Is A ‘Robo Advisor’ In Your Financial Future?

Question: Would you trust a robot as your financial advisor? The question is not farfetched. Today, there are a large number of financial management companies that use robots a.k.a. Robo Advisors to advise and manage the accounts of investors.

The largest of these companies by assets are in the United States, Great Britain, and Canada and include:

  • The Vanguard Group
  • Charles Schwab Corporation
  • Betterment
  • Wealthfront
  • Personal Capital
  • Nutmeg
  • Wealthsimple
  • E-Trade
  • Ally Financial

Again, this list represents the largest financial management firms. There are a whole lot of companies today that feature these advisors.

What Is A Robo Advisor?

To understand the concept of robots providing investment advice you need to know exactly what Robo Advisors are.

First introduced in 2008 during the financial crisis, these advisors are financial counselors that offer financial advice or investment management online with some or very little human intervention. Their advice is based on mathematical rules or algorithms that are operated by software that manage and improve a client’s assets. The Robo Consultant commonly assigns a client’s assets on the basis of risk preferences and desired target return. These robots can apportion assets into a number of investments including stocks, bonds, futures, commodities, and real estate. However, in most cases, the resources are guided into Exchange-Traded Fund (ETF) portfolios. An ETF is a marketable security that tracks an index, commodity, bonds, or a basket of assets like an index fund and they trade like a common stock on a stock exchange. Clients can choose to be passively or actively involved in the process.

How Robo Advisors Work

When a human client first encounters a Robot Advisor he is asked to provide information on his current financial condition and his future goals. The Robo Advisor takes this data and computes where the client should invest his money. The suggestions are based on a given level of market risk with the goal of achieving maximum return for a given risk.

These machines, like IBM’s Watson, can analyze a human client’s personality to determine how it influences his risk-taking behavior in financial decisions. The machine uses personality insights to determine a person’s temperament from available content the client has provided. The deduced personality is then used to determine the client’s risk tendency and helps the machine select recommendations.

Who Uses Robo Advisors?

Investors who use Robot Consultants include:

  • Registered Investment Advisors and Financial Advisors
  • Millennials
  • Retirees
  • Individuals with high net worth

Registered investment and financial advisors benefit from Robo Advisors because they streamline investment management and financial advice making the process of serving the client more efficient. The human advisor can concentrate on the tasks that a robot cannot perform.

Millennials love using Robot counselors because they have been raised on technology and it is a major element of their lifestyle. Millennials also like this type of investing because it is less expensive than relying on a human advisor and often enough they don’t have the money to capture the attention of a human advisor.

Retirees will be a growing segment of this group because more and more investors near retirement age are relying on these machines and so when they retire they will continue using them.

Individuals with high net worth rely on Robo Advisors for a portion of their wealth while they continue to use human advisors.

In the long run, though, all investors will be using Robo Advisors. It is predicted that Robo Advisors will manage as much as 10 percent of the entire worldwide assets under management (AUM) by 2020. That equates to $8 trillion.

Indeed, as you can see we are witnessing a brand new world in which machines that can learn will touch just about every element of our lives.

Social Networking Sites Allow Friends to Find Each Other Online

Like most people, you've probably considered tracking down a friend who you have lost contact with, but do not know how to begin your search because you no longer have any of their contact details, or the information you own was given to you years ago and is incomplete. No need to worry, there is a relatively simple way you can try and find your long lost pals, and even make new ones, and it is through a social networking site.

Websites that have been designed for the purpose of online social networking have become extremely popular over the past few years, and there are a number of reasons for this. Many online users enjoy the fact that they can create their own profile for free, allowing them to have their own personal space on the web. People also like the fact that they can share pictures and other media with those in their network, as well as play games and get involved in other groups, or even create their own. Additionally, it is a great way for members to find old friends, new friends, connect with co-workers or past classmates.

If you would like to try and find your friend using a social network on the web, you should begin trying to locate them with two of the most popular networks – MySpace and Facebook. However, if you have no luck with these sites, try others including LinkedIn, Plaxo, Hi5, Wink and Orkut.

How should you begin your search? Essentially, all you do is follow the searching instructions that have been laid out for you by the site. You will discover that some webpages are different than others, but basically all of them function very similar to a forward search, and will allow you to lookup a friend by using their name as your main search tool. Therefore, in the provided query box, enter the full name of the person you wish to find. If too many results, or none are found, try searching for them under another last name such as a married or maiden name if you are aware of one, or try an alias or a popular nickname they went by when you were close.

