WEBVTT - Using robo-advisers? Do not be trigger happy

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<v Speaker 1>This is a C N A podcast.

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<v Speaker 2>If listeners really want to use robo, it's important to

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<v Speaker 2>desire in a way that do not sabotage the performance

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<v Speaker 2>of their funds by taking emotions out of the equation.

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<v Speaker 2>Hello and welcome to money talks Now. If you're wondering

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<v Speaker 2>why Sarah sounds a little bit different. Well, that's because

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<v Speaker 2>I am sitting in for her today. My name is

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<v Speaker 2>Andrea Heng and I present money mind on C N

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<v Speaker 2>A 938. But back to this episode of money talks now,

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<v Speaker 2>if the names Saif, stash away and Dallas, if they

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<v Speaker 2>all ring a bell, then you'll have a clue as

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<v Speaker 2>to what we're talking about today.

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<v Speaker 2>They're called robo advisors and they've gained traction in recent

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<v Speaker 2>years and are especially popular with younger investors thanks to

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<v Speaker 2>low fees and easy to use apps. It really is.

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<v Speaker 2>As simple as completing a questionnaire about your risk profile,

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<v Speaker 2>your investment goals. Voila, you're in business. A sophisticated

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<v Speaker 2>algorithm uses the money that you put in to invest

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<v Speaker 2>in a slate of products based on the profile that

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<v Speaker 2>you've revealed in your questionnaire, you don't even need to

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<v Speaker 2>speak to a human being to get this done gone out.

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<v Speaker 2>The old brokerage firms fees. Financial advisor who buys you

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<v Speaker 2>a meal in exchange for buying an investment product. Has

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<v Speaker 2>investing really becomes

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<v Speaker 2>so simple. Can you completely rely on these fintech products.

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<v Speaker 2>What if you run into problems to break this down

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<v Speaker 2>is ferris we ferris is a master trainer with the

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<v Speaker 2>Institute for financial literacy. Hi ferris, Welcome to money talks.

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<v Speaker 2>Hi Andrew thanks for inviting us first and foremost, should

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<v Speaker 2>everyone sign up with a robo investor? I mean,

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<v Speaker 2>there's the low management and transaction fees, the algorithm to

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<v Speaker 2>do all the hard work for you. It sounds like

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<v Speaker 2>a good deal. So generally, I think robo advisors kind

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<v Speaker 2>of appeal to consumers and customers who are cost conscious

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<v Speaker 2>about fees in order for them to jump into the bandwagon.

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<v Speaker 2>They will need to be comfortable and confident with tech. Right?

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<v Speaker 2>The hallmark of Robot

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<v Speaker 2>Advisor is there is of online access. However, if listeners

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<v Speaker 2>are intending to invest via robo advisory, something that they

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<v Speaker 2>need to take note is if the returns on their

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<v Speaker 2>investment with the Robot adviser do not outweigh the total

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<v Speaker 2>cost associated with the advisory firm, right? Such as fees,

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<v Speaker 2>then they are better off not using one. It's also

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<v Speaker 2>essential to pay attention to what exactly they are investing in.

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<v Speaker 2>So I would like to encourage listeners to try because

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<v Speaker 2>this is a very good platform, including myself, I have

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<v Speaker 2>three rubles, you know, which I use. Yeah, a lot

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<v Speaker 2>of research that needs to be done before you venture

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<v Speaker 2>into something like that. And the thing is because it's

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<v Speaker 2>so appealing to the newbie investors out there or those

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<v Speaker 2>that don't even have an investing account. This just makes

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<v Speaker 2>it that much more accessible, doesn't it? Okay. We already

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<v Speaker 2>have those traditional brokers, financial advisory firms. How diff

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<v Speaker 2>exactly our robo investors to your traditional brokers. Do they

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<v Speaker 2>actually replace traditional firms or do they actually provide a

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<v Speaker 2>brand new service? That's uncharted territory really, it really depends

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<v Speaker 2>on user's preference, whether they want to get a rowboat

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<v Speaker 2>or rather than getting a human advisor can robo advisors

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<v Speaker 2>make you money? The answer is yes, They can make

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<v Speaker 2>you money with a robo advisor, just like you can

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<v Speaker 2>make money with any financial advisors that you place your

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<v Speaker 2>business with

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<v Speaker 2>and can you lose money with robo advisors? And the

