Asked on 30 May 2020
I work in cybersec, thus why the time I have is quite tight. I’ve been looking at Robo advisors but unsure which provide the best returns in a 9-10 years period of time. I’m also open to other ways to invest, but the fee structure and the terminologies used have always been quite confusing to me. Would anybody be able to advice? Thanks! Also, I’m intending to place a lump sum followed by doing DCA monthly, if that helps
For passive investing, my advice is as follow
Regular Savings Plan, if you do not have sufficient knowledge and confidence to start picking individual stocks yet, start with RSP, it will not go wrong. I'd suggest go with FSMOne RSP as they have the lowest fee and provide the most options. You can DCA a couple hundreds into each of them every month - iShares FTSE A50 China Index ETF, Vanguard FTSE Emerging Markets ETF, iShares Core S&P 500 ETF, Fidelity® MSCI Information Tech ETF (note: these are my choice, you can choose other ETFs that you personally like)
Robo-advisors. They are pretty solid option as well, you just have to answer some questions and they will provide you with a customized portfolio that cater to your goals and risk tolerance. Choose whatever risk level you are comfortable with. If you want to maximize growth, choose a portfolio that has the highest risk-reward. You can invest a lump sum or just DCA every month. Some options are StashAway, Syfe, Endowus, Digiportfolio, Kristal, etc. Personally, I would go for StashAway for general investment and Syfe for their newly launched REIT portfolio.
-Money, and financial freedom, is a skill-
FSMOne has a Regular Savings Plan (RSP) option where you can invest a minimum of S$50 every month in assets such as S&P 500, STI, and many other ETFs. The fees are also relatively low. US$1 if you’re investing in the S&P 500
I actually think that topping up to your Full Retirement Sum in your SA account is a worthwhile goal to strive towards. Here's a video about the founder of 1M65 movement, Mr Loo, explaining how he achieved his first million by topping up his CPF SA to FRS and then letting compound interest do the work: https://www.youtube.com/watch?v=9aHnuNR14Vg
You may wish to consider Robo-Advisor and DCA monthly.
I am currently using StashAway and my return before Covid is 9%. However, currently is almost 4%. I just continue to DCA on monthly basis and let it does work for me.
May I know if there is any difference between investing in Class C shares in mutual funds vs robo advisors? Given that they have similar expenses and returns?
It is better to set up structures for your cashflow to ensure that you have a disciplined way to invest your money.
You can use the above to calculate your budget allocation for equity, based on the end wealth you want. When done passively and disciplined through DCA, your return over 25 years will be substantial. Take a percentage of your monthly income, as that will be scalable as your income grows in your career.
9-10 years is a decent mid-term horizon to get returns from the equity market, if you are able to bear fluctuations and extend your term by an additional 5 years in an event of a market crash, you should definitely be looking into equity.
StashAway is a pretty good Robo-Advisor as their fees are decent. I do find their structural portfolios attractive. You could look into other Robo-advisors listed here as well and read the reviews on what other users have commented on.
Disciplined investing timing. A combination of both DCA, as well as lump sum, is a wise approach.
Most robo advisors have a regular savings plan that only require you to apply for standing instructions through your bank account. There are also regular saving plans offered by investing In unit trusts, this can be done through your personal bank. For me, dbs offers the digiportfolio as well and unit trusts to choose from, however the funds may have a higher risk so please take note.
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