Stockspot: Explaining how it works

What is Stockspot and how does robo advice really work?

Stockspot is an online investment adviser and portfolio manager.

We make investing easy by building you a diversified portfolio using proven investment strategies to grow your wealth. Think Australian shares, global shares, and government bonds.

We use ETFs (exchange traded funds), which gives you access to a range of different investments with low fees.

We started in 2014 and now manage hundreds of millions of dollars for thousands of Australians. Our portfolios have a five year track record of consistent, high quality returns.

Check out our returns over 1, 3 and 5 years.

How is Stockspot different from a regular investment adviser?

We’ve developed technology and algorithms that automate many of the things a human adviser would do to manage your money. This helps us to keep our fees low.

It also gives you access to an easy to use Dashboard and App to view your investments. It’s completely online so you can say goodbye to paper statements and financial jargon.

We’re also different because we believe it’s important to keep fees low. Investing is one of the few areas in life if you pay less, you get more. We believe every dollar you save on fees is an extra dollar added to your returns. 

See our CEO speak at the ASX Investor Day discussing how Stockspot invests

What is robo advice?

You may have heard the term robo advice. It is a bit misleading as it sounds like there are robots doing the investing.

Robo-advice is the name that was given to online investment advice when it started in the US over 10 years ago. According to Statista there is now $980 billion managed by robo advisers worldwide, that’s up 80% in one year. 

The ‘robo’ bit simply means we use technology to automate many of the manual tasks a ‘human adviser’ would do. A lot of those jobs, like understanding your risk capacity and portfolio rebalancing can be done using technology. It means we can keep costs low and reduce human error.

The reality is there are experienced, smart investment advisers overseeing the portfolios. There are no robots making investments decisions (sorry!). 

How do I use Stockspot to invest? 

There are 4 basic steps to getting a Stockspot investment portfolio up and running:

Step 1 – Visit our website and tell us a bit about yourself

  • Your financial goals. Are you saving for a house, retirement, or trying to grow your wealth?
  • How long you plan to invest for (don’t worry, you can change this later)
  • A bit about your investment experience, need for regular cash and risk capacity

We use this information to work out if investing is a good strategy for you and what type of investment strategy you should consider.

Learn more: What is my investment profile and investment strategy?

Step 2 – Receive a custom investment strategy

We recommend a strategy with the right mix of growth and defensive assets to match your personal situation and goals. All of our investment strategies aim to give clients the best possibility of returns while eliminating unnecessary risk.

You complete the signup process by entering your details, completing the online ID check (which is required by law) and electronically signing your investment agreements.

Step 3 – Open your account and start investing

When you invest with Stockspot, you get your own dedicated cash account and investment account that are both in your name. This means that investments are safely owned by you.

You confirm the opening of the accounts and make your first investment by making a deposit into the cash account. When we receive your funds we’ll invest it for you. We’ll also send you an email confirming we’ve invested.

Step 4 – Top up your investments

You can easily add to your investments whenever you want. When your cash account reaches $1,000 (or $2,000 for those with portfolios over $50,000) we’ll make an investment for you.

We believe children deserve the best start possible, which is why you can invest for your kids for free with Stockspot.

Where can I see or track my investments?

Every Stockspot client gains access to their own Stockspot Dashboard.

The Dashboard is the headquarters of your Stockspot investment portfolio. This is where you can monitor your portfolio to see the performance of your investments, keep track of your investment goals and add to your investments.

You can use the Dashboard to tell us about changes in your life (ie buying home / changed investing time horizon) that may affect your investment strategy. We review your investment strategy and make relevant changes to your portfolio if needed.

You can also view your Stockspot portfolio via our iOS and Android apps. They are a quick and easy way to view your portfolio without logging into the dashboard.

How does Stockspot manage my investments?

We match you to a portfolio of investments based on your investing goals, preferences and timeframe for investing. Our five strategies range from conservative to high growth.