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<v Speaker 2>answer is also yes, you can lose money with them,

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<v Speaker 2>particularly with rebalancing cars and fees and also when you

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<v Speaker 2>cash out during market downturns, like now, what robo advisors

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<v Speaker 2>lacks is they are usually limited to investments only there

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<v Speaker 2>are some, they are able to provide financial planning service

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<v Speaker 2>from a financial planning perspective, it will be better to

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<v Speaker 2>go with a human advisor financial advisors because they will

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<v Speaker 2>be able to

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<v Speaker 2>provide holistic financial advice by seeing the whole picture, a

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<v Speaker 2>good one especially will be able to sense beyond what

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<v Speaker 2>is said by asking good questions, right, that enable them

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<v Speaker 2>to understand the client or financial situation. For example, the

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<v Speaker 2>person might be going through a tough time in this marriage, right?

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<v Speaker 2>Or they may have dependence or not well, or they

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<v Speaker 2>may have habits that may put their finances in disarray,

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<v Speaker 2>like addiction to for example, gambling or spontaneous spending. So

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<v Speaker 2>ultimately it goes back to the users their preferences and

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<v Speaker 2>also their needs. Yeah, indeed, I think the nuances of

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<v Speaker 2>our lifestyle is not something that a robo advisor necessarily

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<v Speaker 2>would be curious about, unlike a human being I suppose.

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<v Speaker 2>Is that what you're saying? Right? Yes, yes. When they

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<v Speaker 2>engage the robo advisors, you're going through a digital platform, right?

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<v Speaker 2>You're not having a human face to face interactions. So

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<v Speaker 2>what they usually ask is just

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<v Speaker 2>of questions, they don't really make you dig deeper. So

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<v Speaker 2>similarly you need to trust the selection of the funds

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<v Speaker 2>which they select for you. And if you were to

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<v Speaker 2>pick a financial advisor who go through the process, you

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<v Speaker 2>need to be able to trust your advice, right? So

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<v Speaker 2>if you are able to find a good financial advisor,

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<v Speaker 2>then they will be able to see a holistic picture

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<v Speaker 2>for you and give you good advice and a robo

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<v Speaker 2>can really make you feel. So I remember this quote

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<v Speaker 2>that I like very much people will forget what you,

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<v Speaker 2>but people will never forget how you made them feel.

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<v Speaker 2>So advisors, good one will really sends beyond the numbers

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<v Speaker 2>and give you a good Yeah, you're absolutely right because

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<v Speaker 2>that human emotion and in a face to face meeting

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<v Speaker 2>that body language, when you respond to certain questions, especially

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<v Speaker 2>personal ones, which financial advisor is a good one would

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<v Speaker 2>need to ask you in order to assess what kind

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<v Speaker 2>of financial appetite or

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<v Speaker 2>capabilities you have, that's something that I guess a robot

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<v Speaker 2>can't do is just a simple questionnaire and I suppose

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<v Speaker 2>that's what you're going for when you're speaking with a

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<v Speaker 2>financial advisor or broker in that sense. So let's go

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<v Speaker 2>back a little bit back in time. Robo investing isn't

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<v Speaker 2>actually knew I did some digging up. The first robo

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<v Speaker 2>Advisor was called Betterment and it's still around, it was

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<v Speaker 2>launched in 2008.

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<v Speaker 2>And since then obviously things have blown out. It's now

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<v Speaker 2>2023 lots of robo advisory platforms are out there. What

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<v Speaker 2>do you think has changed since Betterment in 2008 compared

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<v Speaker 2>to what we have now? Right now, the fees are

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<v Speaker 2>much cheaper. And also with the proliferation of internet social media, right.

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<v Speaker 2>A lot more people are jumping on the bandwagon and

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<v Speaker 2>there's a greater adoption rate

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<v Speaker 2>and there's also a larger amount in terms of choices

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<v Speaker 2>in terms of the fund selections typically robust, they focus

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<v Speaker 2>on passive investing's but be aware that there are some

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<v Speaker 2>rules they do active and some they may even get

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<v Speaker 2>into leverage strategies for investors for picking rubles. They really

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<v Speaker 2>need to look at the underlying funds because of the

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<v Speaker 2>wide variety of changes and options that they have is

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<v Speaker 2>therefore important to select the appropriate robles with the

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<v Speaker 2>probably underlying asset fund or E. T. F. That is

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<v Speaker 2>in line with their risk profile, how would you be

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<v Speaker 2>able to know which ones to go for then? Would

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<v Speaker 2>you need to do a lot more research than you

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<v Speaker 2>would normally do if you went to a financial advisor,

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<v Speaker 2>for example, besides look at the fees which is given right.

