Over $60 billion are managed by robo-advisor systems for trading

Warren Buffet's advice for ordinary investors, which states that must invest their retirement portfolio in S&P500 index fund, no longer works. Instead, it is much better to invest in algo-trading, says Jon Stein, CEO and founder of Betterment, whose assets worth $8 billion managed by algorithmic systems.

Stein argues that the portfolio made by the Betterment, can beat S&P500 index fund over time due to optimizes taxes to enhance performance.

Many algorithmic systems, including Betterment, Charles Schwab and Wealthfront, offer automatic tax-loss harvesting , which means they sell an investment to generate a loss to offset capital gains.

Systems using trading algorithms can create portfolios that are more diverse than the S&P500 fund. Most automated services build their portfolios with low-cost index funds that invest in US and international stocks and bonds as well as real estate and consumer goods.

These services have a low minimum investment. For example, if you want to invest in Betterment, there is no minimum requirement, while you will need at least $3,000 for S&P500 fund in Vanguard.