Why It’s So Important to Build Investing Habits & How to Begin with AutoInvest by GrabInvest

I used to think that, in order to invest, I needed to be financially trained AND that I had to have a ton of extra cash in my bank account. On top of that, I imagined the process to be extremely difficult and time consuming.

Actually, it was my own inertia that had built a brick wall between me and investing. I had created the monster under my bed, all by myself.

But when I overcame that mental barrier and started dabbling in investing, I realised that it’s easier and quicker than I thought.

 

 

The key is building good investing habits

 To make a good habit stick, we need to consistently perform that action daily for an average of 66 days for it to become natural. It doesn’t need to be a big change in your life — often these “big changes” come about through consistent small actions and decisions. For example, it can be as simple as spending just 10 minutes tidying up your space every day, or automatically investing a small amount of money regularly.

By building good investing habits, you could be more conscious of your spending, minimise your debts, and become better at managing your finances in general. 

But first, why do we even need to invest? The simple reason why we need to invest is so that we can grow our money, and make it work harder for us. 1. Our savings are being eroded by inflation With the exception of Covid-19 stricken 2020, prices of consumer goods in Singapore have been rising steadily at an average of 1.54% from 2010 to 2019. This means that our $50 today may only be worth $42 in, say, 10 years’ time. 2. The power of compound interest There is an old adage that says that the magic of compound interest is the only free lunch. To demonstrate the impact, if you invest $10,000 at the age of 20, and let it grow, untouched, by 2% each year for 30 years. Assuming the interest gets credited back into the same account, you would have earned $8,113.62 in interest alone when you are 50 years old. Next, consider if that 2% had been 5% (interest earned: $33,219.42). The initial investment amount has not changed — that’s the power of compound interest and also why we should start investing as soon as possible.  3. You could reach your financial goals a little faster By beating inflation and also making your savings work harder for you through compound interest, you could reach your financial goals a little faster (for example, a long-term goal like retirement, or a shorter-term goal like a Dyson hairdryer) than if you had just relied on pure savings.

In 2020, investing is finally really accessible and affordable, thanks to technology. It can be done totally online, and you can start small. In addition, all those jargon-heavy investing-related terms have started to become less complicated in recent times. Fees (if any) are also much lower, and there are loads of tools and resources online to help you along so you don’t need to be financially trained.

So yes, investing is much, much easier than it sounds, and can actually be straightforward and simple. Best of all, if we are afraid of risk, we can slowly dip our toes into the water by starting small.

 

 

Newbie investors can start small with AutoInvest

 Just launched in September 2020, AutoInvest is a micro-investment solution that incorporates investing into users’ day-to-day activities.

How it works: When you make an eligible Grab transaction, you can choose to also channel money into your AutoInvest account, from as low as $1 (you can change this amount anytime).

For example:

• 10am: Grab Ride from Clementi to Raffles Place — Grab Ride fee of $12, AutoInvest amount of $2, total = $14 in a single transaction
• 1pm: GrabFood delivery from Greendot to your office — GrabFood fee of $15.90, AutoInvest amount of $2, total = $17.90 in a single transaction

You have invested $4, whilst you rode to work and ordered your lunch, hassle-free. Note: It’s purely optional to get AutoInvest; you don’t need to sign up for it if you don’t want to.

Assuming you spend your day the same way every day of the year, here’s how the sums work out:
Daily — $4 invested
In a week — $28 invested
In a month — $120 invested
In a year — $1,460 invested

Returns are projected to be an estimated 1.8% per annum (returns are not guaranteed or protected), net of all fees. This means that your AutoInvest investment of $1,460 in a year could net you $26.28 in interest — that’s enough to buy a nice bowl of chirashi don for a self-pampering lunch treat!

(Through AutoInvest, the fund managers charge a low all-inclusive fee of less than 0.45% per annum. i.e. Less than $0.45 per year for every $100 invested).

So where do these fees go?

• GrabInvest does earn a portion of existing fund fees (less than 0.2%), but this allows GrabInvest to keep the subscription and redemption of your invested monies 100% free for its AutoInvest users
• Fund management fee
• Other costs associated with managing the fund such as custodians, auditors, trustees, and legal advisers, amongst others

You actually pay the same amount if you directly invest in the funds yourself (but with AutoInvest, it’s less of a hassle).

To get a better idea of your potential investment, you can simulate this through the AutoInvest calculator on the app (above). Once on AutoInvest, you can view the current value of your investments and see the indicative returns. AutoInvest investments will be actively managed and rebalanced every quarter in accordance with the latest market data and forecasts to optimise for best returns within risk targets.

Keen to know more? There are probably still a few more questions you have…

Where does my money go?

While many people are familiar with Grab’s transport and delivery businesses, its financial services business is also growing steadily. GrabInvest (S) Pte Ltd is regulated by the Monetary Authority of Singapore and holds a Capital Markets Services licence (CMS100908) to provide fund management activities.

GrabInvest partners with established asset managers, Fullerton Fund Management and UOB Asset Management for AutoInvest; and the monies you set aside via AutoInvest will be invested* into high-quality, liquid money market and fixed income funds managed by these asset managers.

What if you made an erroneous AutoInvest transaction? You can always withdraw from your investment (usually takes 2 to 4 days to go through). If it’s on the same day as you made the investment, you can usually also cancel it immediately. Note: Cancel the transfer via the “Cancel Transfer” option in the Transfer Detail page if the transfer status is still “In Queue”. But you can’t do it if the status becomes “Currently Processing”.

How do I take out my money?

Your AutoInvest earnings can be transferred* to your GrabPay wallet at any time. The units you have will be redeemed at the next available price. You can spend it on Grab’s services or on Grab merchant-partners that accept GrabPay/the GrabPay Card.

As such, while your AutoInvest earnings can’t go towards paying for your new home or be withdrawn to be redeposited into your bank account yet, you can certainly use it to hit shorter-term financial goals such as buying that new laptop, treating yourself to a nice meal or enjoying that well-deserved “free” Grab ride home with the potential returns earned.

*Time taken for money to be invested in the funds, or for invested sums to be redeemed and transferred to the GrabPay wallet will take an estimated 2 to 4 working days per transaction, in line with the market standards for investment in funds. Read the full AutoInvest FAQ here.

 

 

Enroute to building good investment habits

Because AutoInvest is really so automatic (as its name indicates), it becomes a natural habit for Grab app users. It hardly takes any time at all (other than setting up your AutoInvest account and checking your returns from time to time).

By starting small (from as low as $1 per transaction), there’s a low barrier to get started. But this also helps build financial confidence and users have total control to increase the amount invested to a level they’re comfortable with in the future.

Returns of 1.8% p.a (returns are not guaranteed or protected) aren’t eye-popping, but it’s better than what most current accounts offer. With a low minimum amount and low investment risk, the downside risk is managed and helps you get used to investing. Earlier on, I mentioned that the average inflation rate in Singapore has been about 1.54% from 2010 to 2019. So you’re already combating the effects of inflation.

While getting your first taste of investing through AutoInvest, in time this builds your financial knowledge and confidence. Eventually, the plan is to diversify and grow your portfolio by adding on other investments that can help you attain your larger financial goals.

Get started with AutoInvest by GrabInvest today. Sign up via your Grab app and find out more here.

 

Disclaimer: This advertisement has not been reviewed by the Monetary Authority of Singapore. The content in this article is meant for informational purposes only and should not be relied upon as financial advice. Users may wish to approach a financial advisor before relying on any advice provided by the website to make any decision to buy, sell or hold any investment product. Read more in AutoInvest by GrabInvest’s FAQs here.