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Genevieve See

29 Aug 2019

Stocks

Is it a good move switching from Robo-advisor to buying my own ETFs?

I now have about 5k invested in OCBC RoboInvest Growth Portfolio. However, I know they are doing this with Saxo, and the custodian fees for Saxo is only 0.12% while OCBC Roboinvest is 0.88%. I feel like most of the times it stays unchanged, so I feel like it's more worth it if I just take out the 5k I have and re-invest the exact same amount into same assets in Saxo. Is this a good move?

Discussion (1)

What are your thoughts?

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It depends on how much of a hands-on/hands-off approach you are expecting towards investing.

If you require more of a hands-off approach, going with OCBC is fine. Though they charge 0.88% on top of the trading fees. And I doubt that the 0.88% includes the cost of investment of the underlying funds (I could be wrong on this). The total true cost of investment should come at around 1% pa which is quite significant (at least to me).

If you want a more cost-effective approach towards investing and generally to achieve that, it would require you to be more hands-on. Going with Saxo would be more ideal since the custodian fee is only 0.12%.
However, note that given your relatively small account, in order to achieve the same level of diversification with the OCBC portfolio, you would be buying into at least 5-6 funds individually which should incur quite a bit of transaction cost. Not sure what is the transaction cost per trade for Saxo but if it is anything more than SGD10 per trade, I believe you are better off sticking with OCBC.
Alternatively, you can look into Interactive Broker (IB) which offers very competitive commission.

The catch is they will charge you USD10 dollars on a monthly basis if your account size is less than USD100K.
If you have less than 100K to invest, IB is still a very compelling option because when you invest in other markets (US, UK), you would require foreign currency and the spread for FX conversion is near the spot which can help you to save quite a bit (few hundred dollars for me).
Hope this helps.

On a side note, I am starting a financial blog. Do check it out.
https://investment-blueprint.com

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