SeedlyTV EP04 - Seedly

SeedlyTV EP04

Robo Wars: How You can Start Investing Easily! LIVE on 7th May 8-9pm! Don't miss out!

ASK A QUESTION

For the first time ever, we have assembled (not the Avengers) but the 5 Robo-Advisors in Singapore, all gathered in one room! SeedlyTV EP04 presents: Robo Wars - How You Can Start Investing Easily. You can check out what was covered here:

  • What are robo-advisors? -- 2:30-3:25
  • Robo-advisors introducing themselves-- 3:26-8:45
  • (Mini Icebreaker) Who are the robo-advisors investment idols?-- 9:05-15:25
  • (Q&A) Why choose robo-advisors when I can invest in funds?-- 16:00-21:45
  • Does your robo-advisor do rebalancing of portfolio?-- 21:50-25:42
  • (Q&A) How can a person who is uninitiated in investing start investing with these robo-advisors? What is the catch and what are the risks?-- 25:47-29:12
  • (Q&A) How can you determine your risk level for robo-advisors?-- 29:15-31:20
  • (Q&A) Without much track records, how can we choose between robo-advisors?-- 31:40-33:14
  • Do the robo-advisors have any licences and how does each robo-advisor structure?-- 33:20-43:20
  • (Q&A) What is the main advantage your robo-advisor/investing method has over your competitors (not taking into account robo-advisor fees)?-- 44:05-50:45
  • (Q&A) How can we know when to get out of the market when using robo-advisors?-- 51:05-55:45
  • (Q&A) Can all the robo-advisors describe your ideal customer?-- 55:55-1:00:00
  • Promo codes for robo-advisors-- 1:00:20-1:00:45
  • Giveaway details-- 1:01:20-1:01:55

Speakers:

NOTE: SeedlyTV is a series which will be covering topics via LIVE video and QnA on the Seedly platform. We will be inviting speakers to cover relevant topics in personal finance: Insurance, Debt, Saving, Spending and Investing. 

-This is a Seedly organised event-

Missed EP03? Watch it here: SeedlyTV EP03: How To Talk About Money and Not Die

Remember to ask your questions via the QnA section below!

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Investments

SeedlyTV EP04

Robo-Advisors

Bryan Choo
Bryan Choo
Level 2. Rookie
Answered 2w ago
I'm really interested to hear about this as well. I'm not exactly sure if OP has the same sentiments but if possible I would rather my robo-investor boycott environmentally irresponsible companies even if they offer greater yield. Then again how does one measure to what degree companies are eco-conscious...?

SeedlyTV EP04

Investments

Robo-Advisors

Chuin Ting Weber
Chuin Ting Weber
Level 5. Genius
Answered on 30 Apr 2019
Hi Anonymous, Thank you for your questions. This is Chuin Ting, CEO/CIO of MoneyOwl. Perhaps as a panellist in the event, I am deemed to be an interested party in relation to your question (though at the risk of sounding like a broken record, MoneyOwl is not a pure investment-only roboadvisory but a bionic - human + tech - adviser & a comprehensive adviser). But if you don't mind let me share some suggestions. First of all, kudos to you for being open about where you are in investing experience and at the same time recognising that one need not follow the "rage" which seems to be in roboadvisory investing at this moment. Over the past 2 years, Singaporeans have seen quite a number of investment roboadvisors being launched. The roboadvisor fever really started in the US when a company called Betterment launched their online investing service in the US in 2010. Note that this is after the Global Financial Crisis of 2008-9. Which means that roboadvisors are largely untested in times of severe market downturns and has been in a decade-long boom. How will roboadvisors respond in such a situation? Can technology solve the problem when fear is prevalent? This is something to think about. To understand more about each roboadvisor, perhaps you can approach it from a few angles. First, what the roboadvisor actually does. I have heard the comment that some “roboadvisors” are more robo-enabled portfolio tools or portfolio managers than advisers. What is it that you are seeking and what do you value? Second, what is the thinking behind the way the portfolios are constructed and managed. This is about investment philosophy, which can differ quite significantly even if the underlying instruments appear to be similar. Investing comes with risks, but seek to understand the evidence about the markets and how each advisor understands risks. Third and maybe most importantly, who are the people behind the technology? Before you can invest with anyone, roboadvisor or not, you need to be able to know that there is indeed no "catch". Trust - both in terms of competence and trustworthiness - will be key to your having a good experience not just in any relationship with you advisor, but to your own chances of investing success as well. All the best!

