and other basic bills as it is. If you are setting aside money for savings, you may only have a few hundred or thousand dollars.
There was a time when traditional pension plans were the norm, and your company would take on investment risk on your behalf. But those plans are becoming more and more a remnant of a past era. Now it is up to you to assume financial risk for your retirement accounts.
This is such an intimidating prospect that a lot of Millennial homeowners simply defer on investing entirely. They save as much as they can, but they still do not have a lot, and are unlikely to meet their retirement goals. In the meantime, they fall behind on home improvement projects and ongoing maintenance costs.
A robo-advisor offers an alternative for those who want to get started investing and earning toward retirement. Instead of paying high fees to talk to a human advisor, you pay very low fees to use a suite of online services. If you do need advice from a human being, someone is there to assist you if you call in (depending on the company you use).
You do not need tens of thousands of dollars or more to get started either. You can get started investing with as little as $100 a month. Actually, Betterment (one of the top robo-advisors) lets you start with even less—but you will qualify for the lowest fees if you can contribute at least $100 monthly. Over at Wealthfront (another of the most popular robo-advisors—check out this Wealthfront review for more info), you can start with just $500.
Benefits of investing with a robo-advisor include:
• Get started investing with just a few clicks
• Monitor your funds on an ongoing basis
• Get personalized advice on your retirement accounts and general finances
• Make small, affordable contributions if you are on a tight budget
• Steer clear of high fees
• Start investing sooner so you can compound more money
Naturally you are not going to want to withdraw from your retirement accounts if you can avoid it; so you should try and put off your home improvement projects for a while if it would mean drawing from your investments. Still, in some cases you may find that simply replacing your existing advisor (who may charge you high fees) with a robo-advisor can save you enough money to tackle some of those projects sooner rather than later.
How do you choose a robo-advisor? While there are many choices out there, two of the most well-respected and established advisors are Wealthfront and Betterment. Click to read robo-advisor reviews on these and other top companies.