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<v Speaker 2>And it's easy to find out. The second thing that

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<v Speaker 2>users may want to find out would be the portfolio

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<v Speaker 2>management and experience like the leadership behind. Right? And look

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<v Speaker 2>at the underlying funds. So they can actually look at

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<v Speaker 2>their website

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<v Speaker 2>one way. Another way is they can even go to

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<v Speaker 2>the extent of writing to the customer service to the support. Say,

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<v Speaker 2>what are some of the historical performance? Can I see

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<v Speaker 2>what are some of the underlying funds that you're investing

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<v Speaker 2>in for your core portfolio then? With that they can

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<v Speaker 2>actually do further research whether historically, although I need to

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<v Speaker 2>qualify that all investments comes with risks, historical performance, not

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<v Speaker 2>indication of future performance. Right? But having said that if

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<v Speaker 2>you are able to see a fund or E T.

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<v Speaker 2>F that has right through the volatility that even during

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<v Speaker 2>crisis

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<v Speaker 2>is to eventually recover, then you can have the confidence

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<v Speaker 2>that you can stay in this for the long term.

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<v Speaker 2>You do not want to invest in a fund or

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<v Speaker 2>in the E. T. F. That over time actually is

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<v Speaker 2>not growing. The returns are diminishing, right? So the research

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<v Speaker 2>has to take this, of course. I mean, the same

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<v Speaker 2>would apply. Right? Yeah. What happens here is with the

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<v Speaker 2>certainty is in terms of cost. So you would have

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<v Speaker 2>an edge in terms of savings in terms of course.

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<v Speaker 2>So the same thing when you look for advisor. Yes,

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<v Speaker 2>you need to look at and so you are absolutely right.

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<v Speaker 2>Hi, my name is julie you and I'm the host

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<v Speaker 2>of the climate conversations. Each week I speak to guests

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<v Speaker 2>who give us tips on how we can protect the

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<v Speaker 2>earth every once in a while. We also have interesting

0:09:10.030 --> 0:09:14.570
<v Speaker 2>stories like how Singapore's first Tesla owner prompted billionaire

0:09:14.580 --> 0:09:17.390
<v Speaker 2>Elon musk to reach out to Prime Minister Lee hsien

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<v Speaker 2>loong or chef who makes the juiciest burgers from only

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<v Speaker 2>plant based ingredients for more stories like these. Look for

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<v Speaker 2>the climate conversations under C N A and me listen

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<v Speaker 2>apps or wherever you get your podcasts

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<v Speaker 2>with robo investing, Farris my impression is that people just

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<v Speaker 2>put money into the platform or the app and then

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<v Speaker 2>let the algorithm do its thing. I mean that's what

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<v Speaker 2>we do on our social media app. Right? It's just

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<v Speaker 2>I enter to search them google does it for me, voila. Right.

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<v Speaker 2>But there also is no close monitoring of the stock

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<v Speaker 2>market or you're not making frequent

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<v Speaker 2>transactions and you alluded to some of these limitations earlier.

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<v Speaker 2>Is that really the case though? Can you really just

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<v Speaker 2>hand over portfolio management wholesale to an Ai you can

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<v Speaker 2>provided that they demonstrate a good track record, what I

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<v Speaker 2>would like to share would be in terms of some principles,

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<v Speaker 2>right principles that I thought, introduction to personal investing.

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<v Speaker 2>What I emphasize on during our sessions is in order

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<v Speaker 2>for investors or for participants to be able to invest

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<v Speaker 2>with confidence, right? They need to invest on a regular basis.

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<v Speaker 2>When this is investing in a regular basis means dollar

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<v Speaker 2>cost averaging, but dollar cost averaging is not like a

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<v Speaker 2>super bullet right? Three conditions I would say must exist

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<v Speaker 2>for it to work effectively.