Investments

Savings

Bank Account

SeedlyTV EP04

Elijah Lee
Elijah Lee
Top Contributor

Top Contributor (Jun)

Level 7. Grand Master
Updated on 17 Jun 2019
If your horizon is one year, consider factors such as your ability to take risk. If you invest for a year, the likelyhood of the markets moving against you are high. Investing works better when your time horizon is longer. You might be better off parking money in something safer.

Robo-Advisors

Investments

SeedlyTV EP04

Stashaway

Autowealth

MoneyOwl

Dennis Hoe
Dennis Hoe, Advisory Team Lead at Moneyowl
Level 3. Wonderkid
Answered on 06 Jun 2019
Hi, I’m Dennis Hoe, Advisory Team Lead at MoneyOwl. Thank you for your question. As the other respondents have highlighted below, there is a correlation between return and risk. Risk is often proxied by volatility, though in a sense it is only one aspect of risk. The difference between a low-risk and high-risk portfolio typically lies in the asset allocation between equities and bonds, as equities have higher volatility than bonds. A low-risk portfolio generally has higher allocation into fixed income/bonds. If the bonds are of investment-grade, the returns are generally stable and is less volatile. However, the long-term returns are lower, as compared to investing into equities. A high-risk portfolio typically has more allocation in equities. Historically, equities have always been the driver for returns as stock market goes up in the long term due to growth in global demand. In a study of the US market between July 1926 to December 2017 done by Dimensional Fund Advisors, we see that in any 10-year period, out of 991 overlapping periods, equities beat Treasury bills (short-dated government bonds generally regarded as risk-free) 85% of the time. A well-diversified portfolio of equities is better positioned to gain higher return in the long term but it is more volatile (higher fluctuations). That said, while we all know that equities go up in the long term, it is important to be invested in a portfolio that suits your risk appetite in which you can stay invested comfortably throughout the fluctuations during your investment period. Because the worst thing that you can do is get out too early when the market plunges as a result of not being able to handle the volatility emotionally and miss out on capturing market returns. If so, it might be better for you to have some bonds in your portfolio to dampen volatility but stay invested to reap the long-term return of that asset allocation. To determine which type of portfolio is suitable for you, our advice is structured around these 3 factors: 1) Need to take risk – What are you investing for? Are your current resources enough to meet the goal? The higher your goal relative to your resources, the higher the need for return. 2) Ability to take risk – Your financial situation. Do you already have your emergency funds in place? How long of an investment period do you have to reach your goal? The longer the investment period, the more capacity. For a pure equity portfolio, MoneyOwl recommends 15 years to have a high degree of certainty of having no negative annualised returns, based on historical observations over the long term. If “tail events” are excluded, this 15-year time frame reduces to about 10 years. However, the caveat always is that historical returns are not a guarantee of future returns. 3) Willingness to take risk – What is your likely reaction to the fluctuation of your investment return? Will you sell off your investment when the value drops in event of market downturn? This is your tolerance for short-term losses and fluctuations. At MoneyOwl, we believe that successful investing is not about maximising returns. Rather, we emphasise sufficiency of returns and the reliability of those returns. As mentioned, volatility is only one perspective of risk. From a financial planning standpoint, not being able to meet the return you need to live the life you want, or having your purchasing power eroded by inflation, are also risks. Thus, successful investing for individuals is really about getting the highest probability of getting sufficient returns, with as little guesswork and as little as stress possible, that will meet your goals such as financial independence. Having the right asset allocation for market-based returns, keeping costs low and very importantly, staying invested for the long term are the keys to a successful investing experience. Hope this helps – and if you would like to speak with someone, please feel free to contact us at [email protected](mailto:[email protected]). As we are a Bionic Financial Adviser rather than a pure robo, my team of client advisers will be most happy to have a discussion with you about your risk profile.

