Asked on 23 Jul 2020
I understand that our money is kept separate in a custodian account, but if anything happens our assets will have to be liquidated in order for our money to be returned to us (like Smartly). This is unfavourable if we're investing for long-term. Considering all the risks involved, do you invest large sums of money (say more than 50k) with Stashaway or a similar product? Is anyone's entire portfolio in Stashaway? Thanks in advance!
In the case of a insolvency, firms that co-mingle funds/assets will need take an extra processes and time before client can have their money back. Such as Smartly, StashAway, Syfe, Kristal.
Whereas firms that legally open a custodian account under your name, and with assets bought under your name are straightforward. So one could have their money back relatively earlier without “grey” areas. Such as AutoWealth, EndowUs, MoneyOwl.
When insolvency occurs, MoneyOwl offers to transfer assets to another custodian of ones choice. Similarly, EndowUs stated their clients can decide when to sell even if their firm ceases to operate. That is to say your assets are still “in the market” even if the firms closes down. I’m unsure of AutoWealth’s offering, but I reckon it to be similar.
Any company can defend and promote ones “robust” security of clients funds by having licenses. In the end, what matters is do you OWN those assets? It makes a lot of difference, psychologically and monetarily.
And yes I do invest entire portfolio in robo-firms, whereby I own those assets, and know what would happen in the worst case scenario.
Majority of my assets are invested with roboadvisors. Based on the answers provided by the rest as well, I also feel assured investing with them.
At the same time, I do spread my risk by investing with 4 roboadvisors (Syfe, Stashaway, Endowus, Moneyowl) with an almost equal capital/weightage.
I don’t recommend putting all your money into one Robo Advisor, it’s always better to spread it across a few Robo Advisors :)
The maximum amount I’ve ever put into 1 Robo Advisor is no more than 20% of my savings.
I think that it is realtively safe to be investing large amounts of money in them
I think this point has been answered multiple times. They keep the funds in a separate account which they have not legal access too. They are structured similarly to traditional brokerage services.
Insolvency will not cause issues unless fraud has occurred, where the money went missing in clients' accounts due to a loophole. I think beyond a certain point, you just need to go with an institution you like to invest your money, one way to diversify away from such risks is to use multiple service providers.
Not more than 10% of my entire investible sum.
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