Robo-advisors are digital platforms that provide automated financial management services driven by algorithms at low costs, with minimum or no human intervention.
In other words, they allow you to automate your investments online or via a mobile app, something akin to internet banking.
Low Level Of Entry
Fees and minimum investment requirements are generally lower than employing traditional financial advisors. Some do not require a minimum investment but take a percentage of your investments as a management fee. Others may require a monthly investment or one-time investment of as low as S$100.
The low level of entry makes robo-advisors an attractive option to small investors with simple financial goals, especially for those who are new to global markets or prefer a more passive mode of managing their investments.
Automated Investments Based On your Financial Profile
The sign-up process mostly begins with a questionnaire aimed at assessing your risk appetite. With this information, the robo-advisor builds a portfolio that corresponds with your investment capacity, the current market conditions, and your investment goals.
Once you have deposited or activated your investment payments, your robo-advisor will set your investment in motion. It will monitor the market and rebalance your portfolio to manage risk and maximise potential returns.
Robo-advisors typically invest in US and global exchange traded funds (ETFs) with exposure to a variety of asset classes, including equities, bonds, gold and other commodities.
The first robo-advisors emerged in 2008 during the financial crisis and they have been growing in popularity since. There is now a wide selection of robo-advisors in Singapore, such as Endowus, Syfe, MoneyOwl and Stashaway, which are offering their services to invest your Central Provident Fund and Supplementary Retirement Scheme savings or cash. In recent years, local banks like DBS, UOB and OCBC have also rolled out their own robo-advisors like DBS digiportfolio, UOBAM Invest and OCBC RoboInvest to capture the robo market.