Personal finance apps are becoming more commonplace, yet they continue to innovate what artificial intelligence can do for investing.
In lieu of traditional financial advisors, robo-advisors — automated trading and investment platforms that help people create and grow financial portfolios — offer simplified decisions and solutions, are faster at identifying fraudulent spending and provide a more personalized strategy for investors. Particularly for people just getting started, these tools provide a way to quickly grow a portfolio.
Whether you’re fully on top of your personal finance health or could use some assistance in growing your money, a robo-advisor platform can help. Here are some to check out, depending on your financial needs.
Stay on top of your spending with Mint
Whenever you’re trying to save or grow money, tracking your spending should be one of your first steps. It’s difficult to put your money to work if you don’t know where it’s going, and an overview of your finances is beneficial.
Mint is a robo-advisor that sorts everything in your financial life under one dashboard. Your bills, balances, credit score, loans and more are all easily accessible — you simply need to connect them all to your Mint account.
Have you ever missed paying a bill because you forgot to log into an online account? Or have trouble keeping track of your monthly payments? Mint seeks to make those issues less frequent with a monthly bill payment tracker and reminders to help you stay on top of what you owe.
Additionally, Mint can help you set your budget by showing how your spending decisions impact the amount of money you’ll have at the end of a given time period. The platform will guide you through a questionnaire to learn your spending habits. As you connect more financial institutions or recurring payments to your Mint account, it uses AI and machine learning to segment your spending into categories like Auto & Transport, Bills & Utilities, Gas & Fuel and Shopping.
Without a budget, we often don’t realize how much we spend in a certain month. By seeing your spending laid out in an easy-to-understand tracker, you can get on the path toward monthly savings.
Round up your purchasing with Acorns and Chime
If you want to dip your toes into investing but prefer to take a hands-off approach, “roundup” apps like Acorns and Chime put a modern spin on the idea of saving loose change. When you make a purchase with a linked credit or debit card, these tools round your purchase up and invest the change in a computer-controlled investment portfolio. Acorns invests into a portfolio of stocks and bonds, while Chime puts your money into a savings account.
Most roundup tools have additional perks. For example, Acorns partners with more than 350 retailers to offer Found Money, or cash back on your purchases. Chime offers a Get Paid Early feature for members to receive their paychecks two days early via direct deposit.
There are some limits to these types of robo-advisors, however. Acorns has a limited investment pool, which means relying on its AI to manage a portfolio. And Chime will invest your rounded up money or payment into a savings account, which typically has smaller yields.
Fees can add up, too. If your rounded-up change only equals $5 a month, you likely won’t find much use with these types of tools, since some or all of that money would be lost to fees. On the other hand, if you have regular purchases that you can’t do without, you could earn some nice interest on your spare change.
Explore the gig economy with Dave
Dave offers a variety of options for taking control of your finances. Its automatic monitoring feature keeps tabs on your spending habits and allows you to build your credit score, while Dave Banking removes fees from ATMs, overdrafting and not maintaining a minimum balance. Dave will even help you cover your bills by providing an advance on your paycheck. It can spare up to $100 to pay a bill, which you’ll then repay (without interest) once your paycheck arrives.
Yet the most unique Dave feature is the Side Hustle. While other robo-advisors provide advice or take action with money you currently have, Dave advises you on how to earn more money. Its tagline is simple: “Apply. Hustle. Collect your cash. Repeat.”
If you’re a Dave customer, the feature connects you to gig and sharing economy work in your area. The service was launched in 2019 but really took off during the COVID-19 pandemic. By early April of 2020, the Side Hustle feature had helped 600% more people apply for jobs. As working from home remains the norm for many companies, Dave has expanded its gigs to include remote work opportunities.
Dave can’t tell you what to do with all that newfound cash, but it can help you manage your money efficiently as you find your next side hustle.
Reduce your taxes with Betterment
Founder and CEO Jon Stein started Betterment in 2010 in the wake of one of the worst financial crises in American history. His goal? “Help people do what’s right with their money so they can live better.”
Betterment offers a handful of ways to grow your money, whether through savings or retirement accounts or through its investing capabilities. The company will invest in the stock market based on your financial goals. For example, if you’re saving for a major purchase like a home or wedding, it will follow a fairly balanced strategy of stocks and bonds. If you’re saving for your child’s future college education, Betterment will invest a bit more heavily into stocks than bonds since you have a longer time for that money to grow. You can also weigh in on the types of risk or social responsibility you want your portfolio(s) to have.
One area where Betterment excels: automating advanced tax-saving strategies to reduce the amount you pay every year. They’re the only investment company that offers automated asset location, which can increase your portfolio by 0.48% per year. That may sound insignificant, but over 30 years — a baseline for long-term investments — you could earn 15% more money.
Betterment also offers tax loss harvesting, or selling a security that’s experienced a loss and replacing it with a similar one. In doing so, investors can offset taxes on gains and incomes and maintain optimal asset allocation — and save up to $3,000 per year. Betterment’s Tax Loss Harvesting+ is automated and free for investors already managing money with the company.
Depending on your plan, Betterment’s investing takes either 0.25% or 0.40% per year on your balance. That’s a bit higher than many Vanguard or Fidelity index funds, but if the thought of picking your own stocks, bonds and funds intimidates you, you’re paying extra for the additional peace of mind.
Enhance your retirement account with Rocket Dollar
Retirement may seem far away, but it’s never too early to start improving it. Many investing companies offer traditional retirement options, such as an IRA, Roth IRA or 401(k) account. These options have tighter restrictions and only allow investors to choose between stocks, bonds, mutual funds and exchange-traded funds (ETFs). IRA and 401(k) accounts also tend to take an aggressive approach in the early going and a more conservative one as you near retirement age.
Rocket Dollar believes in the power of a solid retirement portfolio, but wants investors to have a wider array of choices. Through its self-directed IRA and Solo 401(k) offerings, you can invest in more than stocks and bonds — any asset class allowed by the IRS is fair game. You’ll see options like real estate, cryptocurrency, equity crowdfunding and small businesses and startups. You’ll also get deferred or no taxes on all your Rocket Dollar gains.
Even though you’re choosing the assets to invest in, Rocket Dollar offers robo-advising in the form of starting a limited liability company, or LLC. The company is owned by your account and Rocket Dollar helps file any necessary forms.
If you’re just starting off in your retirement goals, a traditional IRA or Roth IRA may be a more manageable option. However, if your assets have seen some growth and you’re comfortable with investing, you may want to expand into other options for your retirement to further diversify your portfolio.
Image: Rocket Dollar
We’ll continue seeing an increase in robo-advisors as companies work to help investors grow their money. Even with AI on your side, it’s important to understand the risks of investing. Make sure to do your research and due diligence before signing up for any service.
Want additional resources for earning more money? Check out our five best cash back and rewards apps.