A Beginner’s Guide to Investing with Robo Advisors in Singapore

The idea of investing can be really daunting for a beginner. Perhaps you may not know how to open a CDP and brokerage account, or you just don’t have the time to always check on your investments. Or maybe you just have no clue where to start. 

These are totally understandable and relatable. Robo advisors are a great way to begin your investment journey, allowing you to overcome the initial financial barriers.

What are robo advisors? 

Robo advisors are digital platforms that provide automated, algorithm-driven financial planning services with minimal human supervision.

These robo advisors will manage your investments and rebalance your portfolio when needed, all according to your preferences and risk appetite. 

Several services will also provide human advisors that can answer any queries on investing through their platform. However, they are meant to provide broader direction, with the robo advisors doing the majority of the portfolio management.

As with any other investment portfolio, robo advisors will take into account your financial goals, investment timeframe and risk appetite in order to create the right portfolio for you. 

Robo advisors help make investing in the stock market simpler, providing a good starting point for beginners getting into investing.

Investor Risk Profile 

There are generally 3 levels to an individual’s risk profile: 

  • Risk Averse: Investor prefers certainty and dislikes risk
  • Risk Neutral: Investor is open to both high and low risk
  • Risk Seeking: Investor likes and accepts greater risk and uncertainty

Still unsure of which risk profile you fall under? You can find out more about your risk profile by taking a quiz here

Keep in mind—higher risk doesn’t always equal higher returns!

How Safe are Robo Advisors? 

Robo advisors are still relatively new, with the first robo advisor service launching in 2008 during the financial crisis. With just over a decade of existing within the investment space, it’s normal to worry about how reliable and safe they are. 

In Singapore at least, companies need to be licensed by the Monetary Authority of Singapore (MAS), so it’s one big layer of assurance. For most robo advisors, your investment funds are usually kept separate from company funds, so you don’t have to worry that your cash will intermingle with the company’s operational funds.

Some worry about data breaches, since robo advisors are an online service. But of course, the risk of data breaches can be mitigated by a careful user. A few best practices include enabling two-factor authentication on these accounts, and avoiding accessing sensitive information when you’re out using public Wi-Fi or terminals. 

Pros & Cons of Using Robo Advisors 

While robo advisors may be a safe option for many, there are still pros and cons that you should be aware of when using a robo advisor platform. 

Pros of using a Robo Advisor in Singapore 

1. Low Advisor Fees

Compared to mutual funds sold by financial advisors, robo advisors are a low-cost option that is good for individuals looking to invest into a diverse investment portfolio.

While a management fee of about ~1% is significant especially if you’re investing large amounts, it is still cheaper than a mutual fund, where you will be paying about 2-2.5% in management fees to have your funds managed under an insurance company. 

That said, as a caveat, robo advisors are definitely not the cheapest way to invest. For example, buying an ETF directly will cost you less as compared to investing in an ETF via a robo advisor. So do your due diligence when it comes to investing, and purchase the one that carries the best value to you.

2. Minimal Capital Needed

With robo advisors, you won’t need to have a huge sum in order to start your investing journey. Few robo advisors such as Syfe, StashAway, and SquirrelSave require no minimum investment amount, while others allow you to invest with as little as US$1.

3. Passively Invest

Investing requires many to pay close attention to where they’re investing their money, and how it is performing. However, not many people have that sort of time on their hands and would rather invest their money without a second thought—an aspect which makes robo advisors so appealing. Robo advisors will also rebalance your portfolio automatically, ensuring that your risks and returns are managed.

4. Diversified Portfolios

Experienced traders will tell you why every investor should diversify their portfolio. Robo advisors do just that. These services invest your money into a basket of Global Exchange Traded Funds (ETFs) that holds funds from different sectors, diversifying your portfolio in a mix of equities and government bonds.

Cons of using a Robo Advisor in Singapore 

1. No Personalized Service

Robo advisors require minimal human interaction; all you need to do is input your investing preferences and you’re good to go. Of course, there’s a catch. With robo advisors, you won’t be able to get the same quality of personalized service as you will with traditional financial advisors. 

You are given some access to human advisors that can assist you with one-off, simple questions, however, you won’t be able to get the same comprehensive, personalized assistance that’s notable with traditional financial advisors. 

2. Inability to Customise Investments in a Portfolio

The main perk of robo advisors is being able to invest without having to worry about managing your portfolio, and of course, this means leaving the dirty work up to the algorithms to make the best decision for you. So, if you’re someone who prefers to have more autonomy over your investments, robo advisors may not be the path to take. 

