This article was written in collaboration with OCBC. Views expressed in this article are the independent opinion of DollarsAndSense.sg.
For those of you who haven’t already felt it, Singapore is riding a Financial Technology (FinTech) wave. Over the past few years, we have seen numerous novel and innovative start-ups enter into the local financial market with the aim of reinventing the way people manage their personal finance.
One area that has caught the imagination of many is robo-investing platforms for retail investors here. We have previously written about the various platforms such as Stashaway, AutoWealth and Smartly, and how they may potentially play a part in helping new investors kickstart their investing journey.
Robo-investing is typically used to describe platforms that automate the act of investing your money, based on certain parameters including your risk tolerance level and the methodology adopted by the platform.
Robo-investing solutions are not just limited to budding start-ups using FinTech to disrupt the market. Even larger and established organisations such as the local banks are getting in on the act, and they are just as capable and resourceful, if not more, to develop these new solutions to better serve their customers, both new and existing.
One such product recently launched by a local bank is: OCBC RoboInvest which has 28 model portfolios you can choose from based on your interest and preference.
Generally speaking, robo-investing platforms can be suitable for two types of investors. Those 1) who are relatively *new to investing* and who may need some guidance on how and what to invest and 2) *experienced investors* who may be too busy to actively monitor and rebalance their portfolios.
These are individuals who may have recently started investing a little and who still need a fair amount of guidance on their investing journey. They may be unsure of what they should invest in, or even how much risk they should be taking.
For example, they may be unsure about whether they should be buying individual stocks, invest in exchange-traded funds (ETFs) or to get some bonds, and what exactly to invest in within those broad asset classes. If you are such an investor, a platform such as :OCBC RoboInvest allow you to select a portfolio that best fits your preference.
From the table above, you can see that new investors can choose for themselves a suitable portfolio based on the risk that they are willing to accept.
We went ahead to select portfolios with Medium risk levels and were shown the available options for us to choose from.
There are also some experienced investors who could be financially savvy but may be too busy to actively research, monitor and rebalance their portfolios. They may have the ability, but not the inclination, to invest on their own and to manage their own portfolios. On top of that, they may also want a portfolio which is well diversified. If you are such an investor, OCBC RoboInvest can also help you.
OCBC RoboInvest does the heavy work for you by monitoring and rebalancing your selected portfolio based on market conditions. All you need to do is to select the portfolios that you wish to invest in.
For example, when we selected a portfolio based on the following criteria; 1) 10-20% annualized return; 2) US market and 3) very high-risk level, we were presented with a choice of 7 different portfolios to choose from. These include US healthcare giants and US tech leaders.
Choosing to invest through a robo-investing platform and opting to do it on your own may not necessarily need be mutually exclusive choices. If you are already investing on your own or have intention to do so on your own in the future, you can still find it useful to invest via OCBC RoboInvest.
By doing so, you can benchmark the returns that you are get from investing on your own, against the returns delivered by a robo-investing platform. You may even choose to invest with multiple platforms to determine which cater to your needs best.
You could also use robo-investing platforms to diversify your investment methods by employing different investment strategies. For example, you may make more tactical and aggressive investment decisions when investing on your own in small-cap or trending stocks. You could also choose to invest in local stocks, that you are more familiar with, directly, while letting your robo-investing platform help you invest in a portfolio of overseas stocks, without having to constantly monitor them.
A fair question to ask at this point would be: why an investor should opt to try OCBC RoboInvest, given that there are several other platforms available in the market. Here are some key differentiating factors that investors should consider.
Unlike the existing platforms in the market, OCBC RoboInvest is not just restricted to ETFs investments. The portfolio, depending on which you select, will invest into either ETF-based portfolios or Equity-based portfolios.
For example, when we choose the very high-risk portfolio of US Tech Leaders, we can see that the portfolio contains individual stocks such as Adobe Systems, Facebook, Microsoft and Mastercard. It also holds a little cash in Singapore Dollar which can be tactically deployed for portfolio rebalancing.
Existing robo-investing platforms in Singapore have thus far been mainly launched by start-ups. OCBC RoboInvest, on the other hand, is launched by OCBC, a local bank that we are all already familiar with.
The 28 distinct portfolios have been curated based on market research and insights and this is something which many investors, whether new or regular, would value.
All OCBC customers, aged 21 and above, who are non-U.S. citizens can get started from as little as S$3,500.
Unlike structured investment plans, there is no lock-in period for your investments. This means you can deposit or withdraw your funds at any point in time. Based on your instructions, your investment will also be made automatically so you do not have to worry about timing the market.
We want to stress at this point that there is no way to say for certainty that one robo-investing platform is better than another. Investors need to take the time to understand each of these platforms they are considering, the methodology they employ, and most importantly, their comfort level with allowing these robo-investing platforms to invest on their behalf.
Whether you are a new investor looking for more guidance or an experienced investor who is looking to invest in equity-based portfolios overseas, OCBC RoboInvest can help you in building up your portfolio.
This is for general information and does not take into account your particular investment and protection aims, financial situation or needs. You should seek advice from a financial adviser before committing to a purchase. Otherwise, you should consider the suitability of the investment.