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It wasn't that long ago that there were only a couple ways to build a diverse investment portfolio. You could hire a financial advisor, or you could do the research and choose investments yourself. But these aren't practical or desirable options for everyone.
Fortunately, the automated investing industry has exploded, and there are some excellent robo-advisor services available that can put your investing on autopilot. With the stock market reaching record highs in 2024 already, now could be a great time to start, so read on for our favorite beginner-friendly robo-advisors.
There are a lot of options to compare. It can be overwhelming! If you're looking for a place to start, here are some robo-advisors our experts recommend for beginners and why they like them:
Broker/Advisor | Best For | Commissions | Next Steps | |
---|---|---|---|---|
2024 Award Winner
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Best For:
Diversified investing and banking needs |
Commission:
$0 per trade, expense ratio 0.03%-0.08% |
|
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Best For:
Mobile investing |
Commission:
$0 commissions and no management fee. M1 Plus membership costs $3 per month. |
|
2024 Award Winner
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Best For:
Diverse account types |
Commission:
$0 per trade, management fee 0.25% |
|
2024 Award Winner
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Best For:
Simple-to-use platform |
Commission:
$0 per trade, management fee of $4 per month or 0.25% per year |
When we researched online brokers to create this list of brokerages, some of the things we looked for were low costs, a variety of account types, and great customer service ratings. Everyone's investing journey is different, but I've found these three factors are important for anyone to have a great investing experience.
The bottom line is that while we feel our list above represents the best robo-advisors for beginners, the best choice for you depends on the features that matter to you the most.
For example, if you're planning to invest a large sum of money in a taxable account, you may want to narrow your search to robo-advisors that offer tax-loss harvesting. Or, if you want professional help with other aspects of financial planning beyond your investment portfolio, such as budgeting, you could look for a robo-advisor that has a human financial advisor you can talk to.
In short, start with our list, and then narrow it down based on your personal investing situation. If you want to be a bit more hands on as you start your journey as an investor, check out our list of the Best Online Stock Brokers for Beginners to learn more.
SoFi Automated Investing has no management fee and offers free access to Certified Financial Planners. It automatically rebalances portfolios and has no minimum investment, and the app is very easy to use. With a suite of banking and lending products, SoFi is ideal for people who want to keep their finances in one place.
$0 per trade, expense ratio 0.03%-0.08%
$1
On SoFi's Secure Website.
M1 Finance's robo-advisor integrates with the company's checking accounts and offers customers a line of credit backed by their investments. M1 is one of the only robo-advisors with no management fees and even offers a linked debit card with reimbursed ATM fees.
$0 commissions and no management fee. M1 Plus membership costs $3 per month.
$100
On M1 Finance's Secure Website.
Wealthfront has a $500 account minimum, but it has a lot of features that make it a good fit for beginners. Its management fee is on the lower end of the spectrum, especially for robo-advisors that offer tax-loss harvesting to all customers.
$0 per trade, management fee 0.25%
$500
Betterment has a reasonable management fee and no minimum investment requirement. It offers a no-fee checking account and interest-bearing cash management account, plus tax-loss harvesting for accounts of all sizes. It also has the highest rated mobile app we've seen.
$0 per trade, management fee of $4 per month or 0.25% per year
$0
TD Ameritrade has been acquired by Charles Schwab, and the company expects all accounts to be transitioned by the end of 2024. We've removed TD Ameritrade from our best-of lists to align with this development. Here at The Ascent, you can trust that we're constantly evaluating our top broker picks to bring you current recommendations.
A lower fee is better than a higher one, all other things being equal. But that's not the only factor to consider. Here are some other features that the best robo-advisor for beginners will have.
Some robo-advisors will let you get started with $1, while others have minimum initial investment requirements of $500 or more. If you're just starting out and don't have a ton of money to invest right away, this can be a major factor to consider.
It's rare to find a robo-advisor that gives all clients access to human financial planners, especially without any additional charge, but this feature does exist. Even if you have to pay for their advice, it can be a valuable feature if your robo-advisor has a staff of Certified Financial Planner® professionals who can offer you guidance.
Investing is only one part of a solid financial plan. Good robo-advisors offer lots of resources to help you master the art of budgeting, save for college expenses, buy your first home, learn about the stock market, and much more to help you achieve all of your financial goals.
Most robo-advisors are relatively easy to navigate, just by the nature of their product. But it could be worth reading reviews of their apps or websites to see which are the most user-friendly.
Learn more: Best Robo-Advisors
This is different from human advisor access. Not all robo-advisors offer the ability to simply pick up the phone and talk with a representative if you have a question about your account. When picking the right robo-advisor for you, consider what level of customer service you're most comfortable with. Many offer phone support, live chat, social media help, and help through email.