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<v Speaker 2>The first is the investors or the participants needs to

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<v Speaker 2>have time in the market, right? That's the first one,

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<v Speaker 2>staying for the long haul. Right. Second. They must not

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<v Speaker 2>panic sell. But the third condition is the most important,

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<v Speaker 2>which I alluded earlier, which I have explained this. They

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<v Speaker 2>must invest into a good underlying assets, right? Or fun

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<v Speaker 2>or E. T. F. That demonstrated that even when there's

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<v Speaker 2>a crisis, right, They will event

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<v Speaker 2>actually recover. So with that, let me share with you

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<v Speaker 2>one story. Uh of course this is my story. I

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<v Speaker 2>need to be real, right? So as I shared with

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<v Speaker 2>you earlier that I use three different types of robo advisors, Right?

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<v Speaker 2>And to be honest, although I'm a master trainer from

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<v Speaker 2>Institute for Financial literacy, I still find myself having a

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<v Speaker 2>habit of constantly checking the prices

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<v Speaker 2>because the apps are available in our mobile phone. Yeah,

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<v Speaker 2>it's like a job has it for you, isn't it?

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<v Speaker 2>We have easy access to them. Right? Exactly. Yeah. Yeah.

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<v Speaker 2>And it makes me wonder if the funds that invested

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<v Speaker 2>has gone down, gone out. It makes me really, really emotional, right?

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<v Speaker 2>So just now you were saying that can we just

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<v Speaker 2>leave it to them if you have done your research, Right?

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<v Speaker 2>And they have demonstrated that over the long haul, even

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<v Speaker 2>after crisis they will recover over a significant period time.

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<v Speaker 2>Let's say they went to crisis, for example, 97 dot com,

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<v Speaker 2>you know, sorry, 2008 as well. 2008. So I covid

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<v Speaker 2>so and so forth. So what happens to me, right?

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<v Speaker 2>Because of the constant looking at the app, sometimes it

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<v Speaker 2>triggers my emotion and give

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<v Speaker 2>a lot of anxiety, right? Yeah. And I actually redeem

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<v Speaker 2>some of my funds. Yeah. So practical tip to the

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<v Speaker 2>listeners and I did it for myself. Okay. Some of

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<v Speaker 2>you may find that it's a bit extreme. So I

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<v Speaker 2>want to show view. So if listeners really want to

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<v Speaker 2>use robo is important to design in a way that

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<v Speaker 2>do not sabotage the performance of their funds by

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<v Speaker 2>taking emotions out of the equation how, by investing regularly,

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<v Speaker 2>which I have just mentioned, right? The dollar cost averaging,

0:12:40.042 --> 0:12:42.411
<v Speaker 2>which I talked about the three conditions time in the market.

0:12:42.422 --> 0:12:44.962
<v Speaker 2>They mustn't panic sell like me and that is triggered.

0:12:44.972 --> 0:12:47.641
<v Speaker 2>They're going to sell right? The third one is the

0:12:47.642 --> 0:12:50.452
<v Speaker 2>underlying asset must have demonstrated this one. I have emphasized

0:12:50.452 --> 0:12:53.631
<v Speaker 2>this again and again after researching and having the confidence

0:12:53.631 --> 0:12:55.520
<v Speaker 2>that this is the robo that you have selected.

0:12:55.780 --> 0:13:00.040
<v Speaker 2>The listener may want to after setting up after putting

0:13:00.040 --> 0:13:04.010
<v Speaker 2>your money after triggering the money investing amount or the

0:13:04.010 --> 0:13:07.160
<v Speaker 2>annual amount or lump sum investment, depending what they need

0:13:07.160 --> 0:13:10.429
<v Speaker 2>their risk profile in the preferences. Delete the app, delete

0:13:10.429 --> 0:13:13.590
<v Speaker 2>the app and continue to invest it regularly and look

0:13:13.590 --> 0:13:15.790
<v Speaker 2>at it in 10 years time. This is what I did. This,

0:13:15.800 --> 0:13:20.010
<v Speaker 2>this is this is like me and Facebook

0:13:20.429 --> 0:13:23.429
<v Speaker 2>like this is causing too much anxiety, too much work.