We use low-fee exchange traded funds (ETFs) exclusively in all of our portfolios. We believe ETFs are the best way to help you to diversify across Australian shares, international shares, bonds and gold to build wealth.

Shares are ‘growth investments’, which means they have a better chance of providing higher returns but also have more risk. Bonds and gold are ‘defensive investments’ which means they are generally less risky but have lower returns.

You need both growth and defensive investments in your portfolio to help balance out returns and market fluctuations. 

Learn more: The role of shares, bonds and gold in your portfolio

Our portfolios aim to maximise your returns and minimise risk. Our investment strategies are based on ‘Modern Portfolio Theory’. The economists who developed this theory won the Nobel Prize for Economics for their research in 1990.

Our expert team continually research and review the best investments for your portfolio and publish our regular ETF Research.

We also automatically reinvest your dividends (unless you ask us not to) and precisely rebalance your portfolio as investment markets change.

How is Stockspot different from other investment apps and robo advisers?

We provide personal investment advice based on your financial situation to help you achieve your investment goals. It means you don’t take on too much (or too little) risk in your portfolio and can help you get a better outcome. 

We thoroughly research and carefully vet hundreds of different investment options to give clients the best possible chance to make money. Our annual ETF Research is the only independent analysis of the ETF product universe and is what we base our investment decisions on.

Our portfolios have a proven 5+ year track record of delivering consistent performance with high quality returns. We manage hundreds of millions of dollars for thousands of clients. 

There’s a team of dedicated advisers who you can speak to when you have questions.

Our low fees are transparent and all inclusive. They cover all advice, account and transactional costs. We don’t sting you with extras like brokerage, set-up fees or exit costs.

We don’t pool or muddle your money with other investors. Each Stockspot client owns their portfolio individually on their own individual HIN – it’s a safer way of investing and means you can get full tax benefits from your investments.

It also gives you the ability to have more control over your choice of investments by adding investment themes.

You invest in ETFs. What are ETFs?

Instead of investing in one or two companies on the stock market, an ETF (Exchange Traded Fund) tracks the broader market or index like the top 200 Australian companies or the largest 100 companies in the world.

One way to think of an ETF is like it’s a basket that contains lots of different shares. When you invest in an ETF you invest in that basket of shares.

ETFs give you exposure to lots of different markets and assets across the world, which gives you a well-balanced portfolio. You don’t need to pick individual stocks which is risky, and you don’t need to time the market.

We build our portfolios from ETFs comprised of underlying investments in over 1,400 shares and bonds from Australia and the rest of the world. We select ETFs that complement each other to help smooth out the short-term ups and down in the market and improve your return path.

We prefer low-cost ETFs over actively managed funds because they charge lower fees and have generally delivered better returns after fees. The less fees you pay, the more returns you keep!

Learn more:

Why don’t you invest in individual shares?

Picking individual stocks is hard because so many investment professionals are already doing it. Fifty years ago it was easier to make good returns by picking stocks but it’s a lot more competitive now.

These days individual stock prices react to new information very quickly and there are few opportunities to ‘beat the market’.

That doesn’t mean share prices are always right, but it does mean that nobody knows for sure whether prices are too high or too low now. When you buy ETFs like we do, you get access to market returns at a much lower cost.

Learn more: Why you wont beat the market buying shares

Can I have more control over what I invest in?

With Stockspot Themes you can personalise your portfolio with things you care about. Interested in socially responsible shares or want more dividends in your portfolio? You can add them.

Stockspot themes gives you more control over your choice of investments but without the hassle of juggling them on your own.

Where can I find more information?

You can find more information by reading some of our other articles:

This article was originally published in November 2016 and has been republished in September 2019.

Communications & PR

Lauren is Stockspot's head of PR and communications. She helps us minimise the jargon and maximise the info that matters most to clients. She believes investing and creating financial security shouldn't be scary, difficult or only for those with a finance degree.

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