Saving to buy a home can be difficult for many young adults. For some, in addition to saving money, they must also increase their credit score to secure home financing in Coral Springs. Whenever you need assistance securing a loan, you can count on Ace Mortgage to help.
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If you are still in the process of building wealth to buy your own home, you are probably trying multiple strategies.
Have you created a budget?
Tried to cut back on unnecessary expenses, started paying off your debt, and even minimize your credit card use?
If you are already doing these things, then you’re heading in the right direction. But even with your new budget, do you feel like you’re making little to no progress? Then you may need more money coming in.
Apart from getting a side hustle, what else can you do to make money? If investing is an avenue you wish to pursue, have you considered robo-advisers?
What Are Robo-Advisors?
Robo-advisors are automated investing services that use algorithms and software to build and manage investment portfolios. Unlike traditional investment portfolio management, you will not incur a large fee. As a result, this makes it a viable option for entry-level investors who do not have enough cash and experience to get into the investing world through “old-fashioned” means.
Again, there is a fee, but it’s relatively small. It depends on which robo-advisor app you choose, but in general, investors are charged between 0.25 and 0.50 percent of their assets as an annual management fee.
Robo-advisors appeal to investors because they:
- Provide portfolio management at an affordable price
- Create an investment plan and manages it for you – all you need to do is add money to your account
- Allow you to invest without devoting too much time and energy to it
Come Up With A Plan
It’s not recommended to put money into an account and simply start investing. You should have a clear plan in mind of your financial goals, when you want to achieve these goals, and what you’re willing to risk. Before getting started, ask yourself:
- How much investment do I personally want to do?
- Do I need a goals-based financial plan (if you are saving for a down payment before contacting a mortgage company in Coral Springs, the answer is yes)
- How much involvement do I want in the investment plan?
- Am I considered a conservative investor (the answer is probably yes because you can’t risk losing a lot of money)?
- Am I okay with doing it on my own (you will be able to contact someone, but in general, robo-advising is done independently online)?
There are robo-advisors for all types of investors. If you don’t have a lot of money to start with, choose one that has a small account minimum, like $500. Some require a minimum of $5,000, so do your research. If you are just putting your toe in the water, you can find one that matches your conservative investing preferences. Robo-advisors manage trusts, taxable accounts, and retirement accounts, from a company-backed 401(k) to an independent self-directed IRA. So, if you’re building wealth to buy a house, you will likely choose one to manage your checking/savings account instead of a retirement account.
Who Will Benefit Most From Robo-Advising?
There are some investors who have significant experience investing funds. They know how to assess the market and make adjustments accordingly. More importantly, they want full control over where their money is going and they have no problem handling investments themselves. For this group of people, robo-investing is not for you.
If you need help with an investment portfolio because you have no investment experience or not enough, you may benefit from using a robo-advisor. The platforms generally have questionnaires before you get started, so you can choose how much involvement you want and what other services you may benefit from to meet your financial goals.
Bottom Line
If you are trying to save up 20 percent for a down payment and enough cushioning for homeowner’s fees and unexpected costs, then you may want to consider investing. Your money will not go very far in a savings account, since most have an APY (annual percentage yield) of 1 percent or less. Robo-investing, on the other hand, can produce a return of 7 percent with minimal risk. As a result, you’ll reach your goal much sooner. When that time comes, contact Ace Mortgage for home financing in Coral Springs. Call (954) 866-7302 to get started.