I have invested some money in DBS digiPortfolio, syfe and stashaway and there are some profits. I would like to know if I withdraw these earnings out, will it affect my current portfolio? What's the impact I'm looking at? - Seedly
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Bernard Teo

Asked on 21 Jul 2020

I have invested some money in DBS digiPortfolio, syfe and stashaway and there are some profits. I would like to know if I withdraw these earnings out, will it affect my current portfolio? What's the impact I'm looking at?

Thanks in advance.

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Zi Shuen
Zi Shuen, Economics at NTU
Level 6. Master
Answered on 01 Aug 2020

A few friends here have already explained the impact of withdrawal

I'd just like to add one word: do not withdraw any earnings or even your capital, instead just Dollar Cost Average (DCA) every month.

Robo advisor is for long term investment, not something that you withdraw the moment you see some profit

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It would depend on your investment duration. If you are planning to invest for the long run, withdrawing a significant amount of money out now would have quite a significant impact on your returns at the end.

Simple calculation to illustrate the example.

1000*(1.08)^40 would be $21,700

If 800 would be $17,379

If 400 would be $8,689

By removing just $200, you would decrease the amount that compounding effect can magnify by $4000.

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Alex Chua
Alex Chua, Sophomore (Engineering System Design) at SUTD
Level 6. Master
Answered on 01 Aug 2020

Adding on to what @nicholas wong mentioned :

Go back to why you invest in roboadvisors.

The nature of roboadvisors is to protect your capital and to improve your capital. It means to be passive - place and ignore

By withdrawing your earning, you are removing the power of compound interest

If the annual compound rate is 10%, capital is 100k, timeline 10 years. Your future value is estimated 260k. Profit =160k

If you remove your profit yearly, each year you earn 10k. Total profit =100k

Most roboadvisors are built to reduce your risk. More rooms to minimise risk and maximise profit with higher capitals earned. Thus theoretically, if your risk profile stays the same, your capital uptake upon withdrawal reduces.

These are 2 main direct impacts. Don't forget about the cost of using the platform

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Yong Chee
Yong Chee
Level 3. Wonderkid
Answered on 22 Jul 2020

E.g. if you held 1000 DBS stocks worth $10 per stock = $10,000

  • You wtihdraw half = 500 DBS stock left

  • Next year it grows to $12 per stock

  • 500 x $12 = $6,000. You earned $1,000

  • If you did not withdraw = 1000 x $12 = $12,000. You earned $2,000

You might also lose the compounding effect = small inputs over time building to a huge future return. When you withdraw = cut back a lot of potential.

Thus you might want to diversify your investments where some are geared towards long term investment growth, and some more for short term/ withdrawals and spendings. These accounts you mentioned are passive investments e.g. ETFs, which is capped at index performances typically 3-5%. Will be good to look into other (passive for client) tools at 6-8% range for long term growth. ​​​

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Bernard Teo

27 Jul 2020

Anyone can assist??
Nicholas Wong

29 Jul 2020

Hi Bernard, so here's my take on your situation. You need to ask yourself are you in immediate need of the money that is currently invested? If your answer is yes and you have no other means for cash right now by all means pull it out. After all nobody gets hurt taking a profit. However, if your answer is no then personally I would keep they money invested. If you pull the money out now you may miss the boat for the next market rally and thus miss more profits. Of course the opposite where the market corrects itself and you lose some profit can also be said. At the end of the day Robo Advisors are designed to be long term investments due to the ETF holdings in them. Generally most robo advisors will average a return(based on backdating) of 5-8% PA. So ultimately the choice really depends on your needs now. My take is if you do not need for cash now just ride out the potential lows to achieve new highs.
Thank You!
Can you clarify
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