Robo Advisors are definitely the next big thing when it comes to choosing an easy and ideal mode of investment. But the best Robo Advisors for small investors should not only focus on having the lowest minimum deposit. Of course that’s important, but you should look for a service that offers low (or no) fees, and account services for smaller investment amounts.
It doesn’t matter if you have huge chunks to invest or if you simply want to start small: if you’re considering a Robo Advisor, you need to make sure that you’re getting the best value for your money. This is even more important when you’re starting out small.
We’ve been looking for Robo Advisors that are ideal for people with less than $15,000 to invest, but that’s only the tip of the iceberg. In order to fully justify our choices, we focused on the following key factors:
- Low minimum deposit
- Management fees (low or free for small investments)
- Account services available to lower investment amounts
The Best Robo Advisors for Smaller Investments
If you’re an investor with less than $15,000 to invest, here are our top choices for the best robo advisors for small investors. All of them gets a high score in terms of deposit minimums, low management fees, and comprehensive account services.
Free Automated Investing
When it comes to a free Robo Advisor, it’s hard to ignore M1 Finance. You can use the service with $0 minimum deposit, but you’ll need to deposit at least $100 to start trading. But still, this is a good deal considering M1 Finance will not charge any trading or transaction fees. In other words, M1 Finance is a free Robo Advisor with zero account minimum and zero fees! Can’t get much better than that for a small investor.
Wealthfront has a very low minimum deposit requirement. It’s only $500, and the service will definitely impress in terms of management fees and account services. If you use our link to sign up, you’ll get the first $5,000 managed for free with Wealthfront. The 0.25% fee for higher balances is still low compared to other Robo Advisors. Regardless of the size of the investment, Wealthfront also offers portfolio rebalancing and daily tax loss harvesting. A great choice for lower investment amounts since you’ll pay exactly zero management fees if your balance is below $5,000.
Minimum Deposits and Additional Account Charges
If you’re thinking about starting small, the first thing you need to consider is the minimum deposit required by the Robo Advisor. If you don’t meet the required minimum deposit, then you’ll be unable to open an account. Hence, you won’t be able to use the service.
There are Robo Advisors that require a minimum deposit, and the amount can range from a few hundred to tens of thousands of dollars. In order to find the best service for you, you’ll definitely need to consider this.
But all hope is not lost. The good news is that there are Robo Advisors with no minimum deposit requirements, and is thus ideal for small investors. However, the service might add additional account charges if the required monthly contribution to the investment account is not met.
The level of management fees applied is always an important issue to consider, and it becomes even more so when your total investment amount is at a lower level. That means you need to look carefully at how these management fees are charged before signing up.
Most Robo Advisors charge management fees as a percentage of the total investment amount, so it’s ideal to find a Robo Advisor with a low percentage rate. There are also those that charge a fixed monthly or annual fee (rather than being based as a percentage) and this could work out to be cheaper in the long run, but is usually best for larger investors.
Some services only begin charging a fee once you hit a certain level of account balance. This is ideal for smaller investment amounts, since you can begin investing in a robo advisor for no fee at all. We highlight some of these services on this page.
Account Services Available
When you’re trying to make the most out of a comparatively smaller investment amount, the management fees and charges are not the only things you should be concerned about. More often than not, Robo Advisors with the cheapest rates also tend to come with fewer features or account services.
If you’re an investor with less than $15,000 to invest, you need to choose a Robo Advisor that offers bread-and-butter services such as portfolio rebalancing and dividend reinvestment. Some more advanced features such as tax loss harvesting and the ability to trade individual securities are often only available for larger account balances. We took all of these into account in our recommendations on this page, however you should look into which services you really need before signing up.