How does Syfe and Stashaway or the other robo-advisors invest the money we put into them? Also, is there a need to DCA (or put monthly instead of a lumpsum) when there is no share price? - Seedly
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Anonymous

Asked on 07 Jul 2020

How does Syfe and Stashaway or the other robo-advisors invest the money we put into them? Also, is there a need to DCA (or put monthly instead of a lumpsum) when there is no share price?

Hello! I was wondering how does Syfe and Stashaway use the money we put into them to invest. Do they buy them when the time is right? Monthly? Or any other ways possible?

Also, since there is no share price, is there a need to DCA (or put in monthly) instead of placing a lumpsum? I do understand that they do not include an admin fee for deposit and withdrawal, only management fees per month for the amount of money they help you to manage in your portfolio.

Appreciate the response, thanks!

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Gideon Ng
Gideon Ng, Blogger at FI Pharmacist
Level 6. Master
Answered on 07 Jul 2020

Hi Anon,

It all depends on when you transfer the money to them. Syfe and StashAway does not have a fixed date where they'll buy the shares for you, rather it depends on the date that you transfer the money to them.

Within 1-2 working days, your funds will be invested and reflected on the platform.

With regards to share price, what Syfe and StashAway does is they invest in a basket of ETFs based on your risk profile.

So if you'd want to track the share prices, you'll have to see what ETFs that the robo invests in for you and track each ETF individually.

On the question of DCA vs lumpsum, it really depends on the risk you can stomach. Usually, lump sum will perform better compared to DCA, but the volatility is higher.

Let's say if you put in $1000 today, and the market crashes tomorrow and you lose 20% of your total amount. Would you be tempted to initiate the sell order?

If yes, then DCA is a better strategy for you. By investing $100 each month instead of $1000 upfront, the volatility is lower and the price will average out.

If no, then you can go ahead with lump sum! You are able to control your emotions and know that the markets will always go up in the end, so lump sum will be a better choice.

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