This article was written in collaboration with GrabInvest. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.
Most of us already understand the importance of investing. Even if we do not intend to invest towards a big-ticket item such as our retirement or to buy a house, we still need to regularly invest our savings to beat inflation, or just to save for a rainy day. According to the Department of Statistics, Singapore’s Core Inflation (also known as the MAS Core Inflation Measure) has been averaging around 1.7% every year from 1990 to 2017. If we leave our savings in a bank account and only earn an interest rate of 0.05% per annum (p.a.), the purchasing power of our money will be eroded by inflation over time.
For most people, investing is a little less exciting and more intimidating as compared to spending. However, a habit of investing can be cultivated by making active decisions and doing it regularly. If, like spending, we can make investing part and parcel of our lives, half the battle is won. This can be even more effective if we can combine the actions of investing and spending in one act.
Like our health and fitness goals, our inertia to start investing isn’t always due to a lack of investment knowledge, or even a lack of investment options. We may think that’s our reason, but it’s likely just an excuse. Instead, many of us simply haven’t started investing because it’s not a habit that we’ve adopted, and nobody is helping to motivate us to get started.
AutoInvest – Motivating You To Make Investing A Daily Habit
To allow consumers in Singapore to have easy and transparent access to investment solutions to make investing a daily habit, GrabInvest has recently launched AutoInvest.
Of course, Grab – as a company or an app – isn’t new to anyone. Many of us are likely already using Grab regularly for essential services such as booking rides or ordering food. One could even make a case that prior to using the Grab app, these were not even services that we knew we wanted as consumers. For example, in the past, I used to order food online about once every few months. Now, I do it through my Grab app a few times each month, and I think that’s less than many people around me.
So, the question is, how can we now use the same Grab app to help us cultivate an investing habit?
It’s worth noting that prior to the launch of AutoInvest, Grab was already offering some financial services and payment solutions for consumers such as insurance and GrabPay. So, Grab isn’t new to the financial space, although AutoInvest by GrabInvest is its first investment product. We understand from Grab that this is unlikely to be the only investment product it aims to offer consumers.
How AutoInvest Works
AutoInvest works based on the concept of micro-investing and can be accessed via the ‘Invest’ tile in the Grab app. Micro-investing is when people are allowed to invest a very small sum of money each time, as opposed to traditional investing that usually requires a larger transaction to be made each time.
For example, for most low-cost investment platforms today in Singapore, the minimum monthly investment is typically at least $100. For AutoInvest, we can start investing from as little as $1.
However, AutoInvest works in a uniquely different way from most other investment platforms that we are used to. For a start, rather than to allow us to invest directly as and when we want to, AutoInvest wants to help turn our spending (on Grab) into an investing habit that we make as part of our daily lives.
Each time we use a Grab service (ride, GrabFood, GrabMart, shop, or pay in-store and online through GrabPay and the GrabPay Card), we can choose to invest an amount at the same time. This amount will be transferred from our GrabPay Wallet and invested on our behalf. There is no lock-in period for our investment so we can transfer the money from AutoInvest back to our GrabPay Wallet anytime. Do note each transfer may take between 2 to 4 working days to be processed.
AutoInvest is a good first product to help start your investing journey. It allows you to build a habit and make investing a part of our daily lives, just like booking rides, ordering food or paying with an e-wallet.
What Does AutoInvest Actually Invest In?
AutoInvest invests our money in low-risk asset classes such as money market funds and short-term fixed-income funds (i.e don’t expect high risk, high growth stocks such as Apple, Amazon and Tesla). For those who are new to investing, such funds are considered as relatively low-risk investments. While the potential for investment growth is lower, investing in these funds will allow you to generate returns on your idle funds. AutoInvest invests in funds managed by established asset managers such as Fullerton Fund Management (a subsidiary of Temasek Holdings) and UOB Asset Management (a subsidiary of UOB).
According to GrabInvest, we can earn an estimated return of about 1.8% p.a. (after the all-inclusive fee of 0.45% p.a. charged by the asset managers) though this is neither guaranteed nor protected. Actual returns are subject to market conditions. This is a similar return to what most other cash management accounts in Singapore offer.
If you are interested in finding out more about the funds that AutoInvest puts your money with, do check out the FAQ.
AutoInvest Is A Complement (Not A Substitute) For Your Existing Investment Portfolio
As of this point, it’s worth highlighting that investing via AutoInvest isn’t a substitute for other long-term investments that we may already be making (or should be making) through robo-advisory platforms, mutual funds or stocks that we buy.
This is because AutoInvest invests in a very low-risk, low-return portfolio. The returns that we get from AutoInvest, aren’t high enough to effectively grow our savings for our retirement, kids’ education or to buy a house or car.
Also, funds in our GrabPay Wallet cannot currently be withdrawn. However, we can use it to pay for Grab-related services, in-store or online payments via GrabPay, as well as any other products and services that accept Mastercard via our GrabPay Card.
Who is AutoInvest For?
AutoInvest is good in our opinion for first-time investors who have never invested before as it allows them to start cultivating an investing habit.
But even for those of us who are existing investors, we can still invest a little more through AutoInvest by parking some of the money that is already in your GrabPay Wallet in AutoInvest. As long as you are a frequent user of Grab’s services, or typically pay using GrabPay, AutoInvest can help you grow the funds that you have set aside for your day-to-day needs without losing your purchasing power to inflation.
With Grab entering the financial space, it should come as no surprise if the company introduces more investment products in the future. In our view, AutoInvest is likely just the first of many other products that the company will be offering. For those who are keen to try establishing an investing habit first, AutoInvest by GrabInvest is a good first step to start doing so.
Activate AutoInvest via the Grab App here. You can also locate the ‘Invest’ tile on the home screen of your Grab app. Find out more about AutoInvest from this video below.
Cover image from Grab