Myths of Robo-Advisory (Part 2)

Friday, 17 July 2020
Written by Marc Chow, Head of Business Development & Partnerships of GAX MD

We hope you enjoyed our first lifestyle investing article on the ‘Myths of Robo-Advisory, Part 1’. We’re back with the ‘Myths of Robo-Advisory, Part 2’ today as we aim to tackle more myths that investors may have about investing in our Digital Investment Management platform.

Myth #4: Robo-Advisors are for those who can't afford traditional advisors

Yes, MYTHEO’s starting point for any investor is MYR 100, and this is significantly lower as compared to other traditional investment instruments that usually have a minimum starting capital of MYR 1,000 or more. However, this has also led to the perception that Robo-Advisors are meant for:
• Those who can’t afford traditional advisors/ investment instruments
• Millennials
• Investors with little or no investment knowledge

While those belonging to these people groups would very likely be attracted to any robo-advisory service due to obvious reasons, we would like to highlight that a robo-advisory is for everyone - young, old, inexperienced or even sophisticated investors. As a matter of fact, data released by Morningstar have indicated that flows into passive investments (robo-advisors and Index-Tracking Funds) have far exceeded traditional/active investment models over a 7-year period from 2012 to 2018 in developed countries. As more investors are turning to robo-advisors as their vehicle of choice, it is no coincidence that MYTHEO was selected to be the first Malaysian-based robo-advisor by the SC to ensure that digital based investment solutions can be available to all Malaysians.

Myth #5: My money isn’t safe, as MYTHEO is not a bank nor affiliated with a bank.

To ensure the safety of your funds, all investment monies are handled by a trustee.  A trustee is a 3rd party firm that holds and administers property or funds solely for specific purposes. In this case, MYTHEO has no access to investor funds whatsoever and all deposits and withdrawals are handled by our 3rd party trustee to ensure compliance, full transparency and integrity. For further understanding you may refer to the infographic below or read more here.

Myth #6: I don’t need a Robo-Advisor, I am already investing.

Perhaps one would feel that one does not need a robo-advisor as one is already openly invested in stocks, bonds, unit trust funds or maybe even real estate. While investing remains an extremely personal decision, investing via a robo-advisory would allow access to asset classes that may not be readily available to your everyday Malaysian investor. MYTHEO utilises ETFs (Exchange Traded Funds) with exposure across 86 different countries to help investors achieve their goals. Most, if not all, of these ETFs are listed in the US and are not readily available for retail investors to purchase. However, you can have access to these ETFs via your personalised portfolio in MYTHEO. Apart from the use of ETFs, robo-advisors such as MYTHEO also allow real time access to investors via the convenience of an app or a webpage, allowing investors to make transactions as and when they want via their mobile phones. Such convenience and access may not be available via other traditional asset classes.

Thank you reading and staying with us thus far, as we look forward to creating more great content for you. Do follow us on our social media handles on Facebook , Instagram and LinkedIn and say hi or drop us a comment. We would also love to hear from you, if there are any other investment topics you wish for us to address. Till then, take care.

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