Your favourite hawker dish seems to cost more. Pump prices are up. Electricity bills are soaring.

What are you going to do? With complex factors like supply chain disruptions continuing to push prices up, what can you do?

Singapore's core inflation – which excludes accommodation and private transport costs – rose to a 13-year high in May. The Monetary Authority of Singapore (MAS) estimates that this could rise even higher in the third quarter, from 3.6 per cent in May, to 4 to 4.5 per cent.

Across the region, consumers have been grappling with increased costs. Over six in 10 respondents (64 per cent) in Asean indicated that they were uneasy about increased household expenses, says the latest UOB Asean Consumer Sentiment Study, released in August 2021.

About 63 per cent are concerned about meeting long-term financial commitments, while 65 per cent worried about a decline in savings and wealth.

How are they trying to ease their inflation woes? In Singapore, about two in five respondents (38 per cent) said they have put more money into investments in the past six months, says the same survey.

 

Go with the dynamic robo flow

Some are turning to robo-advisers – a digital investing tool that delivers financial advice or manages investments leveraging algorithms, with moderate to minimal human intervention.

But investing for a short-term goal, like a holiday, and investing for a longer-term one, like buying a home, are very different – and require different strategies. While robo-advisers do help investors get started, they typically provide simple portfolios for investors to choose from.

So how can robo-advisers better help retail investors? For UOB Asset Management (UOBAM), the answer is to combine human expertise with machines via its UOBAM Invest mobile app.

“Through UOBAM Invest, we hope more retail investors can benefit from the simplicity, affordability and ease of using a robo-adviser, and have access to an established bank-backed asset management firm,” says Ms Rachel Ong, head of Digital Channel and Sales, UOBAM.

It is the first asset management firm in Asia to offer a robo-adviser with personalised portfolios for retail investors, she adds.

Retail investors can start investing with just $1, and there are no opening or closing fees.

The platform leverages proprietary capital market assumptions derived from its in-house research capabilities, says Ms Ong, and the expertise of UOBAM's team of investment experts, who are responsible for all key inputs in the platform. This ranges from the list of exchange-traded funds available for each targeted risk level, to certain investment levers that help optimise the algorithm.

 

How to start investing with digital tools

  1. Complete a risk profile assessment
    UOB's Carbon Insights, which is part of its digital app named UOB TMRW, automatically helps to calculate, track and benchmark a person's carbon impact. Being aware of your carbon impact is the first step toward making changes toward a more sustainable lifestyle.
  2. Think about your financial goals
    How long can you keep your money invested? Short-term goals can typically be achieved in less than three years, mid-term goals in three to 10 years, and long-term goals are over 10 years
  3. Decide
    How much do you want to invest? Will you be investing regularly?
  4. Find the right digital platform or service for your needs
    Robo-advisers are a low-cost and accessible option, but may not be the right fit for everyone

 

Evolving with one's needs

UOBAM Invest's services include its digital adviser, a portfolio planner that customises investment portfolios based on each investor's risk profile. It offers dynamic portfolios designed to meet the evolving needs of investors, says Ms Ong.

After creating an account and completing a risk profile assessment, users can simply select their investment goals, such as buying a home, a car, a wedding or simply a holiday, and their investment horizon.

The robo-adviser employs a “guided approach” to helping newer investors realise what their goals are by asking some questions, says Ms Ong, before providing them with recommendations.

UOBAM Invest focuses on personalisation, because “different individuals – even those at the same life stage – can have different priorities in life and different investment objectives,” says Ms Ong. “Their risk tolerance and investment horizon also varies.”

She gives an example of how the investment portfolio of a person in their 20s would look very different from that of someone in their 40s – even if they are both working towards growing their nest egg. “Even if they have the same risk tolerance, because their investment time horizons are different, the customised portfolio for each individual will differ.”

Retail investors can fine-tune their investment portfolios by changing their goals, contributions, duration and risk tolerance level anytime, she adds. The app then shows an overview of the probability of them achieving their desired returns.

More savvy investors can make use of UOBAM Invest's Fund Direct service, where they can select their own funds from a range managed by UOBAM's in-house investment teams.

“Investment portfolios need to be dynamic, so as to cater to each person's evolving needs,” says Ms Ong. “Not only is each individual unique, but one's priorities will also change with time.”

 

Market timing vs time in market

In such times of global economic volatility, how can retail investors ensure that they stay on track to achieve their financial goals?

Regardless of economic conditions, or whether you're using a robo-adviser, regular and consistent investing is key, says Ms Ong.

This can be through a regular savings plan, where one sets aside a specified amount of money to invest each month.

Drip-feeding money into one's portfolio on a regular basis reduces investment risks when markets are weak, she adds. This enables the investor to benefit from dollar-cost averaging – the technique of buying more units when prices are low and fewer units when prices are high.

“This helps investors to eliminate emotions in investing and to focus on investment objectives instead,” says Ms Ong.

“The markets are definitely going to go up and down. To avoid the pitfalls of emotional investing, remember: It is not about timing the market, it is time in the market that counts.”

 

The Future of Finance is a series that explores how digital solutions can empower individuals and businesses, creating a smarter, more sustainable world.

This article was originally published on The Straits Times, and was written by Kareyst Lin, Content STudio.

 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction