Online trading vs. automated investing: Which is for you?

A young woman in a shopkeeper’s apron stands in the doorway to a storefront.

Learn the benefits and drawbacks of each to make your decision.

If you’re new to investing, or maybe looking to extend your portfolio beyond your employer-sponsored retirement account, you may be trying to decide between two investment approaches to get started: online trading and automated investing. So how can you choose between the two?

Online trading: It’s a matter of time

Online trading is a relatively inexpensive and straightforward way to invest, but with an important catch: To do it well, you need to have the time to manage your investments — as well as the interest in doing so.

So while a positive of online trading is that it lets you choose your mix of investments — such as stocks, bonds, exchange-traded funds, and mutual funds — you will be responsible for researching your options to choose your investments. You will also need to understand how risky your selections likely will be (in other words, how much money you may lose should markets fall) and the tax implications of buying and selling securities regularly.

Automated investing: Let technology do the work

If you’re an investor with limited time or limited investment experience, automated investing may be an attractive alternative. Automated investing uses technology to help you choose and manage your portfolio to work toward your investment goals.

For example, with Wells Fargo Advisors Intuitive Investor®, investing can be simple and personal. You answer a few questions to help you determine an appropriate portfolio mix for you. Then the system automatically manages and rebalances your portfolio over time to keep it in line with your goals and your tolerance for taking investment risk. If you need advice, a licensed financial advisor is just a phone call away. Additional benefits:

  • Intuitive Investor accounts are simple to establish, and you can also set up ongoing contributions so your portfolio is funded automatically.
  • If you set up a taxable account, automation can help manage your investments tax efficiently.

Automated investing won’t protect you from losses, but it does offer a simple, time-saving way to build, or extend, your portfolio.