This is a sponsored article by DBS but I would really say this regardless if it is sponsored.
Like most Singaporeans, my wife knows how to save money but doesn’t know how to invest it. She simply doesn’t have the interest to learn more. At the same time, she is very sceptical about most investment plans promoted to her since she has little means to evaluate the products. Hence, she just leaves the savings in the bank.
That was until we started dating.
I reassured her she could just start small, investing as low as $100 each month through a Regular Savings Plan (RSP). She didn’t need any knowledge to do it and it was automatic so there’s not much effort involved. I added that she didn’t need to sit through a sales talk or wait at a bank counter to get it done. She could start it through the banking app. I was a little surprised that she did it right away.
That product is nothing secretive. In fact, it is a common tool among local investors. She invested in Straits Times Index Exchange Traded Fund (STI ETF), which is a basket of Singapore blue-chip stocks, via the POSB InvestSaver program.
Fast forward to today, she is pretty happy that she had taken action to start investing. She has made some profits and although far from an early retirement amount, it is meaningful progress for someone who was so sceptical at first.
I suppose this would qualify as a nudge in psychology. A little cue to trigger the behaviour. We all need nudges in life to move onto our desired paths, else we let our bad habits take over us or simply procrastinates. This stymies our progress.
Things just got better recently and I can make use of another nudge to further my wife’s investment journey. DBS launched digiPortfolio – a mix of human expertise and Robo-technology to provide well-diversified portfolios in an efficient way for every individual.
This is an upgrade to my wife’s current STI ETF exposure. This is because STI ETF purely stocks and heavily exposed to Singapore and we know that neither the stock market nor Singapore stocks always perform all the time.
This is where digiPortfolio excels.
Besides managing the risks by adding bonds to her investments, she can also get wider exposure and diversify beyond Singapore stocks.
There are two portfolios to choose from, either Asia or Global.
Both portfolios are constructed with relevant stocks and bonds ETFs. The ETF selection and weight are managed by portfolio managers who previously only serve clients with investment sums of S$500,000 and above. But now you can leverage on their expertise for a minimum investment of S$1,000. Investments have been made more affordable and easier so you don’t have any excuses left.
I would prefer the Global option because it is more diversified compared to the Asia option. Nonetheless, both portfolios would be upgrades on my wife’s sole investment in STI ETF.
Why not other Robo-Advisors?
Robo-Advisors have been burgeoning in recent years. Investors are spoilt for choices, so much that they suffer from the paradox of choice – we don’t choose because we cannot decide.
Most Robo-Advisors, if not all, offer very similar products and methodology. The common characteristics are
- The use of low-cost ETFs
- Using Modern Portfolio Theory as a key investment strategy
- Charge below 1% annual management fee
- Low investment amount to start
- Ease of monitoring the performance via an app
It is almost like a perfect competition with little product differentiation.
Money is a sensitive thing and we want to be able to trust the person and the organisation who handles our money. Trust is what makes capitalism work.
DBS stands out in this instance because no other Robo-Advisor comes close in terms of branding and credibility.
I love rooting for small players with the ambition to do the right things. But not in all situations. It is very tough to do a low-cost business in a country with a small population and Robo-Advisory happens to fit this description. A business has to be viable in order to continue to provide value to customers. I applaud bringing convenient, effective and low-cost investment products to consumers but a company need a lot more financial power and will to pull this through and I’m just not sure if a small player has enough of that.
At the end of the day, Robo-Advisory may just be a public good that only well-capitalised institutions like DBS can provide. Investments are best held for the long term and you do not want to have to switch your investments sometime down the road.
You can find out more about the DBS Digiportfolio offering here.
———By the way,
My wife signed up for the digiPortfolio early access the moment I told her about it. The nudge worked well.
Editor’s note: If you want to do DIY investing, but have no idea on how to get started, you can check out our guide here. Have fun. Don’t get bored to sleep.