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If you are a regular reader of DollarsAndSense, you would have read some of the articles that we have written about robo-advisors. You may have even started investing with one or more of these robo-advisory platforms in Singapore.
Besides providing low-barrier access to globally diversified investments, robo-advisors also help their clients determine the right risk level to take based on their risk tolerance. Risk-averse clients can maintain a higher proportion of their portfolio in fixed-income assets such as bonds, while those willing to take on higher risk can hold a higher proportion of equities, which tends to be more volatile in the short-term but can deliver higher returns in the long-run.
Since many robo-advisors in Singapore offer similar benefits (e.g. low starting amount, hands-off investing approach, portfolio allocation, and rebalancing support), some investors may think of the different platforms as homogeneous, and simply choose the platform that looks cheaper.
However, robo-advisory platforms can operate quite differently from one another even though they serve the same primary purpose – to help you invest in a hands-off manner.
UOBAM Invest – A robo-advisor that helps you build customised portfolios
One of the newest robo-advisors in Singapore is UOBAM Invest by UOB Asset Management. With 30 years of investment expertise and being the investment arm of UOB, UOB Asset Management is a brand that most Singaporeans should be familiar with, even if they have never invested through them.
Like most other robo-advisors in Singapore, UOBAM Invest provides investors a hands-off approach to investing in an appropriate investment portfolio based on their risk tolerance level.
Investors can also start investing from as little as $1, and can invest a lump-sum and/or regular monthly contributions. Investors also retain the flexibility to change their goals, stop investing, or even withdraw their investments, at any point in time. Although, this may not be ideal for their investment outcome.
However, unlike other robo-advisors in Singapore, UOBAM Invest offers a few additional features that can be useful for retail investors, even if they already started investing on their own or through another robo-advisory platform.
#1 UOBAM Invest Can Customise A Portfolio Based On Your Investment Horizon & Goals
Due to the way they build portfolios, many robo-advisory platforms in Singapore are most suitable for investors with long-term investment horizons. They may only advocate for clients to invest if they can hold their investment for a horizon of at least ten years or more to ride out the volatility of the stock market.
With UOBAM Invest, investors can choose their investment time horizon. There is no minimum nor maximum investment duration.
You can choose specific investment objectives or build wealth if you have no particular goals in mind yet.
Based on your 1) risk tolerance level, 2) investment objectives, and 3) investment horizon, UOBAM Invest will personalise a portfolio for you.
Most robos out there do create customised portfolios for investors too. However, the key differentiation is that UOBAM Invest takes customisation to a personal level. The portfolios that it creates are neither standard nor pre-built based on risk levels. So for example, if two people have the same risk profile, the difference in their investment horizons will result in different portfolio allocations.
UOBAM Invest also allows you to fine-tune your investment preferences. If a moderate or conservative risk investor wants to reach their investment goals earlier, they can increase the risk levels of their portfolios. UOBAM Invest will alert you if you take on more risk for your portfolio beyond your risk category.
In our view, the ability to customise your investment objectives and investment horizon is one of the key unique selling propositions that differentiates UOBAM Invest from other robo-advisory platforms.
#2 Using The Glide-Path Model
Instead of having a fixed asset allocation based on your risk tolerance level, or asset allocation that may change based on the discretion of the investment team, UOBAM Invest also utilises the glide-path model concept. What this means is that the platform gradually allocates funds towards safer assets as you move closer to your target goal completion date, with the approach shifting towards the consolidation of the portfolio rather than staying in wealth accumulation mode.
The aim here is not only to ensure that you achieve your investment objective, but that you are also able to achieve it on time. For example, if you are saving up towards your kid’s education in 10 years, you want to ensure that the funds are available when you need it.
#3 UOBAM Invest Gives You Your Success Probability
Rather than project how much you may have from your investment goals after a certain period, UOBAM Invest also tells you the success probability of achieving your goals based on how much you are willing to invest and the risk level you are taking.
For example, we may want to save up $50,000 in the next 15 years for our child’s university education. So, we set a goal to achieve a full payment of $50,000 on Oct 2035.
As we likely have other financial goals, we can only allocate a regular contribution of $200 per month towards this financial goal for 10 years. This means we intend to make monthly contributions of $200 from Oct 2020 to Oct 2030 (total contribution of $24,000) and let the money continue growing for the next 5 years without any further contributions. Based on this input, UOBAM Invest calculates that there is only a probability of 47% that we achieve our investment goal of $50,000 by Oct 2035.
With the relatively low probability rate and not wanting to fall short for our child’s university education, we may want to consider contributing more towards this goal to improve our odds of success.
We can play around with the inputs to derive a probability of success we are comfortable with. For example, we added an initial contribution of $2,000 towards our goal, on top of the monthly contribution of $200 for 10 years. With this, our probability of success increases to 63%, which makes sense since we are now contributing a higher amount to achieve the same goal.
We are also estimated to have about $4,518.25 after the $50,000 withdrawal on Oct 2035.
You can also add multiple goals and UOBAM Invest will automatically calculate for you your success probability and change the allocation of your portfolio if required.
Start Investing With UOBAM Invest
If you have not already started investing, UOBAM Invest offers an ideal starting point to work towards your financial goals. Whether it’s for your upcoming wedding, down payment of a home in a few years or to build up a retirement pot in 30 years, UOBAM Invest can help create an investment portfolio for both your short-term and long-term investment goals.
The success probability that they show you helps, as it would tell you whether your goals are realistic based on how much you are setting aside. For example, if you want to save up $100,000 in 5 years to buy a car, but are only willing to invest $200 a month, then it’s likely that you won’t achieve your objective.
Another thing we like about UOBAM Invest is that even if we already started investing, it can still be useful for us, particularly for setting shorter-term investment goals that we have. For example, even self-directed investors can also have other financial goals that we want to invest towards while we pick stocks and bonds on our own with a separate pot of money. UOBAM Invest can help us with this.
Like other robo-advisors, UOBAM Invest doesn’t allow us to choose specifically what we want to invest in. We set our risk tolerance level and goals and UOBAM Invest creates an investment portfolio that can help us achieve our investment objectives. Rebalancing of our portfolio will be also be done automatically by UOBAM Invest.
Fees for UOBAM Invest is 0.8% p.a. if your account balance is below $25,000 and below and 0.6% p.a. if your account balance is above $25,000. For example, if your portfolio is $30,000, you pay 0.6% p.a. ($180 each year) on the entire sum rather than charging a higher rate on the first $25,000. Fees are inclusive of the 7% GST but excluding SEC fees, which is charged when an investor’s portfolio transacts on US-listed ETFs and underlying fund-level fees.
As a separate standalone mobile app, monitoring your investment progress and setting new goals can be done from the palm of your hands.
You can get started on UOBAM Invest without having to be an existing customer of UOB. Based on our experience, you can register an account, set your investment goals, and fund your account in just 10 minutes or less – something that is easily done on your daily commute or during a coffee break.
You can also find out more about UOBAM Invest in this infographic on their Invest Hub or our summarised version here: