How AutoInvest By GrabInvest Can Make Investing A Part Of Our Lives

Most of us already understand the need for investing. Even if we do not intend to invest towards a big-ticket item for example our retirement or to buy a house, we still need to regularly invest our savings to beat inflation, or just to save for any rainy day. According to the Department of Statistics, Singapore's Core Inflation (also known as the MAS Core Inflation Measure) has been averaging around 1.7% every year from 1990 to 2021. When we leave our savings in a bank account and only earn mortgage loan of 0.05% per annum (p.a.), the purchasing power of our money will be eroded by inflation with time.

For most people, investing is a little less exciting and much more intimidating as compared to spending. However, a routine of investing can be cultivated by making active decisions and doing the work regularly. If, like spending, we are able to make investing part and parcel in our lives, half the battle is won. This is often even more effective if we can combine those things of investing and spending in a single act.

Like our health and workout goals, our inertia to start investing isn't always due to a lack of investment knowledge, or perhaps a lack of investment options. We might think that's our reason, but it is likely just an excuse. Instead, a lot of us simply haven't started investing because it's not a habit that we've adopted, and nobody is helping to motivate us to get started.

AutoInvest – Motivating You To Make Investing A Daily Habit

To allow consumers in Singapore to possess easy and transparent access to investment methods to make investing a daily habit, GrabInvest has launched AutoInvest.

Of course, Grab – as a company or an app – isn't a new comer to anyone. Many of us are likely already using Grab regularly for essential services for example booking rides or ordering food. One could even make a case that prior to using the Grab app, these were not even services that we knew we wanted as consumers. For instance, in the past, I used to order food online about once every couple of months. Now, I do it through my Grab app several times each month, and I think that's less than many people around me.

So, the question is, how can we now use the same Grab app to help us cultivate an investing habit?

Earlier in August this season, Grab Financial Group announced the launch of the suite of financial products. One particular product was AutoInvest by GrabInvest.

It's important to note that prior to the launch of AutoInvest, Grab was already offering some financial services and payment solutions for consumers such as insurance and GrabPay. So, Grab isn't new to the financial space, although AutoInvest by GrabInvest is its first investment product. Problems in later life from Grab that this rarely is in the only investment product it aims to offer consumers.

How AutoInvest Works

AutoInvest works based on the idea of micro-investing and can be accessed via the 'Invest' tile in the Grab app. Micro-investing is when individuals are allowed to invest a very small amount of cash each time, as opposed to traditional investing that always requires a larger transaction to be made each time.

For example, for most low-cost investment platforms today in Singapore, the minimum monthly investment is usually at least $100. For AutoInvest, we can start investing from less than $1.

However, AutoInvest works in a uniquely different way from most other investment platforms that we are accustomed to. For a start, rather than to allow us to take a position directly as and when we want to, AutoInvest really wants to help turn our spending (on Grab) into an investing habit that we make as part of our daily lives.

Each time we use a Grab service (ride, GrabFood, GrabMart, shop, or pay in-store and online through GrabPay and the GrabPay Card), we are able to choose to invest an amount at the same time. This amount will be transferred from your GrabPay Wallet and invested on our behalf. There isn't any lock-in period for our investment therefore we can transfer the money from AutoInvest back to our GrabPay Wallet anytime. Do note each transfer may take between 2 to 4 working days to become processed.

AutoInvest is a good first product to assist start your investing journey. It allows you to build a habit making investing a part of our lives, just like booking rides, ordering food or paying with an e-wallet.

What Does AutoInvest Actually Invest In?

AutoInvest invests our money in low-risk asset classes such as money market funds and short-term fixed-income funds (i.e don't expect high risk, high growth stocks for example Apple, Amazon and Tesla). For those who are new to investing, such money is considered as relatively low-risk investments. As the potential for investment growth is lower, investing in these funds will allow you to generate returns on your idle funds. AutoInvest invests in funds managed by established asset managers such as Fullerton Fund Management (a subsidiary of Temasek Holdings) and UOB Asset Management (a subsidiary of UOB).

According to GrabInvest, we are able to earn an estimated return of about 1.8% p.a. (following the all-inclusive fee of 0.45% p.a. charged through the asset managers) though this really is neither guaranteed nor protected. Actual returns are susceptible to market conditions. This is a similar return to what most other cash management accounts in Singapore offer.

If you are interested in finding out more about the funds that AutoInvest puts your hard earned money with, do check out the FAQ.

AutoInvest Is really a Complement (Not A Substitute) For Your Existing Investment Portfolio

As of this point, it's worth highlighting that investing via AutoInvest isn't a substitute for other long-term investments that people may already be making (or ought to be making) through robo-advisory platforms, mutual funds or stocks that we buy.

This is because AutoInvest invests in an exceedingly low-risk, low-return portfolio. The returns that we get from AutoInvest, aren't high enough to effectively grow our savings for our retirement, kids' education or to buy a house or car.

Also, funds in our GrabPay Wallet cannot currently be withdrawn. However, we are able to use it to pay for Grab-related services, in-store or online payments via GrabPay, as well as any other products and services that accept Mastercard via our GrabPay Card.

Who is AutoInvest For?

AutoInvest is good in our opinion for first-time investors who've never invested before because it allows them to start cultivating an investing habit.

But for those of us who are existing investors, we can still invest a little more through AutoInvest by parking some of the money that is already inside your GrabPay Wallet in AutoInvest. As long as you are a frequent user of Grab's services, or typically pay using GrabPay, AutoInvest can help you grow the funds that you have set aside for your day-to-day needs without losing your purchasing power to inflation.

With Grab entering the financial space, it should come as no surprise if the company introduces more investment products in the future. In our view, AutoInvest is likely just the first of many other products that the company will be offering. For those who are keen to test establishing an investing habit first, AutoInvest by GrabInvest is a good first step to start doing so.

Activate AutoInvest via the Grab App here. You may also locate the 'Invest' tile around the home screen of your Grab app. Find out more about AutoInvest from this video below.

Cover image from Grab

Here’s a quick summary of how AutoInvest works and how it can make investing a part of our lives: