Minimum Annual Management Fee
Robo-Advisors are the new investment kids on the block. Here's all you need to know about them and how they help grow your wealth.
Read the latest news about Robo-Advisors in Singapore and the best money saving tips.
What are robo-advisors?
Robo-advisors are digital advisory investment platforms. An underlying algorithm automates your investments and the management of your portfolio. As little human intervention is involved, you can expect cheaper management fees.
To better understand these new-age investment platforms, you can read this guide.
How do robo-advisors work?
Robo-advisors curate a portfolio based on your financial goals, investment horizon and risk appetite. This is determined by the inputs you share during your account creation. Portfolios offered by robo-advisors are typically made up of investment types such as Exchange Traded Funds (ETFs) and mutual funds that invest in a variety of asset classes.
The robo-advisor’s algorithm will invest your money through the selected portfolio and automatically rebalance it whenever it strays from the asset allocation, or when you deposit or withdraw funds from the portfolio.
Pros and cons of investing using robo-advisors
Which are the best robo-advisors in Singapore?
The best robo-advisor depends on your personal investment preference. Are you looking for the platform with the lowest fees, or are you looking for a robo-advisor with a unique product to complement your portfolio?
To help you with your decision, you can check out this article on the best robo-advisors in Singapore.
What are the robo-advisory fees like?
Robo-advisors are known for their low fees. You can expect to pay a management or advisory fee to the robo-advisor for managing your portfolio. Charged as a percentage of your portfolio size, management fees can range from 0.2% to 0.88% per annum depending on your investment type and total investment amount. This fee covers components such as rebalancing costs, transaction fees, account creation and custody fees.
Besides the management fee, there are also additional fees involved, such as the total expense ratio and currency conversion fees.
You can consider robo-advisors if you are looking to grow your money, be it for retirement, financial independence or simply hedging against inflation. Robo-advisors are best made for those:
You can choose a robo-advisor based on factors such as:
Before investing using robo-advisors, you should first consider your financial situation. Do you have an emergency fund to tide you through at least six months of unemployment? Are there big-ticket expenses coming up that will require you to use this investment capital?
You should also consider how much you are looking to invest as this could affect the management fee you’ll be paying.
One concern investors might have with robo-advisors is the safety and security of your assets. To help you rest easier, these robo-advisors have to be licensed by the Monetary Authority of Singapore (MAS).
Your assets are also held in a custodian account by large, established brokerages such as UOB Kay Hian and SAXO markets. This custodian account is opened in your own name, which means that should the robo-advisor go bust or be acquired, your money is still intact.