How can a person who is uninitiated in investing start investing with these robo-advisors? What is the catch behind them and what are the risks?

Pros:

• Use my referral code and save on robo-advisor management fees (Have you started investing with StashAway yet? Sign up with my link and we'll both get up to $10,000 SGD managed for free for 6 months! https://www.stashaway.sg/referrals/vinasp2m)

• The management fees for stashaway is 0.8% (https://www.stashaway.sg/faq/115003861428-what-...), much lower than $10 per buy/sell transaction on trading platforms like FSMOne.

• The portfolio is quite diversified so you get to invest in etfs of many countries (like US, China), as well as bonds, commodities and tech etfs etc.

• You also get regular dividends from the stashaway etfs and the system automatically reinvests any dividends you may earn

• Easy to deposit and withdraw, with no charge

Cons:

• Just like with any investment, there is a risk of losing all

• Returns from robo-advisor etf is more slow and steady (it is an etf afterall so it is more diversified), so it might not be as fantastic as picking a good stock and profiting high returns in a short span of time (provided you managed to safely pick a good stock ;p)

Hi Anonymous!

To answer your question, I think that most robo-advisors do the job of assessing your current financial position and recommend a portfolio strategy after reviewing your risk profile. As for the "catch", I would say that robo-advisors are still not very different from your ordinary financial advisors as both options will still have a management fee incurred for users. The difference lies with the amount, as robo-advisors have lower management fees. You can check out kristal.AI (https://solutions.kristal.ai/seedlypost) as they have no management fees for investment amounts lower than $50 000.

Practically speaking, robo-advisors replace that human element that traditional financial consultants would provide with an AI system. Depending on your preference, that may or may not be a disadvantage/con for you. There are also a plethora of robo-advisors and some do not rely solely on AI/technological capabilities and retain the human element (see kristal.AI).

Hope that answers your query!