Asked on 21 Dec 2018
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.
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.
23 May 2019
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!
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.
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.
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.
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.
They rebalance according to their rules.
You take on the risk.
Positive returns can never be promised.
The higher the return potential, the higher the risk.
Generally the performance of an equity invesment can only be judged after about 5, better 10 years, a time horizon that must be realistic for you to stay invested in any equity you chose.
Times are bad, even some Bonds are in red.
Please revisit your idea or thoughts when you buy into StashAway, what is your risk index and what is your time horizon?
I need to say and emphasis do not panic, panic sell is one of the worse-off most of the time. Stashaway have auto-rebalance.
Yes I had withdrew before, takes 2-5 working days most of the time. Other things to say are covered by other answers!
The thing is that robo-advisors do not have much historical data to work with, but if they are following the idea of funds with long term returns, you should be looking at at least 10 years for any meaningful gains.
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"
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