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My Review Of GrabInvest: More Like CashBack Rather Than Investing

GrabInvest just launched a few days ago for some early beta users, you can set it up and try now.

The other day when we saw the launch GrabInvest, I got quite intrigued to see how this could shake up the Robo-Advisor space in Singpore

I immediately fired up my Grab app and found it under the 'More' section in the home page section.

Apart from food, transport and deliveries, the other one that catches my eye is insurance. I will write a seperate review for that another day.

What is GrabInvest?

GrabInvest aims to make wealth management services accessible by adopting a low-cost model, easy to understand by allowing users to transact on a platform they are familiar with. (basically through the Grab app)

It is housed under the arm called Grab Financial Group (GFG) which is also running for a digital bank liscene to be announced later this year.

TL;DR: I Would Use It as "CashBack", Not For Serious Investors

Pros:

  • It takes you around 5 minutes to set up. (Their investor-level assessment model is really basic though)

  • It's quite effortless, GrabInvest uses a "invest every time you spend kind of model"

  • Everytime you spend on Grab Transport or Food, they will top up $1, $5 or $10 to your investment account

  • They claim will be able to generate around 1.8% p.a returns (projected) which is higher than any lousy low interest rate account now

  • They invest through a portfolio of Money Market funds which are basically similar to what Stashaway Simple, EndowUs Cash Smart and MoneyOwl's higher interest rate but low risk solutions offer as well.

  • Fees are similar and decent as well at 0.45% p.a expense ratios quite low

Cons:

  • One massive cons are that it's all locked in your grabpay wallet, and you are unable to transfer money out into your bank account

  • I don't see this replacing my Stashaway, Endowus or any savings accounts any day soon, but I guess this is not their intention as well

  • I can't top up to this investment account directly even if I want higher returns, I have to spend in order to top up my "GrabInvest" account.

How Does GrabInvest Makes Money From This?

GrabInvest partners with Fullerton Fund Management and UOB Asset Management Ltd to allow them to recieve a portion of the existing fund fees.

GrabInvest recieves less than 0.2% from the fund managers but this is really low. (for every $100 you invest for 1 year, GrabInvest only gets less than 20 cents from the whole sum)

Conclusion: A Game Of Big Numbers, Definitely Not in Singapore

Naturally, the only way for this to be a profitable business line is for many investors to get onboard, and I guess that is where the market-access idea comes in.

They are definitely need millions of users to invest that $100, so they can earn a decent enough amount.

For example, if 1,000,000 users invest $100 yearly.

GrabInvest will make... $200,000 yearly from a AUM (asset under management) of $100M invested. That's a really small amount of profit.

This model has definitely worked in the US and China where market population numbers are way bigger than little Singapore which I think has only a realistic market size of 1M to 1.5M who are keen to try out a product like that.

So if the plan is to move beyond Singapore's shores to the SEA region (eg Philipines and Indonesia one day, this could be super interesting)​​​

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