More robo-investing innovation as Digit heads into electronic wealth management
The Silicon Valley start-ups are looking for a piece of the robo-advisory pie as yet another application technology company goes down the electronic wealth management route
Robo-advisory services is an avenue once explored by FX and electronic trading companies, however that direction has since gone almost completely quiet.
Over the past month, however, start-up technology firms across North America and Great Britain have been partnering with challenger banks and mainstream financial institutions, and to say that the robo-advisory avenue is being revisited is something of an understatement.
This morning, FinanceFeeds reported that Nutmeg had joined British challenger bank Starling’s marketplace, and now, Silicon Valley is taking the reins as San Francisco-based money management and savings startup Digit has added an automatic investing tool to its application.
Digit brands itself as a financial wellness specialist that has helped its users automatically save $5 billion and pay down over $150 million in debt. The firm’s algorithm analyses users’ income and spending patterns, looks at their goals and takes part of their income for savings or debt payment.
Now, the firm is putting the same data and knowhow into a feature that automatically moves money into retirement and/or investing accounts.
Digit says that its offering beats other investing tools because it doesn’t require users to have predictable disposable incomes – something particularly important during the economic uncertainty caused by Covid-19.
Says a blog: “Digit’s algorithm makes sure you’re always improving your financial health in a way that’s right for you. And unlike other investing tools, Digit looks at your larger financial picture so that you can make real progress on all your financial goals at once.”
For investing, customers make a long term goal for their investment account and answer one question. Digit then matches them with a conservative, moderate, or aggressive portfolio of diversified ETFs and sets aside what they can “afford” and invests that money directly into a portfolio every few days.
For retirement, the app matches users with a Roth or Traditional IRA based on income and picks a diversified portfolio based on age. Digit puts money aside and invests it in the retirement every month.