Robo-Advisors

MoneyOwl

Stashaway

Investments

SeedlyTV EP04

Boh Jia Jing (James)
Boh Jia Jing (James), Associate Product Manager at Moneyowl
Level 3. Wonderkid
Answered on 06 Jun 2019
Dear Anonymous, Thank you for investing with us! To answer your question, I would like to refer you to a letter written by our CEO/CIO 3 weeks ago on 13/05/19, titled ‘Investing with Best Odds through Market Turbulence’ . It can be found in the link below: http://bit.ly/moletterfromceo Have a great day! :)

SeedlyTV EP04

Investments

MoneyOwl

Stashaway

Autowealth

Robo-Advisors

Chuin Ting Weber
Chuin Ting Weber
Level 5. Genius
Updated on 15 May 2019
Hi Anonymous, thanks for your question! Firstly allow me to clarify the structure of an investor's relationship with MoneyOwl vs Dimensional and the roboadvisors you mentioned. An investor would invest in Dimensional funds through or with MoneyOwl ; and the parallel is that an investor would invest in ETFs through roboadvisors like Stashaway or Autowealth. So the "equivalent" of Dimensional funds are the ETFs (provided by Vanguard, State Street etc.) and they are the underlying funds with fund managers. Whereas MoneyOwl's "equivalent" in terms of the relationship with an investor is the roboadvisor like Stashaway or Autowealth. The investment philosophy thus has to be considered on different levels as well. On the underlying fund level, Ting So and Yang Teng have described the differences between Dimensional and ETFs (passive indexed funds traded on exchanges). I would say that there is commonality in both Dimensional funds and ETFs used by roboadvisors in being market-based (largely following market, no "active" management in terms of stock picking or tactical asset allocation/ market timing), low-cost and broadly diversified. To digress slightly - but on an important point: there are structural differences between Dimensional funds, being unit trusts, and ETFs, those used being US ETFs, that affect the accessibility, return and risk of the investor that are not directly to do with markets. Broadly speaking, they are as follows: (1) Dimensional funds, being unit trusts, can be invested even with small amounts down to your last dollar. MoneyOwl, being a social enterprise seeking to bring great solutions to the ordinary person, has a low threshold in terms of investment quantum of $100 one-off/ $50 monthly. To do the same with ETFs, you would have to either have larger investment amounts, accept some drag from keeping some spillover in cash, or fractional shares with your record kept at the roboadvisor's level and you may or may not be comfortable with this. (2) ETFs (depending on which ones are used) may have a lower headline Total Expense Ratio (TER) than Dimensional funds, but the situation may be reversed once you consider hidden costs of ETFs especially withholding tax treatment, but also fund bid-ask spread and forex bid-ask spread. Dimensional funds used by MoneyOwl are domiciled in Ireland, are much more tax-efficient than ETFs, and traded on NAV, without bid-ask spread, and are registered in Singapore as SGD funds. (3) For the bond portion, Dimensional funds are fully hedged back to SGD, your base currency, whereas US bond ETFs are not. It is important to hedge bonds back to base currency because the volatility of currency is higher than that of the volatility of bonds. If you do not hedge out the currency, then actually you are taking more risk that you had meant to by incorporating bonds into your portfolio and you are really investing in a different type of portfolio with a different risk profile. Please read this article for more important on differences in structure https://advice.moneyowl.com.sg/why-unit-trusts-and-not-etf/ To return to investment philosophy: just as important to consider, besides the investment philosophy of the underlying funds, is the investment philosophy of the one "with" or "through" which you invest -- MoneyOwl or the roboadvisors. While the underlying instruments are market-based, or passive or passive-plus, do understand whether there is an active overlay expressed in terms of dynamic or tactical asset allocation, based on such views as macroeconomic changes, market forecasts etc., and which you are convinced by. MoneyOwl believes that it is very hard to beat the market consistently over the long run by changing tactical asset allocations, as borne out in the active managers' longstanding underperformance as a group and also the lack of persistency of champions who make it in on year. Instead, MoneyOwl believes in staying invested in globally