Robo-advisors offered by the best stock brokers can often be paired with a self-directed investment account if you want to choose some of your own investments. Those operated by banks can seamlessly integrate with checking and savings accounts. These can be major advantages, especially if you like to keep all of your finances in one place.
Most robo-advisors offer this. Automatic rebalancing essentially means that the robo-advisor will re-evaluate your portfolio every so often to make sure it is still aligned with your goals and risk tolerance. For example, if the stock market performs exceptionally well, a robo-advisor with automatic rebalancing might move some of your money out of stocks and into fixed-income funds to maintain your target asset allocation.
This is more important for high-balance accounts, but robo-advisors that offer tax-loss harvesting will make strategic moves in client accounts that maintain the same investment goals while simultaneously maximizing the tax efficiency of the portfolio. It's a method that can help people pay less taxes.
A robo-advisor, which is also referred to as an automated investing platform, aims to do essentially the same thing as a traditional financial advisor, but without any direct human involvement.
These services create an appropriate investment portfolio based on factors such as your:
And they will automatically adjust your portfolio based on these over time. Because there isn't an advisor's salary to pay, robo-advisors charge a fraction of the management fee of traditional financial advisors.
By nature, most robo-advisors are appropriate for beginners. But there are a few things to look for that makes a robo-advisor a great fit for beginning investors.
Here are a few things you'll find with the best robo-investors for beginners:
All robo advisors automate the construction of an investment portfolio. You'll open an account following the general procedure outlined in the previous section, and the robo-advisor will invest it in the stock market and fixed-income instruments allocating it in investment funds, usually in the form of ETFs. These are usually index funds, but not always. (An index fund is a passively managed mutual fund).
In exchange for their automated investing services, robo-advisors charge a management fee. We'll get into the fees in more depth a little later, but the key takeaway is this: Because robo-advisors automate most, if not all, investing tasks, the fees are significantly lower than human financial advisors typically charge.
Most robo-advisors charge a management fee in the 0.25% ballpark for their services, but fees can range from 0% to 0.40% for the top firms. Even on the higher end, this is significantly more cost effective than the 1% average management fee charged by financial planners for advice and investment guidance.
Just like with human financial advisors, robo-advisor management fees are generally based on a percentage of assets in your portfolio and are assessed annually.
For example, a 0.25% management fee means that for every $1,000 you have in your robo-advisor account, you'll pay $2.50 per year in management expenses.
It's also important to mention that the individual investment funds your robo-advisor uses typically have their own annual management fees (known as expense ratios). These are usually quite low, but they do add to the total cost of your investments. It's still usually much cheaper to use a robo-advisor -- just be aware that an advertised 0.25% management fee can be 0.30%-0.35% when including the expenses of the individual funds your money is invested in.
The exact process for opening a robo-advisor account varies from company to company. But the general process is the same:
That's basically it. The robo-advisor will then use the money you contribute to construct an appropriate portfolio of investment funds for you.
You could be on the path to financial independence with just a few clicks. Our fully-vetted picks for the best robo advisors offer simple-to-use services that automate your investing needs. Learn more about our top picks by clicking below.
At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and user experience; however, we also take into account features like research, education, tax-loss harvesting, and customer service. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.
See our full methodology here: Ratings Methodology
Robo-advisors allow investors to put their money to work in a diverse portfolio of stocks and bonds, which it usually does through exchange-traded funds, or ETFs. The exact funds vary by robo-advisor, with most choosing to offer passive, low-cost index funds.
Some robo-advisors are more user-friendly than others. As a general rule, these types of companies tend to have the easiest platforms to use:
By nature, all robo-advisors should be easy to use for most investors. The general idea behind robo-advisors is that they allow people who don't have the time, knowledge, or desire to choose their own investments to put their strategy on autopilot.
Our Brokerages Experts
Brokerages we evaluated for consideration on this page: Acorns, Ally Invest, Axos Self-Directed Trading, Betterment, Cash App Investing, Charles Schwab, Delphia, Domain Money, Ellevest, Empower, eToro Brokerage, E*TRADE Core Portfolios, E*TRADE, Fidelity, Fidelity Cash Management, Fidelity Go®, Firstrade, FOREX.com, Interactive Brokers, J.P. Morgan Self-Directed Investing, M1 Finance, Magnifi, Marcus Invest, Merrill Edge® Self-Directed, moomoo, NinjaTrader, Personal Capital, Plynk, Prosperi Academy, Public, Robinhood, Rocket Dollar, Schwab Intelligent Portfolios, SoFi Active Investing, SoFi Automated Investing, Stash, Stockpile, Tastytrade, Titan, Tornado App, TradeStation, Tradier, Vanguard, Vanguard Digital Advisor®, Wealthfront, Webull, Zacks Trade.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Betterment disclaimers
†Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II.
**The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 4.00% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of Feb. 6, 2023. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.