0:13:23.440 --> 0:13:24.850
<v Speaker 2>I don't want to think about it. I'm just going

0:13:24.850 --> 0:13:26.770
<v Speaker 2>to delete it. I mentioned that I use a few

0:13:26.770 --> 0:13:28.970
<v Speaker 2>rubles frankly. This is what I did with one and

0:13:28.980 --> 0:13:31.540
<v Speaker 2>all that. So I want to be honest, one that

0:13:31.540 --> 0:13:35.010
<v Speaker 2>I'm significantly invested in. It's quite a significant amount. I

0:13:35.010 --> 0:13:37.260
<v Speaker 2>also want to let you know, let the listeners know

0:13:37.260 --> 0:13:40.559
<v Speaker 2>that confession is good for the soul. I do have

0:13:40.570 --> 0:13:44.970
<v Speaker 2>a small portfolio which I pick my own stocks. However,

0:13:44.990 --> 0:13:48.400
<v Speaker 2>looking at my historical performance, I mean I'm not very smart.

0:13:48.400 --> 0:13:52.280
<v Speaker 2>The funds that invested in the has much better returns

0:13:52.280 --> 0:13:55.370
<v Speaker 2>than the portfolio that I'm managing on my own. So

0:13:55.380 --> 0:13:58.800
<v Speaker 2>I do admit that there are a minority out there

0:13:58.800 --> 0:14:02.980
<v Speaker 2>who does better than the market. But despite me being

0:14:02.990 --> 0:14:06.370
<v Speaker 2>a trainer who teaches financial literacy right? Humans being humans,

0:14:06.370 --> 0:14:08.590
<v Speaker 2>I think that I'm very smart. But the data shows

0:14:08.590 --> 0:14:09.550
<v Speaker 2>that I'm not very smart.

0:14:10.540 --> 0:14:13.450
<v Speaker 2>Well nobody is immune to such things, right? Nobody is

0:14:13.450 --> 0:14:18.210
<v Speaker 2>immune to not knowing enough for making mistakes. Okay, so

0:14:18.220 --> 0:14:22.750
<v Speaker 2>one of the biggest attractions of robo investing is like

0:14:22.750 --> 0:14:25.230
<v Speaker 2>you said, and we all know the low cost in

0:14:25.230 --> 0:14:29.170
<v Speaker 2>terms of fees, it's a very big attraction. So when

0:14:29.170 --> 0:14:31.840
<v Speaker 2>we pay for a human broker now,

0:14:32.130 --> 0:14:35.130
<v Speaker 2>what are we really paying for that? We may not

0:14:35.130 --> 0:14:38.440
<v Speaker 2>get from a robo advisor, break it down for us

0:14:38.440 --> 0:14:41.050
<v Speaker 2>various When we pay a human advisor, what they do

0:14:41.050 --> 0:14:44.700
<v Speaker 2>is they do the holistic planning, But if you are

0:14:44.710 --> 0:14:49.110
<v Speaker 2>engaging human advisor or financial advisors that just go through

0:14:49.120 --> 0:14:52.950
<v Speaker 2>the motion or just paddling or trying to sell your product,

0:14:52.960 --> 0:14:56.530
<v Speaker 2>then that's not a good advisor. Right? So, human advisors,

0:14:56.540 --> 0:14:58.860
<v Speaker 2>if they take into consideration your goals, your

0:14:58.885 --> 0:15:03.365
<v Speaker 2>needs, looking at finances holistically, that'd be very helpful. Why

0:15:03.365 --> 0:15:05.915
<v Speaker 2>don't we use risk profile as an example for robo

0:15:05.915 --> 0:15:08.795
<v Speaker 2>advisory platform? Usually what they do is a few sets

0:15:08.805 --> 0:15:11.665
<v Speaker 2>of questions, right? Let's say on a scale of 1

0:15:11.665 --> 0:15:14.365
<v Speaker 2>to 10, by going through this risk profile question,

0:15:14.500 --> 0:15:19.220
<v Speaker 2>the user assessed that psychologically right there skill is actually eight,

0:15:19.230 --> 0:15:24.460
<v Speaker 2>you know, they can take on high risk their growth investor. Right? However,

0:15:24.470 --> 0:15:27.540
<v Speaker 2>with a human advisor, if they did in the right way,

0:15:27.550 --> 0:15:31.520
<v Speaker 2>by understanding their needs, their circumstances right? And understanding their

0:15:31.530 --> 0:15:35.580
<v Speaker 2>ability to risk their risk capacity. So all those cycle

0:15:35.590 --> 0:15:38.940
<v Speaker 2>basically the user may be able to take high risk,

0:15:38.950 --> 0:15:43.120
<v Speaker 2>but circumstantially, maybe they have a couple of dependents who

0:15:43.120 --> 0:15:45.730
<v Speaker 2>are depending on them? Maybe they have depths that they

0:15:45.730 --> 0:15:49.320
<v Speaker 2>need to repay. Maybe their job situation is not so steady.