If searching their name is unsuccessful, the site may also provide you with other options for your hunt, such as finding a person from their …

– High school or college name and year they graduated
– Place of work or their career title
– Common interests or hobbies

Should you be able to track down your friend on a social networking site, keep in mind that you will likely need to create a free membership in order to contact them or access their profile. Furthermore, also keep in mind that while you can use these networks as a type of forward search, they do not function as a phone number lookup , so if you are trying to find your friend through their telephone number, you will need to use a separate reverse search

Use Financial Calculators To Realize Your Financial Goals

Online money calculators are a good way to keep your financial future in check. You can find these calculators for free online to determine things like your monthly mortgage payments, the amount of money you will need to save in order to reach a goal, or to compare loan and investment terms. As a result, these calculators can prove to be very worthwhile to just about anyone interested in planning and preparing for their financial future.

Types of Financial Calculators Available

There are many different types of financial calculators that can be found online. The one you choose will there before be dependent on the task which you would like to perform. There are investment calculators, mortgage calculators, car loan calculators, retirement calculators, debt management calculators and credit card calculators. Based on this list you should be able to see that there is a calculator to suit just about any financial situation you may have.

Information Needed to Use Financial Calculators

The type of calculator that you choose to use will determine the nature of the information needed. In the case of loans, like your mortgages, credit cards and auto loans, you will generally need to enter the interest rate at which the loan will be charged, the amount being borrowed and the duration for which the loan will last. Other information will of course be needed in the case of a mortgage calculator.

Savings calculators like your investment and retirement calculator generally require the interest rate at which money will be earned, the duration for which you plan to save and in some cases the amount you plan to save, whether monthly, bi-monthly or yearly. In the case of retirement calculators you would need to enter additional information depending on the retirement scheme being used.

Benefits of the Financial Calculators

These calculators can be used to provide you with a wealth of information. For instance, if you a set financial goal, these calculators can be used to determine how much you need to save each month at a given interest rate for a set time period to meet your goal. This can greatly help you in designing your budget to meet both your present and future needs.

In addition, if you plan on purchasing a new house or car, you can use these calculators to help you decide the price range that you can afford. This will help to prevent you from choosing something that will only put you in debt. If you have credit card debts that you would love to erase, you can also use this medium to help you determine the amount you need to pay each month so as to completely erase your debt with time.

Risks and Benefits of Tax Lien Investing

Tax lien investing is something that every serious investor in real estate should consider. But the last thing you must do is leap into it without considering all that's involved.

What are tax liens?

Most states of the USA have a system for collecting unpaid property taxes and enabling reliable payers to be deposited back on the tax roll. These states use either a "tax deed" system or a "tax lien" system, depending on what rights are sold to the purchaser of the property. Under a tax deed system, county Governments will sell full ownership and possession rights to the investor. In tax lien states, it is only the right to the tax lien or tax claim on the property that is sold.

The tax lien is an encumbrance or enforcement right. It provides the investor with the right to receive interest penalty charges if the lien is paid off by the delinquent owner, or the right to foreclose and take title to the property if the lien is not paid.

So tax liens are a highly attractive investment opportunity. These are just some of the many benefits:

· The tax lien is a high priority lien which takes precedence over judgment liens, mortgage liens, trust deeds etc.

· There is the right to collect interest or foreclose. If the lien is redeemed by the delinquent property owner, you can collect a double-digit return. If not, you can foreclose and obtain full ownership rights.

· It is the responsibility of the county to chase up payment – it is not your problem.

· The tax lien is usually for a small fraction of the property's market value, so the investment is highly secured.

· The investor is not subject to land owner liability. This is clearly an advantage, as there are an increasing number of laws against property owners.

· Interest rates are usually 16-24 percent, according to state law.

· The investment is low risk and low maintenance.

So the temptation is to leap blindly into this seemingly very attractive type of investing. But those who do not take care can get their fingers burned. These are aspects you should attend to:

· Assessing the property. Since you are purchasing the lien, not the property itself, it is tempting to go ahead without bothering to view the property. However, the security and value of the lien are based on the actual property. So you do need to see what sort of property it is.

· Market value of the property. There are all sorts of factors that may affect the value of the property and hence the value of the lien. These include zoning regulations, location, city restrictions, flood plain paths etc. Researching these factors is essential.

· Although property tax liens have a high priority, in some states federal and state tax liens share equal priority. Sometimes people who have failed to research survival liens and encumbrances have received a nasty shock when they find their lien is not number one. This shock can easily be avoided with some simple research.

· One risk factor can be created by the delinquent taxpayer becoming bankrupt after the purchase of a lien. The tax lien holder is usually given high priority in this situation. However there could have been a problem in the case of a Chapter 7 bankruptcy where payment of the tax lien has to wait until the expenses of administration are paid.

· If a lien is administrated by the FDIC (Federal Deposit Insurance Corporation) there could be serious delays in the foreclosure process. It is essential to check whether this is so before completing the purchase.

The good news is that most of these risks can be avoided by doing reasonable research before investing. This makes tax liens one of the safest and most profitable forms of investment. And if you as the investor do fall into any of these traps after reading this, you only have yourself to blame!