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We Hate to Say It but You’re Probably Using Your Robo-Advisor Wrong

profileThe Woke Salaryman

The stock markets are in the red right now.

Especially if you invested sometime in January or February 2020.

Back in late February 2020, I had put in $13,250 into a robo-advisor with 100% allocation into equities (FYI: equities = stock market).

As of 23 March 2020, it was worth $10,465 (it’s since recovered a little).

Here, let me show you.

(Down 22.7%. Oof. And I think it’ll stay that way for a while.)

That’s fine, to be honest.

I’ve slowly built up holding power over the years.

And I have absolute faith that a globally diversified portfolio of index funds and exchange-traded funds — which many other robo-advisors also invest in — will rise up in the long term.

What’s NOT fine though, are your misconceptions about robo-advisors.

But it’s okay, we are here to help you with that.

Robo-Advisors Might Be Simple to Invest With, but They’re Not Low-Risk

Simple doesn’t mean safe.

For example, it’s simple to jump off a building vs jumping off an airplane.

But that doesn’t make it (any) safer.

If you’re investing through a robo-advisor, you might think that you’re a passive investor as long as you have a significant portion of index funds and ETFs in your portfolio.

However, it still means that you’re taking on the risks of the stock market.

Yes, the index funds that many robo-advisors make you invest in might be considered ‘safer’ options than individual stocks (SBUX, TSLA, BIDU, and etc) because they’re diversified.

But that doesn’t mean that they are completely protected from market fluctuation.

For example, over the last quarter, I’ve seen my index funds fall as much as 15% before staging a recovery.

Therefore, index funds are (technically) equities and should be considered as mid to high risk.

Robo Advisors Are Not Genius Tools That Allow You to Repeatedly Beat the Market in the Short Term

Yeah, they are not.

Sorry to burst your bubble.

They’re essentially managed funds or digital advisors that save labour costs by cutting out human financial advisors.


The ‘A.I’ in a lot of them — at least those in Singapore — seems to be a cost-cutting function through automation.

Not one that enables them to beat the market day after day after day.

You will have to accept that your investments will rise and fall over the short term.

And there are no two ways about it.

For That Reason, We Wouldn’t Put Money We’d Need in the Next Five Years Into Robo-Advisors

I was pretty amused a couple of weeks back when I saw a FaceBook ad for a robo-advisor.

There were comments lambasting the robo-advisor as these users’ investments were not doing that great.

Let me show you two of them:

Now, this is precisely why we don’t invest money, which we need in the next five years.

If you’re saving up for a wedding, or honeymoon, or a renovation, then this money should be put in a highly liquid, super safe place.

Not anywhere with exposure to the stock market.

Just your regular bank savings account will do — if you’re below 27, you can look at Stan Chart’s JumpStart account.

We personally use OCBC 360 because we’re too lazy to switch accounts.

If you don’t have income, DBS Multiplier is an acceptable choice too if you’ve built up regular dividends.

You can also try UOB One — it lets you replace salary credit by carrying out three GIRO transactions monthly.

Stick to Your Goddamn Risk Profile


Most robo-advisors will allow you to change your risk profile.

Meaning you can switch from something like 80% stocks and 20% bonds to something like 40% stocks 60% bonds with the single click of a button.

Now, we think that that’s a bad idea.

And you should just ride it out.

Because when you switch your risk profile, you’re effectively selling your stocks at a loss and BUYING bonds in this market crash. 

Doing that during times where the markets have crashed is terrible because “buying high, selling low” is an incredibly hard way to make money.

You can’t decide that you’re a ‘long-term-investor-taking-on-moderate-risk only during good times’, and decide to switch your strategy the moment risk appears.

That’s like training for years to fight a war, then throwing your weapon aside the moment the enemy appears — without even fighting.


We Know It’s Hard to Remain Invested

In these uncertain times, you’ll get all sorts of people telling you that your long-term passive investment strategy is wrong.

Now, it’s not that you or they are wrong — it’s probably just that you have different circumstances, skill levels, and strategies.

Traders will say “sell all now, and then buy back at a lower price”.

Maybe they’ve honed their abilities and monitored the markets.

Did you? 

Value investors will say that “Oh, I’m going to pick undervalued stocks now, there are so many things on discount”.

They’ve done their research and crunched the numbers.

Did you? 

I could go on forever, but the main point is this: You decided some time ago you are a passive investor — that’s why you decided to invest with a robo-advisor.

You made your decision, you have done your risk profiling, and it’s a great plan.

Buying index funds, through a robo-advisor or not, is one of the simplest and most accessible ways for a regular salaryman to invest.

TL;DR: The way you invest might be noob. But your mindset shouldn’t be.

Stay woke, Salaryman.

This article first appeared on The Woke Salaryman and is part of a content syndication agreement between The Woke Salaryman and Seedly.

For this series of comics that are related to all things personal finance, the Seedly team worked closely with The Woke Salaryman to bring you useful sh*t which you can apply to your everyday life.

The Woke Salaryman is the brainchild of a Singapore-based duo that aims to help people reach financial independence early. It is the quintessential page for people living in Singapore who earn the median salary and didn’t inherit their fortunes from their parents.

If you have any questions with regard to personal finance and retiring early, feel free to discuss them with the friendly Seedly Community!

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