Asked by Anonymous
A lot of people are in the red now.
I agree with the Nicholas and Yang Teng. I'm comtemplating to increase my monthly contribution precisely because the market is falling (this is a method done called, dollar cost averaging).
The method works because we anticipate all these indexes to rise again after a few years. But never, ever DCA into a stock, unless you are sure it will not bankrupt and will rise again as a superstock.
If you are going to withdraw your money every time your investments gets negative, you should not invest in stocks. Stocks are volatile. If you cannot handle the volatility of stocks which are very common, you will just keep buying at high price and selling at low price which is going to make you lose even more money. You will carry on to do the same thing which is buying with stashaway because market doing good and selling it because market doing bad.
If you started investing with StashAway anytime in the past year, it's likely your account will be in negative returns now. The point of rebalancing is not to prevent negative returns. And it's a bad time to withdraw especially when your account is in negative returns.
I reckon you should have a more detailed read of the StashAway website and the various explanations of what you are actually investing in. It sounds like you have little idea of what your robo-advisor account investing is supposed to do!
Why do you want to withdraw? It is only paper loss now. If you withdraw, it becomes realised loss! Robo-advisors are not a sure way to get positive returns. The market has ups and downs. If you cannot sit tight and go through all the volatility while doing dollar cost averaging, you should consider putting your money elsewhere, such as FDs.
The key to dollar cost averaging an index ETF portfolio is to ride the up and down without market timing. Just continue funding and do not panic.
Rebalacing is not going to give you instant riches. Maybe your expectations of a robo was wrong as they are not a sure win money machine.
Here are a few simple rules: 1.if you dont know why you own something in the portfolio and in that percentage, your strategy is called Hope. 2.Hope has no thresholds, so anytime is a good time to buy and sell. 3.More seriously, rebalancing is different from market timing. Rebalancing is a way to book intermediate profits by selling assets that have gained and buying assets that have lost. The key thing to remember is that you still believe that the assets in your portfolio are ones you want to live with. 4.Your strategic asset allocation doesnt change in rebalancing, but you may have a tactical tilt due to your reading of macroeconomic factors. 5.Remember to calculate the correlations and annualised volatility of your portfolio. That way, you have a sense of what is unprecedented volatility and what is expected volatility. 6.i dont do roboadvisors myself (i like to have control) but you still need to know what you own, what factors are favorable and not favorable to your allocation and what volatility is the portfolio aiming for. 7. If you are so worried about annual returns, you should be investing with an annual horizon. Your hit rate is going to be the same as a coin toss.
Markets globally is sinking due to many geopolitcal reasons. In short, most investments are not going to provide positive/significant returns. Since Stashaway functions like ETF, you should still invest montly regardless of market condition.
Everytime you deposit, they rebalance your portfolio by buying more of the underperforming assets. I guess they will only sell the overperforming one if you haven’t deposit for long time and the performance disparity is too great to ignore.
BTW if you either withdraw or dial down ur risk level now, you will realize the loss. If you have faith in stock market going back up in few years, you should deposit even more cash in.
You know why it's negative? There are more sellers than buyers.
Buy when there is fear.
As many have shared, most people are in the red now including mine. I quote from sonicericsg, "When you trade long term through dollar cost averaging, no need to worry about the red"
I'm worried for you, after reading your question. Rebalancing will not prevent any one from losing money in a market downturn. Every long term investor is losing money now, including Warren whom many people consider as god of investing. The only people making money now are probably those very good traders. Hey, but please don't simply switching to trading after reading this! You are likely to lose even more money trading.