Robo‑Advisors vs DIY (2025 Beginner Guide)

TL;DR

• Robo = “autopilot” with fees ~0.25%/yr (+ fund fees)
• DIY = you pick 2–3 index funds and rebalance a couple times a year
• If you freeze when choosing funds, robo is worth it. If you’re comfortable with 3‑fund basics, DIY saves fees

What robos actually do

• Pick a risk level → a model portfolio of index ETFs
• Auto‑rebalance when it drifts
• Some offer tax‑loss harvesting (TLH) in taxable accounts
• Auto‑deposit and goal tracking apps

Cost comparison

• Robo advisory fee (~0.25%/yr) + ETF fees (~0.05–0.15%)
• DIY fee = ETF fees only (~0.03–0.10%)
• Over 20–30 years, 0.25% compounds a lot — but better than not investing at all

When a robo makes sense

• You won’t rebalance or stick to a plan
• You want TLH without learning the mechanics
• You value the behavioral “nudge” and UI more than the extra fee

When DIY wins

• You can manage 2–3 funds and follow a calendar
• You want minimal cost and control tax lots yourself
• You’re comfortable ignoring noise and staying the course

Upgrade path

• Start with a robo for the first year
• Learn index basics (3‑fund), then switch to DIY later (rollover assets)