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How to Invest Online

(What's a Robo-Advisor?)

In the old days, you had to hire a broker to manage investments. You paid them a fee or a percentage of your portfolio and they did all the buying and selling for you. And you only bought and sold whole shares of stocks. If the share was $100 and you only had $99, you didn’t get to buy it.

Investing is much more accessible today. All you need is a small investment and a secure Wi-Fi connection. Robo-advisors emerged as a response to the high fees and transaction costs of traditional investing. Research showed that the heavily managed, high-priced investments were often not as efficient as a well-balanced portfolio that you just “set and forget.”Robo-advisors use algorithms to automatically rebalance portfolios. They typically invest in low-cost funds that track an index, meaning they aim to keep pace with a certain marker, such as the Standard & Poor’s (S&P) 500.

If you use a robo-advisor, you can start small and build at your own pace. Once your investments reach the $100,000 range, you’re probably better off working with a traditional brokerage or financial planner.


Microinvesting allows you to invest tiny amounts of money to purchase fractional shares. So, rather than having to come up with more than $100 to buy a share of Apple stock, you can buy a $5 fractional piece of a share. And you don’t have to buy even amounts. Some sites will round your purchases up to the nearest dollar and literally invest your change.


While robo-advising and microinvesting are starter approaches to growing money and can be useful tools to beat inflation, the serious investing usually happens at work. If you’re lucky enough to have a 401(k) or similar retirement plan, you are wise to take advantage of it. Contribute up to at least the maximum that your employer will match. If they match up to 3% then contribute at least 3%. The earlier you start and the more you contribute, the faster your money can grow.

As always, we’ve got your back. — The On Your Own Team End of article insignia

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by On Your Own, the National Endowment for Financial Education or any of its affiliate programs.]