3. Currency Exchange Risk

As of now, most robo advisors invest in US and global ETFs (Exchange Traded Funds), and this means that your investments are subjected to USD conversion (at spot rate) and  currency conversion charges from the broker. 

Remember to read the terms and conditions in case of any hidden charges that may come with the service. 

4. Investing based on long-term goals may be challenging

Robo advisors are good for setting up a portfolio, but they are not a financial planner. Unless you’re actively reminding yourself to increase your investment, or to invest regularly, it is easy for you to miss your long-term goals without intervention, since your investments are being automated.

Comparing Robo Advisor Companies

Robo Advisor

Minimum Investment Amount

Advisor Fees per annum (p.a.)

Platforms

Syfe

None

0.4% – 0.65%

Web and Mobile App

StashAway

None

0.2% – 0.8% 

Web and Mobile App 

SquirrelSave

None

0.5%

10% of any positive return (Performance fee)

Web only

UOBAM Invest

S$1

0.6% – 0.8%

Mobile App 

OCBC RoboInvest

USD100

0.88%

Web and Mobile App 

MoneyOwl

$100 

0.5% – 0.6% 

Web only 

DBS digiPortfolio

S$/USD 1000

0.75%

Web and Mobile App 

AutoWealth

S$3000

0.5%
US$18 (platform fee)

Web only 

UTrade Robo (UOB KayHian)

S$5000

0.5% – 0.88% 

Web and Mobile App

Philip SMART Portfolio

S$5000 

0.5%

Web and Mobile App 

EndowUs

S$10,000 

0.25% – 0.6%

Web only

Kristal.AI

USD0 – USD50,0000

0% – 0.3% 

Web and Mobile App 

Investment Offerings from each Robo Advisor 

An important thing to note of these various robo advisor platforms, are the types of investments they offer. From this list, this may range from investing in funds, ETFs, and individual stocks. 

Platforms such as StashAway and EndowUs even allow you to invest with your CPF or Supplementary Retirement Scheme (SRS) funds. Read on below to find out more on what kind of investments are offered by each platform: 

Investment in ETFs and REITS 

Syfe 

On top of investing in equities and bonds, Syfe also has a diverse portfolio where they invest in ETFs listed on the US stock exchange. Syfe offers 3 types of portfolios to their clients: Equity 100, Syfe REIT+, and Global ARI portfolios.

Equity 100

Syfe REIT+

Global ARI

Offerings

Access to over 1,500 stocks from leading global companies 

Ability to maximize exposure to global equities 

Portfolio is made up of attractive Real Estate Investment Trusts (REITs) from renowned real estate companies 

Protect your portfolio with Syfe’s Automated Risk-managed Investments (ARI) strategy 

Invest in a mix of equity, bonds, and ETFs for a diversified portfolio 

Portfolio is managed by proprietary ARI™

engine that maintains client’s chosen risk level 

Average Annual Return

14.4%

11.4%

8.6%

StashAway

StashAway offers three different types of portfolios: General Investing , Goal-based Investing, and Income Investing. Additionally, StashAway also allows you to fund your portfolio through your SRS funds, but do note that once you enable this setting, you won’t be able to undo it! 

UOBAM Invest 

With UOBAM Invest, your portfolio will be mainly invested in ETFs that are diversified across assets such as equities, bonds, and money markets, with your returns received in SGD. They utilize a Digital Adviser’s Investment Model that has unique features such as a Glide-path solution, Capital market assumption inputs, and an Optimisation Model.  

UTrade Robo (UOB Kay Hian)  

UTrade Robo identifies asset classes that encompasses varying types of assets such as stocks, bonds, commodities and ETFs. By utilising the Modern Portfolio Theory, the platform allocates among chosen asset classes to determine maximum expected return for an individual’s given level of risk. 

AutoWealth

AutoWealth states that all their portfolios are diversified across more than 8000 stocks and 600 government bonds, spanning across US, Europe, APAC and Emerging Markets. They diversify their portfolio in a cost-efficient manner by index-tracking ETFs so that your portfolio is protected against market fluctuations. 

SquirrelSave 

Fully led by AI to make investment decisions, SquirrelSave’s portfolio invests in curated global ETFs listed on the US stock exchange that help diversify your portfolio. SquirrelSave’s Digital Asset Allocation System (DAAS) selects from a pool of ETFs that comprises developed and emerging equities, fixed income, commodities and currencies, giving you a unique portfolio based on your risk preference and entry timing. 

