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How technology is transforming personal investment

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For decades, personal investment has taken one of two forms. Investors would either call brokers to order stocks, or simply purchase items—usually at auction—that they hoped would accrue value. Needless to say, we’ve come a long way in recent years. But modern technology is taking us even further.

Personal investment has already been transformed for the 21st century. And as more investors cotton on to the plethora of tech-based solutions at their fingertips, the landscape will only change even more.

Robo-advisors are making investors younger and more passive

The first robo-advisors were launched almost a decade ago, but with Betterment raising $70 million in funding and Personal Capital raising $40 million last year, they are due to take off in a big way in 2018.

If you’ve never used one, robo-advisors cut human beings out of the final planning process, instead using algorithms to manage clients’ wealth. The main advantage of this is the reduced cost. With no real-life financial advisor to pay, robo-advisors allow people to invest at a much more affordable price point.

According to Forbes, the most significant result of this has been to bring “younger, less affluent, less investing-savvy folks” into the world of investing. While the full effects of this technology are yet to be felt, robo-advisors will undeniably impact the demographic makeup of investors, and make things easier and more cost-effective in the process.

This kind of technology has also lead to a rise in ‘passive investors’—those who wish to invest with minimal effort and involvement. Since most potential investors, young and old, lead busy lives, the services that robo-advisors offer allow them to increase their wealth without having to follow trends with the intensity of a stockbroker.

Rather than picking stocks or assets, passive investors pay into funds that aim to guarantee relatively low returns in exchange for low costs and security. Popular robo-advisors like the aforementioned Betterment and Personal Capital, as well as the European service Nutmeg, have all capitalised on this trend.

Online tools are bringing fine wine investment to the masses

Moving on from the stock market, one of the most profitable and popular asset investments is fine wine, with many top bottles appreciating by more than 20% in 2017. Until recently, large-scale fine wine investment was solely the domain of wealthy investors with large enough cellars to rack up pricey bottles. Now that almost all of the wine investment process has moved online, more investors are able to partake.

For many new wine investors, the first step will be buying wine. Like almost everything, wine can now be bought online. Online wine auctions have now become a $50m market according to the Financial Times, overtaking their live equivalents. But these do not tell investors whether their bottles will be worth anything. That’s where online wine valuation comes in. Some firms can assess a fine wine’s value from descriptions and pictures alone, removing the need to take a trip to an expert evaluator’s premises.

The internet has also improved storing and trading wine. Online wine cellar management apps mean keeping track of bottles and their value is easier than ever. Most significantly, there are even services that allow investors to store their wines securely, in ideal conditions, outside of their homes. These remote wine cellars, when used in combination with cellar management apps, mean investors can keep track of a large number of bottles all year round, even if they don’t have a large cellar of their own.

Fintech has made investment investible

Much of this financial technology, as you will already know, is dubbed ‘fintech’. Fintech hasn’t just changed the way we make investments, it’s actually become a popular asset to invest in.

Thousands of startups have sprung up in recent years with the aim of making personal investment easier, and replicating the huge funds raised by companies like the aforementioned Betterment and Personal Capital.

In 2017, the fintech sector surpassed $31 billion in funding. Dozens of fintech startups are now bona fide unicorns. While not all fintech startups are directly related to personal investment, a large number of them are, and investing in fintech has become a tried-and-tested way to make money regardless.