8 Securities: Chloe, The Emerging Markets Robo-Advising Platform
As my semi-loyal fans read, I enjoy helping the less fortunate in paying my knowledge treasure trove forward. This installment is an emerging markets robo-advising platform story about 8 Securities' Chloe.
Victoria’s a saver, not a typical private dancer. The majority of dancers I dated are fashion and party addicts; their weekly salary runs dry shortly after payday.
Victoria’s a 29 yr old dancer and already owns her own house. Comparitively, I didn’t own my first house until I was 36 yrs old. Victoria’s ahead of the investment curve.
Victoria like many savers uses traditional banking. Thanks to bankers' risky gambles and the central bankers colluding to fluff the bankers (quantitative easing), savers have suffered low savings rates for a decade and counting. The smart saver should move their monies to global investments.
Wealthy people earn money like a turtle, slow and steady. Wealthy people invest in conservative securities like the S&P500, real estate trusts, timber, and a host of other tried and true passive income models. Warren Buffet, Earth’s 3rd richest person, said, "If you don’t find a way to earn money while sleeping then you’ll work until death." Wealthy people specialise in passive earnings while sleeping. Robo-advising platforms mimic wealthy investors investment habits at fractions of their cost.
Until recently, global investing was only available to wealthy investors. With the advent of robo-advising platforms such as USA’s Wealthfront, the EU’s ETFmatic, and Hong Kong based 8 Securities' Chloe, the average Wang can and should take advantage of the same investing opportunities as the wealthy.
Robo-advising platforms incorporate algorithms, fancy math, to optimize investing strategies. Robo-advising platforms automate our investing goals based on Nobel economics’ prize winning investment models. Because the investment models are automated robo-advising platforms can cut out labor costs and provide us with significant cost savings vs traditional brick and mortar investment advisor firms.
Passively managed exchange traded funds (ETFs), formerly mutual funds, beat the majority of actively managed funds. The smart, lazy investor invests in passively managed, robo-advising ETFs.
I also taught Victoria about compounding interest or how long it takes our money to double and the rule of 72. Compounding interest is based on a challenging math model of geometric series. The rule of 72 is a compounding interest math trick. Divide the interest rate from 72 to garner a strikingly similar result as the geometric series. For example, Victoria’s bank account earns a paltry 0.5% interest which would take 144 years for her savings to double. Conservative global investments typically return 4-6%, so her money would double every 12-18 years.
I then introduced Victoria to the Hong Kong robo-advising platform, 8 Securities' Chloe. 8 Securities' Chloe is a robo-advising platform available to overseas investors not from the USA. Chloe charges 0.88% annual fees for accounts with HK$8888 and above and zero for below. Year-to-date (YTD), the conservative Chloe fund returned 8%, so her money would double every 9 years.
An aside: 8 Securities is a commission free trading platform, Earth’s first. 8 Securities make money from cash accounts plus their robo-advising service. 8 Securities’ trading platform is a disruptive technology trading model. If not a USA citizen then take advantage.
A rule of thumb to detect investment scams
Warren Buffet’s global investment firm, Berkshire Hathaway, returned a 19%/year average during his epic 50 yr run. Using Yale University professor Robert Shiller’s historical data, the S&P500 returned about 9.9% with reinvested dividends during the same period. If an investment advisor, friend, or otherwise suggest returns greater than the 50 yr S&P500 average then be very sceptical!
If it sounds to good to be true then it’s usually a scam. Stupid and poor people are abused by get rich quick scams like lotteries. Wealthy people get rich and stay wealthy via conservative investments.
According to Financial Samurai, wealthy families save and invest 37%+ of their annual income. By contrast the middle class and below rarely save more than 4% of their annual income. In order to retire early, we need to invest like the wealthy.
Victoria’s said her monthly spending is about USD$140/month. We calculated she could save and invest $1663/year. At a conservative 6% annual interest and a 21 yr investment plan, MoneyChimp’s compounding interest calculator output her net worth at $71000. She was giddy.
A $71k nest egg might not appear much to my Western fans, but the typical average annual wage in emerging markets is $3000 or less. When annual expenses are covered by passive income then we are financially independent. A nest egg of USD$71k with universal healthcare, should last emerging market workers the rest of their natural lives. If the smart money, our private dancer, stays invested then she could setup future generations for success too.
Musical tribute: Private Dancer by Tina Turner
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Disclaimer: I’m not paid for the links or guidance. I could be wrong.