Philip SMART Portfolio

With Philip SMART Portfolio, your investments would mostly consist of ETFs listed on major stock exchanges, though they may also invest in other investments such as unit trusts, closed-ended funds, business trusts and Exchange-traded notes. This would give you a diversified portfolio that stretches across different countries and industries. 

Investments in Funds

DBS digiPortfolio 

Offering two main portfolios — Asia Portfolio and Global Portfolio, investors can choose to invest in ETFs and/or in funds. What’s special about DBS digiPortfolio is that investors are able to invest in either SGD or USD in either portfolios, however, they would need to open a Multi-Currency Account with DBS. 

Moreover, with DBS digiPortfolio, a certain level of investment knowledge is needed, hence investing with them would be good for individuals who have some investment experience and are looking for a less time-consuming way to invest. 

EndowUs

With EndowUs, you can grow your money holistically by investing in Cash, CPF and SRS. They offer investors best-in-class funds from respected, global fund management companies, carefully selected by the EndowUs team with the investor’s best interest in mind.

 On top of that, EndowUs also offers a cash management account called EndowUs Cash Smart, which can be used on its own or with other EndowUs portfolios. 

MoneyOwl

MoneyOwl, a social enterprise that was established through a joint venture between NTUC Enterprise and Providend, currently offers 5 investment portfolios: Equity, Growth, Balanced, Moderate and Conservative. 

These portfolios are made up of different Dimensional equity and bond funds which you can check out here. According to their website, they allocate their equities between global developed markets and emerging markets according to the MSCI All Country World Index, ensuring you that your portfolio is well diversified. 

Investments in Individual Stocks and ETFs

OCBC RoboInvest 

OCBC RoboInvest offers investors 34 thematic portfolios over 6 markets so that you’re able to find the best investment to match your preferences. 

OCBC Roboinvest allows for a minimum investment of only USD100, while others can go up to a few thousand dollars. However, if you’re more of a risk-averse investor, you may be limited to only 1-2 portfolios that match your risk appetite. The riskier you are, the more portfolio offerings are available for you. 

Kristal.AI 

Under Kristal.AI, there are two types of accounts — Kristal Freedom and Kristal Private Wealth for Accredited Investors. 

  • Kristal Freedom: Portfolio encompasses ETFs as well as ETF baskets
  • Kristal Private Wealth: Portfolio encompasses both ETFs and individual stocks

Between the two portfolios offered, Kristal Private Wealth definitely carries more features and benefits. However, as a beginner starting out with robo investing, signing up for the Kristal Freedom portfolio is more than enough to get your foot in the door. 

Things to Note when Using Robo Advisors

As simple and easy as it sounds, it’s a misconception that robo advisors will always make the “right” options for you. The algorithms that run these robo advisors are designed to make investing more straightforward—they are not designed to beat the market! Be ready to accept that your investments, regardless of the platform, will be subjected to the fluctuations in the stock market. 

How do I set up a Portfolio? 

On your end, there are two steps that you need to go through in order to fully set up your portfolio. 

First, you would need to fill out a questionnaire regarding your risk appetite and your investment time frame. 

Second, you can fund your account by connecting your bank account and either deposit a one-time payment or by topping up your account on a monthly basis. 

Nonetheless, it’s still a good idea to check out each robo advisor’s website to get a full understanding on how you can go about setting up a profile, as well as their eligibility requirements! 

Once you’ve deposited your money, the robo advisor would purchase the “right” mix of ETFs based on your portfolio preference and current market conditions. 

Finally, your robo advisor would assist you in monitoring the market conditions and rebalancing your portfolio whenever needed, in order to minimize risk and maximize your returns. 

Who Should Use Robo Advisors? 

With all this in mind, what sort of individual would benefit the most from utilizing robo advisors? Beginners, for one. While you’re learning about how you can build your investment journey, robo advisors are a great starting point to grasp the general inner workings of investing.  

Individuals short on time, who want an affordable investment option, or who are looking to diversify their assets on other investment platforms can also benefit from robo advisor services. 

Even so, it is important to remember that robo advisors are not a one-stop solution to all things investment! There are still some qualities that robo advisors lack when it comes to planning and growing your money in the long run. We say dip your toe in it, and happy investing!

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