Robo Investing - too good to be true?

DragonQ

adindas wrote: »

Got Reply from them. The incentive has all gone to the first 500 people who signed it uo on day one.

I should have done it earlier but I just got this info a few days ago ..

The T&Cs for the cashback offers are here. I got an email a few days ago confirming that I'm eligible for it and with a link to the T&Cs.

The most interesting and confusing bit is this:

7. Cashback will be paid into the customer’s Moneyfarm account in the ‘available cash’ section after a minimum of three months of the initial investment reaching Moneyfarm. Cashback will be paid after three months providing the investment has reached the minimum invested amount threshold of £5000 or £10,000.

8. Once in the customer’s Moneyfarm account, customers are welcome to withdraw their cash but their portfolio value of £5,000 or £10,000 must stay invested for a minimum period of 12 months – in accordance to the promo code applied.

9. If a customer withdraws their remaining account balance within 12 months of funding their Moneyfarm account, in the event of the £500 cashback being issued, Moneyfarm reserves the right to withdraw the equivalent value from the portfolio before disinvestment is complete.

I was told that by putting in £2.5k and then putting in £250 for 10 months, I'd get the cashback after 12 months. Point 7 suggests that'll be 13 months. However, point 8 then suggests you need the whole £5k in the account for 12 months. Point 9 is not clear either - does it mean I can't take the money out in the first 12 months after the initial £2.5k deposit or in the first 12 months after the £5k total is reached??

EDIT: Had a chat with them, turns out the 12 month timer is always from the initial deposit, even if it wasn't the full £5k upfront. Cashback should appear in month 10-11, and can be taken out after month 12.

bigadaj

moneyfoolish wrote: »

Will you be able to get a decent rate with one of these P2P ISAs if you merely want to put money into a 1 or 3 year deal and forget about it?

Different companies operate under different models, what you suggest is what is operated by firms like Zopa and Ratesetter, but the returns aren't great. You're maybe looking at 4-5% at most, lending unsecured and no idea of who the money is lent to.

The other platforms such as moneything and Ablrate offer typical returns of 10-12%, secured but you have to bid on individual loans, take responsibility for the business plan and security offered and potentially deal with defaults, capital losses or maybe early repayment.

Good opportunities but requires some knowledge and effort and there will almost certainly be defaults on some investments at some point.

ricky_v

If anyone is interested, this is what wealthify has done with £500 (£50 cashback)

£17.59 Fidelity Index UK
£11.28 Fidelity Index US
£17.65 BlackRock Mid Cap UK Equity
£9.90 BlackRock Japan Equity
£11.23 Vanguard Developed Europe ex U.K. Equity
£10.07 Vanguard UK Inflation Linked Bonds
£149.09 BlackRock Sterling Liquidity
£7.49 L&G Global Emerging Markets
£7.49 L&G Pacific Index
£60.12 L&G Short Dated Sterling Corporate Bonds
£9.99 L&G Global Inflation Linked Bonds
£33.73 Vanguard UK Government Bonds
£74.91 BlackRock Ultra Short Bond
£40.10 BlackRock Corporate Bond 1 to 10 Year


And this is what Moneyfarm has done with £5k (£500 cashback)

Sterling Cash LU0321464652 £ 1,466.64
UK Sovereign Bonds Short Maturities IE00B4WXJK79 £ 939.19
Global Sovereign Bonds Sterling hedged LU0641006290 £ 848.64
UK Investment Grade Corporate Bonds 0-5 years IE00B5L65R35 £ 321.09
Global High Yield GBP Hedged IE00B8KQFS66 £ 914.40
UK Inflation-linked Bonds IE00B1FZSD53 £ 330.12
Cash - £ 192.05

Both set as cautious or conservative, I'm just in it for the cashback :rotfl:

eskbanker

ricky_v wrote: »

Both set as cautious or conversative

Perhaps they'll invest in TalkTalk

bigadaj

Brand wrote: »

Thanks for your interesting post DunstonH

Where I fear robo-funds may end in tears in the next year or so, is because, as I've said, that today stockmarket reminds me of the complacency of the late 1990s. The logic behind share index ETFs is that it allows a "stupid" fund to make gains instead of employing a "thinking" fund manager, and and ETF makes gains only by expensive shares getting even more expensive. This can last for a while, but eventually there will be a fall, who knows, 10%, 20% or more.
Robo funds use index ETFs and investors in Robo-funds, when they chose a risk profile, are in effect saying to the robo-fund managers, whatever happens, keep me in shares to a particular percentage, e.g. 0%, 10%, 25%, 33%, 50%.

