RetireJapan

Hi,

I can see there hasn't been a lot of activity in this section of the forums but I hope someone can give me some advice regarding robo-advisors.

I have already opened an iDeco and started my tsumitate NISA, both with SBI. I still have some money after investing in the two and am looking into robo-advisors to (hopefully) gain a bit more money with my investments.

Investing in stocks is totally new for me and while I know it's cheaper to open an online brokerage account, I don't have confidence in doing it myself. I was wondering if anyone has any recommendations of robo-advisors that might be suited for someone like me with an easy to control interface. I have read about THEO from the retirejapan blog but the posts were all made a while back and I am sure there are new changes and/or companies nowadays.

Thanks for reading !

The reason discussion about robo-advisors here is pretty much dead is because the fees are just too high.

Even with 10m yen invested through theo, you're looking at .65% management fee, ON TOP of the management fees you're already paying for the stocks theo buys for you.

Theo is not magical, in a recession it will still go down, and the management fee means it will charge you in the process.

It's not hard to beat that with a two fund portfolio: one global diversified stock fund(with the news of reduced rates ｅＭＡＸＩＳ Ｓｌｉｍ 全世界株式（オール・カントリー） is a solid choice) and a diversified bond fund(not japanese though. Personally I'm using ニッセイ外国債券インデックスファンド for the bonds.

For allocation between the two, it depends on how aggressive you want to be: but earlier in your career bonds:stocks, 1:9, 2:8 would be good, while approaching retirement you would work closer to 5:5, 6:4, or even 7:3.

Using those, your overall portfolio management fee would be roughly .12%. If you used theo, it would use similar stuff(though some of the JP robo-advisers are not using the lowest-cost funds available, which I find sketchy), and then charge 0.65%-1% on top of that.

Sounds like not a big deal? Well, if you assume you're invested for 20 years, and getting 4% annual returns on an investment of 1m yen, after 20 years of the self-made mix, you're looking at 2.14m. With theo(assuming .7% charges for a 1m portfolio), you would be looking at 1.87m, or a shortfall of 270k yen! That's a pretty big number. And if the annual gains are lower(a lot of people are forecasting that the future trendline upwards is going to weaken!), the gap would grow.

So robo-advisors seem like a great thing, and for the lazy investor, they are. But they're also very expensive.

Wow, thank you for the detailed reply.

The way you explained it made the whole concept much easier for me to understand. I do agree that in the long run, robo-advisors do suck up too much money.

I will consider keeping it simply like you suggested and perhaps try it out myself with a regular SBI investment account.

Thank you again for the heads up!

I have never seen a robo nor index perform well. I would be fired if my clients dropped 30% in a bad market. 1M to 700K?
Look for screens(thoughtful indexes). RPG , DGRW.

bushidobryan wrote: ↑Mon Jun 29, 2020 1:36 pm I have never seen a robo nor index perform well. I would be fired if my clients dropped 30% in a bad market. 1M to 700K?
Look for screens(thoughtful indexes). RPG , DGRW.

So you wouldn't recommend a low-cost world stock index fund for someone with a long-term outlook (three decades plus) and the knowledge/temperament to ignore it?

I would not invest into an Index fund. We called them loss leaders when I was a Fidelity. It gets you in the door and I have never met a person worht more than 5M that owns indexes funds.
I would target screens 'thoughtful indexes').
A screen can look for companies with good cash flow, lots of cash on the books, low debt, and have factors for growth potential.
They tend to be more stable companies. It also eliminates companies faster, than an index if their balance sheet goes sideways.
The ETF world has embraced screens and there are a lot of good ones in the market place. If they do not have a lot of trading volume, then always trade with a limit order.

I would also, put some money into the private markets over time. Private markets have far out performed the public markets, have 1/3 volatility, feast when public markets are crashing(not correlated to the public markets) and generally get better income. Only use name brand private firms. Companies like Blackstone(USA), Pantheon(UK), the Partners Group(Switzerland), KKR(USA). Those 4 companies have not had a losing fund in decades. Some bad investments, but not a losing fund. There are other similar firms. The money is not liquid though and can take at least 3 months to get out of an investment. So they are only appropriate for the long term investor.

bushidobryan wrote: ↑Mon Jun 29, 2020 2:33 pmWe called them loss leaders when I was a Fidelity

Fidelity just happens to have more profitable (for them, that is) products to sell to their clients, so nobody is surprised that they are not huge fans of index funds.

bushidobryan wrote: ↑Mon Jun 29, 2020 2:33 pmI have never met a person worht more than 5M that owns indexes funds.

You haven't met many millionaires have you.

I don't think it is appropriate for a financial advisor to prospect for future customers here. You are not even being subtle in doing so by hinting at private markets that you just happen to provide access to. Everyone, please ignore the vultures.

I honestly was just trying to help.

bushidobryan wrote: ↑Tue Jun 30, 2020 1:57 am I honestly was just trying to help.

Spamming your website in each of your messages and relentlessly asking people to contact you is only helping yourself.

bushidobryan wrote: ↑Mon Jun 29, 2020 2:33 pm I would not invest into an Index fund. We called them loss leaders when I was a Fidelity. It gets you in the door and I have never met a person worht more than 5M that owns indexes funds.

Warren Buffett wrote:In my view, for most people, the best thing is to do is owning the S&P 500 index fund.

And of course the bet Warren Buffet made, and won, that [url=
https://www.fool.com/investing/2017/02/ ... ent-m.aspx] a good investor couldn't beat an index fund over a 10-year period[/url].

A nice post from Monevator: Is active investing a zero sum game? Spoiler: worse, actually.

sytyue wrote: ↑Wed Jul 24, 2019 5:50 amwhile I know it's cheaper to open an online brokerage account, I don't have confidence in doing it myself.

We're getting a bit off-topic, so back to the OP.

I think the effort you will put into finding a robo-advisor you're happy with + how much it would cost you would be far outweighted by learning a little bit about how to set up your own portfolio. In the simplest case, you can just buy a single index find. Maybe a bond fund as well depending on your risk tolerance. So max two funds, if you keep it simple. It's not hard, once you get started, and is way worth it. What jcc already said, basically.