Through automated risk calibration, DBS Retirement digiPortfolio optimises one's retirement runway for growth, and provides stability near retirement.
The solution will enable many young investors to maximise the benefit of having a longer time horizon to achieve greater capital gains through compounding returns
Pilot launch received strong response; younger customers make up half of total investors, of which 70% also committed to making recurring top-ups
Launched as part of the bank's holistic retirement proposition aimed at helping all Singaporeans plan and retire well, DBS Retirement digiPortfolio is premised on the concept that investors should only take on risk appropriate to their life stage (defined as Early Career, Mid-life, and Retirement). It plugs a long-standing gap in the market by enabling investors to take more risk earlier and moderate their risk when they approach retirement. Customers can better map out and plan for their long-term needs while staying disciplined to invest and accumulate wealth when they are younger. This gives them greater peace of mind during their golden years.
A pilot programme, progressively rolled out to select customers since late last year, has drawn strong interest. DBS Retirement digiPortfolio proved to be highly effective in motivating them to start planning for their retirement, with nearly half of the investors made up of younger customers aged 40 and below. 70% of them also opted to make recurring top-ups to their portfolios, which signalled that young investors are willing to make smaller but regular investments that will contribute meaningfully to their retirement nest egg when compounded over the years.
Contrary to popular belief, retirement planning should not stop at the point of one's retirement. Even as investors start to make withdrawals from their DBS Retirement digiPortfolio, it will continue to be professionally managed by the DBS and JPMAM investment teams. Investors will be able to automate these withdrawals and be presented with a view of the longevity of these payouts, as part of its market-first proposition, later this year. More importantly, they will be able to see how these payouts contribute towards their broader retirement plan, which will comprise various other sources of passive income, such as CPF Life, traditional annuities, and endowment plans.
How it works
For a customer aged 30, the portfolio would focus on leveraging the benefit of a longer investment horizon to achieve greater capital appreciation by allocating greater exposure to equities (65%) versus fixed income (32%) and cash (3%). With the passing of time, the portfolio will gradually de-risk from this skew, to hold more in fixed income instead. When the customer finally nears his or her pre-determined retirement age of 65 (as an example, since age is customisable), the portfolio would have reduced equity exposure (15%) and a heavier weight towards fixed income (82%), which provides more stability and cushions the investment against market volatility.
An illustrated example of how an investor's asset allocation in Retirement digiPortfolio can change through the years. Note that actual portfolio allocation is based on an investor's indicative years to retirement.
Prior to DBS Retirement digiPortfolio, investors looking to invest in such a manner would incur frequent transaction or switching costs, as they transition from one portfolio mix to the next in preparation for retirement. DBS Retirement digiPortfolio investors pay only a flat 0.75% annual management fee, which allows them to benefit from a fully automated experience with the glidepath strategy and enjoy other features, such as making recurring top ups and withdrawals at any time. A portfolio can be created with a minimum one-time
The portfolio, which is professionally managed by the DBS Chief Investment Office and JPMAM, is an extension of the bank's years-long effort to lower barriers of entry to investing and democratise retail investors' access to wealth management services.
'DBS Retirement digiPortfolio is designed with careful risk calibration over decades in mind. This effectively breaks down big hurdles for customers who want to plan for retirement, yet find it too daunting. It also serves to remove some of the inertia we hear around retirement planning, by making it not only more accessible to all but also more affordable to start with,' said
'We are very heartened by our customers' positive response to the pilot, and especially by the fact that 70% of them have committed to making recurring top-ups to their portfolios. It affirms our belief that we are on the right track in getting our customers interested in planning for the longer term. We look forward to helping more of our younger salaried customers take advantage of their longer retirement runway by not only starting to invest now, but also adopting a consistent, disciplined approach to investing that prioritises time in the market, rather than timing the market,' added Ling.
Customers can sign up for the DBS Retirement digiPortfolio conveniently via DBS/POSB digibank. For more information on DBS Retirement digiPortfolio, please visit here or here.
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