0:15:49.330 --> 0:15:53.090
<v Speaker 2>They may not have the ability to risk this money

0:15:53.100 --> 0:15:56.680
<v Speaker 2>much lower risk appetite, correct, correct.

0:15:56.910 --> 0:15:59.990
<v Speaker 2>Would you then say that the platform is safe because

0:15:59.990 --> 0:16:04.910
<v Speaker 2>I know that robo advisory firms are regulated here in Singapore,

0:16:04.920 --> 0:16:07.700
<v Speaker 2>which is a good thing. But what happens if the

0:16:07.700 --> 0:16:10.890
<v Speaker 2>company goes under is my money going to be safe? Yes. Yes.

0:16:10.900 --> 0:16:14.060
<v Speaker 2>All rubles are regulated by M. S. They have this

0:16:14.060 --> 0:16:17.240
<v Speaker 2>capital market license, right? The money that they are investing

0:16:17.240 --> 0:16:20.120
<v Speaker 2>in right is separated from the operating account. Right? So

0:16:20.120 --> 0:16:22.260
<v Speaker 2>in the event that if they put the fails, you

0:16:22.260 --> 0:16:23.400
<v Speaker 2>are entitled to the

0:16:23.903 --> 0:16:26.613
<v Speaker 2>right based on of course, based on the valuation at

0:16:26.613 --> 0:16:29.313
<v Speaker 2>the point of time. Yeah. So listeners do not have

0:16:29.313 --> 0:16:31.733
<v Speaker 2>to worry if they were to go bust, they will

0:16:31.733 --> 0:16:34.603
<v Speaker 2>still be able to get back their investment subjected to

0:16:34.613 --> 0:16:39.213
<v Speaker 2>market evaluation at that point of time. Okay, so one

0:16:39.213 --> 0:16:44.630
<v Speaker 2>of the biggest captive audiences that robot investing seems to

0:16:44.640 --> 0:16:48.280
<v Speaker 2>be attractive to the younger investors and of course the

0:16:48.280 --> 0:16:49.900
<v Speaker 2>retail investors, we saw

0:16:49.920 --> 0:16:53.470
<v Speaker 2>a surge in the number of retail investors, not just

0:16:53.470 --> 0:16:56.860
<v Speaker 2>in 2022 it was as early as the pandemic years

0:16:56.860 --> 0:16:59.460
<v Speaker 2>where people had all this extra cash put aside from

0:16:59.460 --> 0:17:02.980
<v Speaker 2>not traveling from not spending robo advisory was one of

0:17:02.980 --> 0:17:05.149
<v Speaker 2>those things that they decided, yes, I'm going to spend

0:17:05.150 --> 0:17:08.420
<v Speaker 2>on that because it's more accessible for me to invest now.

0:17:08.430 --> 0:17:13.390
<v Speaker 2>Why was this segment previously underserved by brokerages before the

0:17:13.390 --> 0:17:16.409
<v Speaker 2>younger generations? They are more familiar with tech

0:17:16.590 --> 0:17:20.190
<v Speaker 2>and these days with internet there's a lot more research

0:17:20.200 --> 0:17:23.220
<v Speaker 2>that you can easily, there's a lot of bloggers, you know,

0:17:23.230 --> 0:17:26.850
<v Speaker 2>there's a lot of information and google is our best friend, right?

0:17:26.859 --> 0:17:28.810
<v Speaker 2>What we need, what we don't know, we just ask

0:17:28.810 --> 0:17:30.070
<v Speaker 2>our best friend and we will be able to find

0:17:30.070 --> 0:17:32.130
<v Speaker 2>out that. But the important thing is how to distill

0:17:32.130 --> 0:17:36.730
<v Speaker 2>the information that is relevant and that is applicable to us.

