Picking your own stocks and bonds is a form of active investing, and it is an involved process. It is up to you to conduct the fundamental and technical analysis of the various companies, understand their financial statements, have a sense of government policies that could affect their business, etc.
While it offers the greatest degree of control, it can be difficult for time-starved investors; it also carries the risk of emotional biases, such as sunk-cost fallacy, or the urge to “double down” on a previously successful investment.
Robo-advisors are the opposite – they will take over all the decisions on which assets to buy, hold, or sell. They are entirely passive, which makes up a large part of their attraction. Robo-advisors, being algorithms, are also immune to emotional biases; they always stick to the strategy they’re coded to follow.
However, using a robo-advisor requires you to trust that the algorithm works, and that the robo-advisor you’re using is a top performer (as mentioned below, this can be very hard to determine for the layperson).
SME lending is somewhere between the two. You are required to decide which SMEs to lend to. Some online platforms like Validus offer SME lending opportunities exclusively to accredited investors, and provide insurance for capital protection, use escrow accounts, and thoroughly vet all borrowers.
Once the decision is made, however, it’s mainly a passive process as there’s no need to “buy and sell” like stocks; just wait for the repayments to come in as specified.