Investing creates wealth over the long term
Skills and experience matter
Fees can affect overall returns in the long term
When you invest, you are buying a small piece of a company or a small piece of a group of companies. A “diversified portfolio” is a group of investments across many different companies. As the global economy grows, companies tend to follow suit, rising in value over the long-term. As the companies grow over time, your investment in those companies grows as well.
- While the value of stocks and bonds may fluctuate in the short term, they have historically generated wealth over time (a decade or more).
- Holding different types of investments can help reduce your risk of loss over the long term. Automated investing services do this for you.
- If you don’t have investment experience, you may make investing decisions that work against your financial goals. Professional services can help align your investments with your goals.
- Investment services often charge fees to trade and invest on your behalf. Finding a low-cost investment platform that meets your needs can save you money in the long-term.
- There is no crystal ball that will tell you exactly which companies will perform the best over time. Because of this, all investing comes with risk. Still, research and history show that buying and holding a diversified group of investments can generate a positive return over the long term.
How do I start investing?
Generally, people who want guidance with their investing do it one of a few ways:
- Gives users the option to create guided portfolios by answering a few questions about their income, net worth and investing time horizon.
- Users can also opt for a self-managed approach by choosing their own funds.
- As part of your Genius subscription, consult with a real money expert for advice or guidance at any time.
- Offers low $1 minimums and zero-fee commissions on trades.
To get started, it's as simple as visiting your Albert app and looking for the Albert Investments option. Text Genius if you have any questions.
Self-guided fund providers:
- Before automated investing, this was what many who didn't want investment advisors chose.
- You'll also fill out questionnaires, from which you'll get suggestions on funds to invest in.
- It's up to you to buy the investments.
- They also charge fees, often the lowest of these three options.
Well-known examples: Vanguard, TD Ameritrade, Charles Schwab (these companies also offer traditional investment advisors)
Automated investment services:
- They're the most recent addition to the investing landscape.
- They automatically invest your money based off your responses to a series of questions.
- These investments are typically in passive, diversified funds.
- They do charge fees, although typically at a lower rate than a traditional investment advisor.
Well-known examples: Betterment, Wealthfront, Acorns
Traditional investment advisors:
- Long-running method of providing advice for a fee, typically reserved for higher net-worth individuals.
- You will interact with a human, either over the phone or in person.
- This person will help you build your plan, and their fees are almost always higher than the other two services.
Well-known examples: Merrill Lynch, Goldman Sachs, JP Morgan Asset Management
Why do I pay fees:
Whether it's a robo-advisor or a real person, there are costs, skills and time that go into putting your investments into place. You're having someone, somewhere, help you manage your money, and the fees compensate them for that.
What's a typical fee:
A percentage of your total account balance, which can usually range from .01% to 2%. Generally, more human help means higher costs. These fees are not limited to your profit, and will be assessed whether you see returns or not.
If I pay more in fees, will I see greater returns:
Not necessarily. In fact, your investments may lose value and you may pay more in fees on top of it. No service or individual can guarantee investment returns over time.
How do fees affect my returns:
In short, they lower them. By how much? That depends on your investment size, and the size of the fee. A .01% and 1% fee look similar on paper, but a 1% will lower your returns over time by a far, far greater amount.