Investing with a Robo-Advisor: Pros and Cons

Last Updated: 6. November 2023By

How best do I invest my money? Decisions can be easily delegated to a so-called Robo-Advisor.

A Robo-Advisor is an Artificial Intelligence. Computer programs and complex algorithms are used to develop investment strategies, manage portfolios and make investment decisions. Human interaction is not required.

What do you think of Robo-Advisors? Are you skeptical or do you wonder if computers might actually be better investment advisors?

Robo Advice has been around for over ten years, but only recently, with the help of ChatGPT Artificial Intelligence, has Robo-Advisors gained more and more attention. However, the majority are still skeptical about the technology.

Study shows: skepticism prevails Cominvest and Quirion surveyed 1,300 people, who all had at least 5,000 euros of freely investable assets. 39 percent of those surveyed said they had no knowledge of Robo-Advice. Only 28 percent said they knew what Robo-Advice was about.

According to the study, trust in Robo-Advice has increased, but there is still a lot of skepticism. Almost 60 percent appreciate the time saved compared to an investment advisory service, but in doubt they prefer to trust themselves.

If you want to invest your money with a Robo Advisor, the first step is for them to ask you questions. Among other things, you should define your financial goals and think about what risk you are willing to take. Would you rather play it safe or would you accept losses in an attempt to make quick money?

This is how a Robo-Advisor works Basically, if you indicate that you are a risk taker, the Robo-Advisor will invest your money mainly in equity funds. If you are a security-conscious investor, you will find more bonds in your portfolio.

„This is certainly a relief for those beginners who do not dare to open a completely self-managed portfolio at a bank and then choose the right fund,“ explains Hendrik Buhr from the money advisor „Finanztip“ on In addition, Robo-Advisors could lead to certain target groups getting involved in the topic of investing and the stock exchange at all.

A definite disadvantage of Robo-Advisors are the high costs. Every year between half and one percent of the amount invested will be charged. This significantly reduces your return, as the costs for a self-installed portfolio at a cheap bank are only 0.2 to 0.3 percent.

Foregoing short-term profit opportunities Some Robo-Advisors adjust the portfolio in response to changes in the stock market to reduce losses. Others keep the original allocation largely unchanged and only rebalance once a year. A lot can happen in the financial markets in one year. You may miss out on numerous profit opportunities.

Investing with a Robo-Advisor is certainly convenient. Nevertheless, you should consider alternatives. One could be to find a clever investment strategy with Sicheres Geld. Sicheres Geld is an advisory service for critical investors who wish to have active asset protection.

The convenience aspect is also in the foreground, as you get exact recommendations on where to take profit opportunities and what to do to avoid losses.