Seems like robos are a trend right now... Just wondering what are the pros and cons of using a robo for investment?

Hey Anon!

Yep, robos are getting increasingly popular in Singapore!

Robo advisors are able to generate recommendations in a matter of minutes allowing you to immediately plant your money in ETFs. But of course, as with every investment, there are always pros and cons.

Pros

• Low-cost investing (~0.5% to 1% management fees; fund managers typically charge 2% to 3%)

• Diversified investments, or global ETFs (A mix of equities and bonds)

• Passive and convenient (e.g. automated rebalancing for certain platforms)

• Option to liquidate investments at any point in time

Cons

• Stagnated returns on some months

• Occasional fee discrepancies (e.g. ETF management fees may be charged separately from platform fees)

• Advice is limited to algorithm's parameters

• Some platforms are web-only (e.g. AutoWealth)

Though robos are considered a relatively low-risk investment, it is still important to diversify.

You could consider spreading your wins and losses by putting small amounts in different robo advisors, then measuring your returns over several months to determine which works best for you.

Here is how some of our community members diversify their portfolios across multiple robos.

Hope this helps! :)​​​

Couple of reasons why people commonly choose robos are because they are relatively low in charges between 0.4-0.8% based on your portfolio size. It is extremely helpful if you are investing on a smaller amount because some brokers have a minimum fee per trade which can be quite painful in a long run.

robos also help you select a combination of stocks based on your risk appetite and you do not have to kill your brain cells by creating your own portfolio.

lastly with the rebalancing Element, it takes away the emotions of you wanting to keep or sell the stock if the prices increases of decreases. :)