How is Fintech Revolutionising Retirement Planning in the US?

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How is Fintech Revolutionising Retirement Planning in the US?
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How is Fintech Revolutionising Retirement Planning in the US?

Fintech has changed the way most of us bank or handle our finances. For example, when’s the last time you walked into a bank or went through the drive-up? Chances are you do everything from your phone thanks to fintech.

Today, fintech affects more than the banking industry – it’s taking over the investment and retirement space too. For many, it’s opening up more doors, and for others, it’s making retirement planning less overwhelming and more accessible so anyone can invest in their future starting now.

Fintech Makes Investing Low-Cost

A common barrier to investing is the costs. Even 401K accounts through an employer have high costs, which make many people avoid them. Fintech lowered these costs by lowering the overhead of the investment firms.

While you don’t get the same level of human contact (advisor input), you get the system’s algorithm, which is often just as effective. With lower costs, more people can afford or feel comfortable investing.

Fintech Requires Lower Upfront Investments

Many retirement accounts aren’t accessible until you have $10,000 or more to invest. That’s a large barrier for many people, especially young adults just starting their careers. Many investment apps, however, have no minimum balance requirements, such as Robinhood or apps like Wealthfront that require just $500 to start.

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Sometimes all it takes is getting started to get the ball rolling. Remember, every dollar you contribute today is worth more tomorrow so there’s no better time to start than now.

Less Overwhelming Options

When you talk to a financial advisor, it can get overwhelming. While they are a wealth of information, for those just starting it’s overwhelming. You feel like you have too many decisions to make and may even feel pressured to make certain decisions.

With investment apps, you are in charge. The app will walk you through your options and guide you, but won’t ever pressure you. Instead, it will give you options based on your risk tolerance. After you answer questions about your goals, timeline, and what you feel comfortable with, investment apps provide you with a recommended portfolio.

In some cases, you take what they offer and that’s it – they do the rest. In others, like M1 Finance, the app offers suggestions, but you create your portfolio. Again, you aren’t talking to someone face-to-face or even on the phone, so there’s pressure regarding your decisions.

Fintech Opens up More Opportunities

The bottom line is that fintech makes investing in your retirement easier and more accessible. Whether you’ve held back because of the stress it involves, the lack of funds you have, or the costs, fintech apps see their way around it.

You have many fintech options at your disposal. The most common options include Robinhood, M1 Finance, Betterment, and Wealthfront, but there are many other options available today too. The key is to find the app that offers options you feel comfortable with, whether that means handling your entire portfolio independently or letting the robo-advisor guide you from the start.

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