The problem of judging what to do in an "expensive" phase of the market passes to the robofund managers. Do they dare adjust those percentages downwards and miss out on extra stockmarket gains. . . or do they dare not to!?
A multi-asset fund such as l&G and VLS is I guess would feel less tied to those percentages and make a less constrained judgment, and also, if they are good managers, may respond more quickly, do you think?
Although ETFs have done well over the last few years, after the good run, and the various economic headwinds, I wonder if in 2017-18 the stockpicking value fund managers will beat the index ETFs and hence the robo-funds will disappoint.

Anyway, my view is that it is a time for taking money out of the stockmarket rather than putting it in, and so for those using robo-funds choosing a risk level halfway or higher, I think it is wiser in the next few months to invest monthly rather than large lump sum.

I'm not sure you wholly understand what you've written.

Times are very different to the late 90s, interest rates are far lower, and stock markets now yield a far higher amount than any safe savings account, again very much the opposite of that time.

Stock markets are at highs but as above where else are you going to keep large amounts of capital, cash will be eroded by inflation, bonds are in bubble territory, much property is very much over priced etc

It's a reasonable argument to make that you prefer active fund management over passive, teh sensible view is probably both have their place, especially in different markets and/ or sectors, but you seem to think that lifestratgey and multi index are active funds, they aren't. Multi index has a little more discretion but is still a long way from being an active fund, in the manner of fund smith or a huge number of others. Compared to the fund of funds options then the robo options only really save a stage in the process, using a set if questions to ascribe a risk rating rather than leaving teh investor determine their own.

In terms of a downturn then there will no doubt be a crash in the next year or two, history shows that many active managers fail to spot this and fare no better or often worse than trackers.

You are welcome to your opinion but disinvesting is also a risk, drip feeding is good if your money comes from salary or regular income, it can reduce volatility but will generally result in lower returns.

ricky_v

eskbanker wrote: »

Perhaps they'll invest in TalkTalk

I've only had 1 glass of wine! haha:rotfl:

bigadaj

ricky_v wrote: »

If anyone is interested, this is what wealthify has done with £500 (£50 cashback)

11/05/2017Purchase Fidelity Index UK
£17.59 11/05/2017 Purchase Fidelity Index US
£11.28 11/05/2017 Purchase BlackRock Mid Cap UK Equity
£17.65 11/05/2017 Purchase BlackRock Japan Equity
£9.90 11/05/2017 Purchase Vanguard Developed Europe ex U.K. Equity
£11.23 11/05/2017 Purchase Vanguard UK Inflation Linked Bonds
£10.07 11/05/2017 Purchase BlackRock Sterling Liquidity
£149.09 11/05/2017 Purchase L&G Global Emerging Markets
£7.49 11/05/2017 Purchase L&G Pacific Index
£7.49 11/05/2017 Purchase L&G Short Dated Sterling Corporate Bonds
£60.1211/05/2017 Purchase L&G Global Inflation Linked Bonds
£9.99 11/05/2017 Purchase Vanguard UK Government Bonds
£33.73 11/05/2017 Purchase BlackRock Ultra Short Bond
£74.91 11/05/2017 Purchase BlackRock Corporate Bond 1 to 10 Year
£40.10

And this is what Moneyfarm has done with £5k (£500 cashback)

Sterling Cash LU0321464652 £ 1,466.64
UK Sovereign Bonds Short Maturities IE00B4WXJK79 £ 939.19
Global Sovereign Bonds Sterling hedged LU0641006290 £ 848.64
UK Investment Grade Corporate Bonds 0-5 years IE00B5L65R35 £ 321.09
Global High Yield GBP Hedged IE00B8KQFS66 £ 914.40
UK Inflation-linked Bonds IE00B1FZSD53 £ 330.12
Cash - £ 192.05

Both set as cautious or conservative, I'm just in it for the cashback :rotfl:

That's a very different approach, are you sure you were profiled in the same way?

Moneyfarm looks incredibly conservative, wealthify moderately risky.

ricky_v

I gave moneyfarm the impression that I'd melt at any sort of loss on paper and that I'd want to withdraw the money in 1 year's time. I thought I'd gave wealthify the same impression although it does set my style as cautious. It is "only" 16% in equities, who knows, that 16% might give me an extra few quid in 1 year.

ricky_v

I fogot to add, as a general point, both Wealthify and Moneyfarm send an email out confirming you're eligible for the cashback. So if there's no email then chances are that there's no cashback coming (although check with them first before taking your money out).

AndyT678

bigadaj wrote: »

That's a very different approach, are you sure you were profiled in the same way?

Moneyfarm looks incredibly conservative, wealthify moderately risky.

I was about to agree that £150/£500 (30%) in an emerging market tracker was nowhere near cautious but I've noticed that the original table has been corrected now and looks a lot more suitable for widows and orphans.