How much robo-advisors can cost

Many think: everything is cheaper online. But services on the Internet are not in vain. This also applies to digital investments. The “Stiftung Warentest” reveals what you should look for in your investment robot.

High investment costs reduce earnings. A few percentage points are clearly noticeable over a longer period.

The MSCI World Index, for example, has risen from 100 points in May 2019 to 2,626 points in 1969, the experts at Stiftung Warentest calculated in a guide. If the costs are subtracted, however, the result looks different: with fund costs of 0.5 percent, the final score is 2,050 points, with two percent annual costs only 968 points. So if you have high investment costs, you are giving away a lot of money.

Keep an eye on these costs

Robo-advisors are considered cheap. However, digital portfolio managers also incur costs. If you want to have your money managed by an investment robot, you should take a close look. It comes down to these costs:

  • administrative expenses: The providers charge fees for digital portfolio management. They are usually given in percent and for the desired investment amount. The costs are often less than one percent. However, some providers are also more expensive.
  • Fund costs: Fees also cost the funds in which the robo invests customers’ money. The following applies: Passive index funds – so-called ETFs – are cheaper than active funds.
  • Transaction costs: The purchase and sale of financial products also has an impact. The custodian banks usually charge trading fees, as do the stock exchanges. The more often a robo-advisor reallocates, the more important it is.

Sometimes changes to the investment strategy or services, such as issuing a certificate, may also be subject to a charge. The providers should provide transparent information about such costs.


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