0:17:36.740 --> 0:17:39.750
<v Speaker 2>But it's important to highlight just one point, not just

0:17:39.750 --> 0:17:43.490
<v Speaker 2>for the younger generation and even for the generation X

0:17:43.490 --> 0:17:44.879
<v Speaker 2>and all the baby boomers using

0:17:44.900 --> 0:17:47.730
<v Speaker 2>the advisory firm you can save in terms of fees

0:17:47.740 --> 0:17:49.740
<v Speaker 2>but if they're not comfortable they can always start with

0:17:49.740 --> 0:17:53.480
<v Speaker 2>a small sum. Right and see how things work. You

0:17:53.480 --> 0:17:56.430
<v Speaker 2>call it. Play money yes money not to use more

0:17:56.430 --> 0:17:59.570
<v Speaker 2>than 10% of your investable assets. I mean in the

0:17:59.570 --> 0:18:01.639
<v Speaker 2>worst case scenario, if you're not comfortable, the maximum that

0:18:01.640 --> 0:18:03.580
<v Speaker 2>you lost is 10%. If you find that is too high,

0:18:03.590 --> 0:18:07.100
<v Speaker 2>you can reduce the five. Absolutely. On that note though,

0:18:07.100 --> 0:18:10.170
<v Speaker 2>just a quick question about how much cost savings we

0:18:10.170 --> 0:18:13.190
<v Speaker 2>actually do save using a robo advisory compared

0:18:13.210 --> 0:18:17.300
<v Speaker 2>to using a traditional broker Ridge? How much actually in

0:18:17.300 --> 0:18:19.760
<v Speaker 2>percentage terms I suppose you can do that. How much

0:18:19.760 --> 0:18:22.619
<v Speaker 2>actually are we saving using a Robo advisor because the

0:18:22.619 --> 0:18:26.090
<v Speaker 2>fees for the advisers, I think they have been adjusted

0:18:26.090 --> 0:18:29.550
<v Speaker 2>over time. So generally speaking, the robo advisor fee is

0:18:29.550 --> 0:18:32.540
<v Speaker 2>less than 1%. Right. Let's suppose that if you will, do,

0:18:32.550 --> 0:18:35.860
<v Speaker 2>you go with a financial advisor if you read fee,

0:18:35.869 --> 0:18:40.020
<v Speaker 2>which is an additional 1%. So you could talk about 1% savings,

0:18:40.020 --> 0:18:41.520
<v Speaker 2>but if there's an upfront fee

0:18:41.650 --> 0:18:45.880
<v Speaker 2>then there's additional is being incurred. I think advisors can

0:18:45.880 --> 0:18:48.800
<v Speaker 2>also adjust their red fee, whether is it more than

0:18:48.800 --> 0:18:52.080
<v Speaker 2>one or less than one, then are there any other fees?

0:18:52.080 --> 0:18:53.909
<v Speaker 2>That one, it will be good for listeners to go

0:18:53.910 --> 0:18:56.919
<v Speaker 2>and find out. I mean one more point. One more point. Sure, yes, please.

0:18:56.930 --> 0:18:59.930
<v Speaker 2>There's something that I think listeners may not be aware

0:18:59.940 --> 0:19:03.570
<v Speaker 2>and you may be surprised as well actually for those

0:19:03.570 --> 0:19:06.070
<v Speaker 2>who prefer to pick their own stocks, who prefer to

0:19:06.070 --> 0:19:07.590
<v Speaker 2>buy and hold for exam,

0:19:07.600 --> 0:19:11.200
<v Speaker 2>they buy one of the blue chips company by a

0:19:11.200 --> 0:19:14.460
<v Speaker 2>certain E T. F. That they find a potentially it

0:19:14.460 --> 0:19:16.980
<v Speaker 2>will grow over the period of 10 years and they

0:19:16.990 --> 0:19:19.690
<v Speaker 2>just buy and hold actually it's more expensive to go

0:19:19.690 --> 0:19:22.270
<v Speaker 2>with robo rather than buy and why is that? So

0:19:22.270 --> 0:19:24.750
<v Speaker 2>because the annual management fees on the yearly basis. Right.

0:19:24.760 --> 0:19:27.480
<v Speaker 2>So let's say if it's 1% just use an example

0:19:27.490 --> 0:19:29.700
<v Speaker 2>like you have to buy and hold investor, you just

0:19:29.700 --> 0:19:33.480
<v Speaker 2>want to buy this particular company or by this particular,

0:19:33.730 --> 0:19:36.629
<v Speaker 2>Right? And you will only exit in 10 years time.

0:19:36.640 --> 0:19:39.429
<v Speaker 2>So you are only paying that breakage, the transaction fee

0:19:39.440 --> 0:19:43.080
<v Speaker 2>and the redemption fee, right? Whereas it applies to your

0:19:43.150 --> 0:19:45.859
<v Speaker 2>management fee, whatever because they are charged on a yearly basis.

0:19:45.869 --> 0:19:49.230
<v Speaker 2>I thought there's just something additional to highlight. Yeah, that's

0:19:49.230 --> 0:19:52.130
<v Speaker 2>a good caveat actually because I think people are not

0:19:52.130 --> 0:19:55.200
<v Speaker 2>really sure how long they should go, whether it's a

0:19:55.200 --> 0:19:58.050
<v Speaker 2>long play or a shorter term play when it comes

0:19:58.050 --> 0:19:59.500
<v Speaker 2>to robo investing.

0:19:59.680 --> 0:20:03.080
<v Speaker 2>Some final advice we'd like to get from you ferris

0:20:03.090 --> 0:20:08.619
<v Speaker 2>for newbies, absolute newbies to robo investing. How can they

0:20:08.630 --> 0:20:12.250
<v Speaker 2>actually seek advice to get started? What do they need

0:20:12.250 --> 0:20:15.160
<v Speaker 2>to consider? One way to start is to go through

0:20:15.160 --> 0:20:18.060
<v Speaker 2>the process, Right of research on

0:20:18.070 --> 0:20:20.950
<v Speaker 2>their own. They are with blogs. If listeners are willing,

0:20:20.960 --> 0:20:24.280
<v Speaker 2>we do have public talks offered by FL, which they

0:20:24.280 --> 0:20:27.120
<v Speaker 2>can attend as well. They can always try by opening

0:20:27.119 --> 0:20:30.209
<v Speaker 2>up one account. Then after that they can decide whether

0:20:30.210 --> 0:20:33.100
<v Speaker 2>they want to put their money in. Ultimately, in order

0:20:33.100 --> 0:20:36.460
<v Speaker 2>for them to start, they need to start by investing

0:20:36.609 --> 0:20:40.150
<v Speaker 2>and some money if they are uncomfortable, they can always

0:20:40.150 --> 0:20:45.920
<v Speaker 2>start small. Okay, that's good advice for beginner investors or

0:20:45.920 --> 0:20:49.619
<v Speaker 2>those looking to start a small portfolio with less effort.

0:20:49.630 --> 0:20:52.900
<v Speaker 2>Robo advisors could be an avenue to try out,

0:20:53.140 --> 0:20:56.520
<v Speaker 2>but it remains to be seen if the robots can

0:20:56.530 --> 0:21:00.900
<v Speaker 2>in fact fully replace humans or perhaps it will continue

0:21:00.900 --> 0:21:05.110
<v Speaker 2>to be a coexistence because in some ways nothing can

0:21:05.109 --> 0:21:08.379
<v Speaker 2>truly beat the human touch On that note. Thank you

0:21:08.380 --> 0:21:11.570
<v Speaker 2>so much for your time ferris for explaining this world

0:21:11.570 --> 0:21:14.890
<v Speaker 2>to us, ferris, we is a master trainer with the

0:21:14.900 --> 0:21:17.740
<v Speaker 2>Institute for Financial literacy.

0:21:18.020 --> 0:21:21.040
<v Speaker 2>If you have enjoyed money talks, do follow us on

0:21:21.040 --> 0:21:24.440
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0:21:24.450 --> 0:21:28.060
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0:21:28.070 --> 0:21:32.000
<v Speaker 2>If you're looking for investment ideas for financial advice, you

0:21:32.000 --> 0:21:34.899
<v Speaker 2>can check out our previous episodes where we cover issues

0:21:34.900 --> 0:21:38.629
<v Speaker 2>like investing 101, the fire movement may

0:21:38.640 --> 0:21:42.740
<v Speaker 2>managing debt and investing with your CPF. Now, if you

0:21:42.740 --> 0:21:45.450
<v Speaker 2>have a topic that you're interested to hear about or

0:21:45.460 --> 0:21:48.560
<v Speaker 2>if you have feedback, please write to us at Sienna

0:21:48.560 --> 0:21:52.680
<v Speaker 2>podcasts at mediacorp dot com dot SG. The team behind

0:21:52.680 --> 0:21:57.930
<v Speaker 2>money talks is Joanne, chan, Jacqueline chan Christina robert and

0:21:57.930 --> 0:21:59.250
<v Speaker 2>I'm Andrea hang