diversified portfolios over your investment horizon to capture market return, without going in and out. Rebalancing for us is about returning to the weights that present your intended risk/return mix or asset allocation, based on your need to take risk, your ability to take risk and your willingness to take risk, not about changing asset allocation mixes. A full description of our investment philosophy is here https://advice.moneyowl.com.sg/the-right-way-to-invest/ You may also wish to join us at our inaugural Investment Symposium on 25 May 2019! https://www.eventbrite.sg/e/moneyowl-investment-symposium-registration-60702740531 In addition, you may wish to understand how each of the companies you are investing "through" or "with", adds value as there are meaningful differences. After all, you pay an advisory/"wrap"/access fee. There are many models, some are more like robo-macro fund managers (as they shift asset allocations), some are more robo-tools for access. For MoneyOwl, allow me to describe who we are and what we do: 1. Our core is advisory, and bionic (not just robo-) advisory. Bionic advisory means combining tech and human wisdom, and we have a good-sized (human) advisory team of fully-salaried (non-commissioned) advisoers who are available to you not just for client service, but for actual regulated financial advice. Why do we believe that humans are important in investments? This is because money is a very personal thing and can involve not just the head but the heart. There can be complexities in how the need to take risk, ability to take risk and willingness to take risk interact or contradict each other, and human wisdom for risk coaching is needed. Most importantly, risk coaching is important to help investors understand how markets work and to stay invested through turbulent times, to not lose out on return but capture the full market return upon recovery. In fact, Dimensional funds are not available directly to investors worldwide, but they only distribute through advisers, because they believe in the advisor alpha or value-add to a client's investing experience. 2. We are a comprehensive financial advisor, not just an investment (robo-)advisor, though we have an investment platform, which is our third robo after insurance and will-writing. These are all on our website at www.moneyowl.com.sg In the next few months, we will roll out our fourth robo which is the comprehensive planning module that incorporates CPF LIFE into retirement planning as the starting point or bedrock of retirement planning for Singaporeans and PRs. If you check out our content site at advice.moneyowl.com.sg, you will see that our range of articles is not just about investments, but about insurance, estate planning, wills, CPF etc. 3. Finally, MoneyOwl is not a pure start-up, but a joint venture between NTUC Enterprise and Providend. NTUC is a household name that has been around for decades, to serve ordinary working families and help everyone stretch the hard-earned dollar. Providend is the first fee-only, conflict-free independent financial adviser in Singapore, one of the first set up almost two decades ago, known for its best-in-class expertise and ethical advisory practice. As part of a larger corporate group, we also take security seriously, with MoneyOwl being an ISO27001 certified company despite being only about 9 months old. We are thus confident to bring our services to the Singapore mass market, with this unique parentage that brings a combination of mission and experitse, to be with you in your investment and holistic financial planning journey. Hope this helps and thanks for reading!

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SeedlyTV EP04

Investments

Robo-Advisors

Sin Ting So
Sin Ting So
Level 4. Prodigy
Answered on 13 May 2019
We think that it's very difficult to forecast the market or outguess other market participants, and it's time in the markets rather than timing the markets that will lead to long-term wealth accumulation. Over time, markets display efficient characteristics and investors are rewarded commensurately for the risks that they take. This is why we believe in taking an evidence-based approach, where we analyze empirical data and time-tested academic evidence, and apply it in a systematic manner rather than trying to speculate or outguess other market participants. The aim of evidence-based investing is to give you the highest probability of success in growing your wealth over the long-term. We wrote an article on market timing at Endowus Insights that you will hopefully find interesting!

SeedlyTV EP04

Robo-Advisors

Investments

Smartly

Autowealth

MoneyOwl

Stashaway

Endowus

Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 4. Prodigy
Answered on 03 Jun 2019
A robo adviser is alway removing human emotions and helping you to diversify in a low-cost way. I don't see the point of diversifying if your capital or monthly amount is small. You should probably lump into one for easy checks. (Do NOT check daily, investment should be long term, check once or twice per year... easier said than done thouhg) Stick to one. Find the best that suits you and stick to it. Any small disadvantages or advantages that crops out later probably is insignificant.

SeedlyTV EP04

Investments

Robo-Advisors

Smartly

Autowealth

Stashaway

MoneyOwl

Endowus

Samuel Rhee
Samuel Rhee, Chief Investment Officer at Endowus
Level 4. Prodigy
Updated on 24 May 2019
Dear Anonymous, This is a great question and Endowus has reviewed the pros and cons of accessing various products and we believe that the most efficient way to access certain asset classes or funds is through a third option - Irish UCITS Funds(Unit trusts). I have seen many comparisons but nobody has really delved into the key issues in detail. Because they normally compare the US ETFs vs Irish UCITS ETFs or UCITS ETFs vs UCITS funds. I will review the pros and cons of the respective fund vehicles below; 1. US ETFs on the surface look good as they have lower fees and have narrow bid-ask spreads but this is more than offset by the huge witholding tax that it is subject to (For example, if dividends are 3% then you will be charged 1% which dwarfs any benefits of lower fees/narrow bid ask spreads). Recouping taxes is notoriously difficult as the money is co-mingled (meaning the dollar invested is not in your name and the tax refund is not specific to you) - you only get partial refund and you have to wait a long time after the money has been deducted to get a refund and God forbid you take your money out from the platform before the refund comes through as you may never get it back. 2. Irish UCITS ETFs simply solves the tax issue but on the other hand you have less choice in terms of ETFs, the bid-ask spread is quite wide as liquidity is poor, and finally the fees are higher as they tend to be smaller in scale and scale vs cost is directly and inversely correlated. However, you can bypass the bid-ask spread issue by accessing them through market makers at a small fee at NAV (this is the actual price/value of the fund = and please remember ETFs are funds as well but they are just listed to provide intraday liquidity and readily tradeable. This is a key point I elaborate on later). 3. UCITS Funds. Apart from the fact that these funds are tax-efficient like the UCITS ETFs, they also have no bid-ask spread. NONE AT ALL. This is because you can buy/sell it at the actual NAV. Even US ETFs have bid-ask spreads and some US ETFs are very wide at times. The whole point of ETFs and the reason they have bid-ask spreads is because it is exchange traded. If we trade US or UCITS ETFs from Singapore then we normally trade only once a day so it defeats the whole purpose of using ETFs which is supposed to provide live intraday liquidity. They trade once a day and provide liquidity once a day. So there is no benefit to ETFs other than the other factors focused on cost, which on balance including tax and FX risk, they lose out on. We are not taking advantage of the most important aspect of why ETFs exist. Furthermore, for UCITS funds, because you are buying at NAV at daily liquidity there is no additional cost of transaction and no need to inefficiently fractionalize shares(llike ETFs) as you can invest to the cent at NAV price. Finally, these funds have a broader choice than UCITS ETFs and they tend to be at scale much cheaper in terms of total costs. There is also another important factor that many people don't discuss as much as taxes, and that is the impact of FX on risk and returns. We pursposefully build and access UCITS funds denominated in SGD or Singapore dollar hedged products in the case of fixed income products. Whereas you are taking FX risk with US or other ETFs, which involves additional costs. This is a big additional benefit to accessing the products through Irish UCITS fund structures. So if you combine all of that, UCITS Funds from the likes of PIMCO and Dimensional that Endowus uses, are in fact the most cost-efficient, tax-efficient vehicles and removes completely any FX risk. Thereby allowing you to invest your Singapore dollar savings as a Singapore based investors with peace of mind. Thank you! Yours Sincerely, Sam
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