What is automated investing and how does it work?

Thrive Robo-1

It’s not entirely what it sounds like – a robot out of the Jetsons, hoverboarding around the stock exchange floor plugging in charts and printing out portfolios from a hatch somewhere. That would be kind of cool… but when it comes to automated investing you might be relieved to know that there’s a lot more science to it than that. 

What is automated advice?

Think of automated investing as financial advice gone digital. Using software and algorithms, this system of creating investment portfolios assesses all of the information you provide, including a risk analysis, and provides you with a portfolio suited to you and your goals.

What are the steps for investing using EasyAdvisor?

As for cool robots, that's where the name MrPHY comes from. It's a little homage to the main character in RoboCop - a man/machine hybrid who's pretty determined to achieve what he sets out to do. To use a goal-based automated advisor like MrPHY, powered by EasyAdvisor, you would:

  • Visit www.mrphy.co.za
  • If you are an existing EasyEquities user, you’d be able to log in with your credentials. If you’re new, you’d need to register an account.
  • MrPHY will then ask you about your goals, risk appetite and financial profile before proposing a recommended investment plan for your selected goals.
  • Based on this recommendation, you’re able to tweak different variables like your contribution amount, or your risk level until you hit the sweet spot – something that feels just right for you.
  • MrPHY can take it from here - managing your portfolio, re-investing dividends and rebalancing your investments.

How much does it cost?

One of the perks about using EasyAdvisor is that you save on a lot of fees which would normally go to a human financial advisor. And MrPHY is a reasonable guy, which is why his fees are low and transparent:

  • Annual advice fee of 0.3%
  • Average investment fund costs of between 0.75% and 1% per annum, paid to fund providers
  • Average execution costs of between 0.18% and 0.35% per annum

Depending on the portfolio you are allocated, this works out to around 1.5% on the value of your investment, each year.

How are the portfolios put together?

Based on all of the information you plug in to the platform when you are in the process of setting up your goals, you will be matched with portfolios which are powered by Emperor Asset Management. You’ll be able to have full sight of what’s inside of each portfolio and how it has been weighted. You’ll also be able to adjust your choice of portfolio based on risk levels and view the fact sheets of each portfolio option available.

Meet MrPHY