How can you make money by investing with Smartly?

In the previous part, we shared how your portfolio was put together and allocated based on your risk score. This leads us to the next question – How can you invest in the allocated portfolio?

The Transfer

Unlike e-commerce which allows you to purchase or make recurring payment via credit or debit card, most robo advisors only allow investing via bank transfer. This is due to several reasons.

Firstly, if you use a credit or debit card to invest, there is a fixed fee and a percentage of processing fee for each transaction (E.g. For every $1,000 invested, there is an additional $34.50 processing fee – The pricing is based on Stripe.)

Rather than passing on the cost to you, we have decided to use bank transfer only. This allows you to have unlimited deposits and withdrawals without any additional charges.

Secondly, bank transfer allows us to validate your particulars. Deposits and withdrawals can only be made directly from and to your bank account. It prevents people from impersonating you and using Smartly to invest in criminal activity such as money laundering or terrorist financial support.

In the near future, we’ll be implementing PayNow – which allows you to invest on-the-go.

What happens to your money?

After you transferred money to your investment goal/portfolio, we will purchase the ETFs based on your allocated portfolio.

For example, if you have a risk score of 10 and you decide to invest $1,000 in your allocated portfolio. We would use $100 (10% of your investment) to purchase VTI ETF. Out of the $100 you invested in VTI, you own about $2.91 worth of Apple stocks.


The ETFs which you have invested will be held via Saxo Capital’s custodian – HSBC. We’ll utilise the ownership of the ETFs to match buy/sell orders within our ecosystem, allowing us to lower the trading expenses thus providing lower fees for our users.

(In the next part, we’ll share how it works behind the scene 😊)

How can I earn money from the investments?

Depending on your allocated portfolio, there are three different ways in which an investment can provide returns – The change in stock price, the yield of the bond and company dividend. To simplify things, here are some examples pertaining to Apple.

  1. Change in stock price

The difference in stock price represents the price movement of a stock. The price indicates what investors feel a company is worth and it does not represent the value of the company. It will increase or decrease based on the market demand.

For example, Apple stock price is trading at about $200 per stock. If Apple introduces a new iPhone with several innovative features, Apple stock price will most likely increase. It is because investors believe that the new iPhone would be popular among consumers – which may lead to higher revenue. With a higher expectation and demand for Apple stock, it will result in a higher stock price.

This is just a simplified example of how stock price can fluctuate. In reality, there are numerous factors which can affect the stock price. It includes political and economic environment, company financials and market competition.

The following is a visual of the various scenarios which you can either earn or loss depending on when you sell the stocks.

Stock Price

  1. The yield of the bond

A bond is a form of borrowing by companies or government. Individuals who invest in bonds are essentially lenders. Just like the student loan or a credit card payment, the repayment of the loan also entails periodic interest to be paid to the lenders.

If Apple decides to build a new factory to produce more products, they may need more capital to purchase the machinery. One of the methods to raise money is by issuing out bonds. Apple will decide on the coupon rate and the term of the security.

Coupon rate refers to the interest rate paid on a bond, while the term of the security refers to the duration which the loan will be repaid.

Bond ETFs hold thousands of bonds by different companies and government. At any given time, some bonds in the portfolio may be paying their coupon (repayment of the loan). As a result, bond ETFs usually make coupon payments monthly, rather than semi-annually (like most corporate and government bonds). The value of the coupon represents the returns which you can get from investing in bonds.

  1. Company dividend

Dividends are earnings that companies pass on to their shareholders. They can be in the form of cash payments, shares of stock, or other property. Mature company with stable earnings might choose to pass some of its profits on as dividend.

For example, Apple is one of the companies that pay dividends over various timeframes. Just by owning Apple Stock, you can have additional income through dividends.

Will I lose money with the investments?

When it comes to investing, there will always be risks. The stock prices may decrease due to an economic downturn, which may lead to a decrease in your portfolio.

The decline in portfolio value is just paper loss – an unrealised capital loss in investment. You will only lose money when the investment position is closed (when you sell your investments at a price lower than what you brought for).

Like everything in life, there is always a cycle. Same goes for the economy, where there is always a systemic rise and fall. To learn more about the economic cycle, you can check out this video by Ray Dalio.

Rather than withdrawing your investments during an economic downturn, we encourage our users to take a long-term approach. A reasonable estimate for the investing duration is around a market cycle between a rising market and a downturn – which is about 6-7 years.

That is all for this part of the series 😊.

We hope that this provides you with a better understanding of how you can earn with Smartly. In the next part, we’ll share with you what happens behind the scene – What we do and how we manage your funds.

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