Wealth Management

You asked, we answered: Questions & answers from our first webinar

We were thrilled to see so many of you engage in our first webinar of the series and raise some very interesting and excellent questions. We ran out of time to answer these live so we have answered these for you here - we hope you find them useful!

You asked, we answered: Questions & answers from our first webinar

Please note that the following questions were raised during the webinar session hosted with Pretiosum Ventures on Monday 8th June 2020 and have been answered for reference purposes however this must not be taken as advice.


The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested. This may be partly the result of exchange rate fluctuations in investments which have an exposure to foreign currencies.


You should be aware that past performance is no guarantee of future performance.



Question 1.

Are there any courses you’d recommend to learn more about the different investment options?

You can find some useful resources here to give you some guidance on this.

Hope that helps!


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Question 2.

As an investment advisor, how do you make your own investment Qiaojia?


I practice what I preach!

Around 20% of my money is in real estate, and 80% in financial market. Out of the 80%, 90% is managed by someone else to generate stable return, and 10% is my DIY portfolio where I try some higher risk ideas and keep my fingers on the pulse of the market.


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Question 3.

What are the calculations for these (financial) vitals?


The Financial Planning section of our online platform that we are currently building will be able to show you all of this information and will take the pain out of trying to calculate this yourself.


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Question 4.

How can I access this tool?

You can sign up for free and utilise our platform via this link:
https://app.rosecut.com/signup.html


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Question 5.

When should we save and when should we invest?


Yesterday!

If not, today. Your financial future starts from today. Build your personal wealth balance sheet with us, and start investing tomorrow.


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Question 6.

As you mentioned the use of AI in your approach, how much client data would you say would be sufficient for machine learning to be accurate and meaningful?



There is not a direct correlation between the amount of data that a client inputs onto the platform and sufficient machine learning, but we need enough to cover the main pillars of our algorithm: Income, Expenditure, Assets, Liabilities and Goals.

Of course, with more data, our platform can improve its recommendations and find even more optimisation opportunities, but this additional information doesn’t need to be provided straightaway at the beginning of the digital journey.


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Question 7.

Will Rosecut provide investment advice only or will it help to invest?

Rosecut offers regulated advice suitable to your individual circumstances. We offer a free financial planning tool and held provide a financial strategy that supports your different life stages.


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Question 8.

How do you differentiate from other digital wealth advisors that are in the market?


We are not a digital wealth manager, we are your financial strategist, and will understand your needs, and build a plan for you to get to the future you want.


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Question 9.

How does Rosecut navigate its way through all the current volatility in the market?


There will always be both volatile times and benign times in the market. Dealing with volatility is part of our job. We will find out the suitable risk level your investments should be on, and the portfolio manager will allocate the cash based on our research and views, in “risk on” or “risk off” mode for example.


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Question 10.

How much human interaction is there in the investment decisions, are you closer to a Nutmeg or a Hargreaves Lansdown?



We are NOT like Nutmeg or Hargreaves Lansdown. Typically Nutmeg doesn’t provide you with financial advice, and Hargreaves Lansdown is a DIY online trading platform. You need to choose single funds and stocks to build your own portfolio.

We will look at your circumstances, wishes and constraints, and provide you with regulated advice and an investment strategy suitable to your individual circumstances, taking the guess work out of it.


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Question 11.

What is the minimum amount required for opening a Rosecut account?


Everyone is welcome to use the personal wealth balance sheet and lifetime cash flow projection, and iterate for 100 times, for free. For us to implement your investments, GBP (£)50,000, or equivalent in other currencies, is the minimum amount required for opening a Rosecut account.


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Question 12.

The wealth balance sheet looks very interesting. How do you ensure it shows real-time information?

I currently store asset values in a spreadsheet and update it monthly. Do you use open banking or similar to do this?


Yes we will. Open banking will make it easier to track real time value. But also importantly, the wealth balance sheet is built in a professional manner to put the right items into the right category, so you get an accurate, and “textbook” definition of your net worth.


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Question 13.

What type of assets can be considered as effective diversifiers today, when core government bond yields being so low whilst gold price surging record high?


Knowing what (investment idea) to buy is different from knowing when to buy, and also different from knowing which instrument to buy.

Yes,  gold price is at record high and we would not suggest people to rush into it. Government bond yield is very low, 10-year Gilt is at 0.25% for example. But the point of diversifiers is not to achieve a high return; it helps to bring the risk level down, as part of the overall allocation.

Cash is the simplest diversifier but as said, how much cash to hold should be carefully considered, for both emergency cash and diversification purpose. For example, Rosecut portfolio can hold anything between 0 to 25% of the portfolio as “agile capital” to diversify and be opportunistic with the markets.

Alternatively, passion investing into wine, arts, jewelleries can be an effective diversifier but one needs to bear in mind the illiquidity risk and domain knowledge is required. Please also note that these are unregulated investment types so don't have the protection afforded to regulated products and investments.


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Question 14.

What should be the size of Emergency Fund as a % of total assets?



Emergency Fund should not be a percentage of your assets, it should be multiple of your monthly spending, 3, 6 or even 12 months. Two people can have the same net worth, say GBP (£)1m, but one spends GBP (£)60k a year, and the other spends GBP (£)500k. If both want to keep 6 months spending as emergency fund, the former needs GBP (£)30k and the latter may require GBP (£)250k in this case.


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Question 15.

Do you manage existing SIPP portfolios?

Yes, we will be able to, once we set up SIPP accounts on our platform. It is on our product roadmap and will take another 6 months.

Remember, we can now offer our clients Individual Savings Accounts (ISAs) on our platform!


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Question 16.

How do you think about dollar-cost averaging vs. trying to time the market during a crisis like today?


Very good question.

Dollar cost averaging in general is a good concept to get people to save and invest consistently, so they can build up their assets over time.

However, Coutts has done a study based on around 50 years of client data, and found that investing your cash in one go, generates marginally better return than investing it in a few tranches. Surprising huh?

Timing the market in general is not a good idea, unless you have some framework to base your decision on. Even that it is very hard; professional investors get it wrong all the time.


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Question 17.

How are you different from Financial Advisors? There is a lot of advice available in the market. What's your edge?


We are very different from financial advisors, for 3 key reasons:

1) We don’t charge you thousands of pounds up front. Our platform is free to use and gives you valuable insights into your personal finances.

2) We provide impartial advice, meaning, we don’t take any marketing fee/wrapper fee/revenue sharing from any investment providers.

3) We build our investment products in-house and have far better control and much less fee charged than the typical investment product financial advisors would recommend.

You should be aware that past performance is no guarantee of future performance.


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Question 18.

Do you only help with paper/commodity asset investments? Or holistic e.g. real estate (rental income) too?


We currently offer discretionary portfolios to our clients we the option to hold up to 25% in execution only themes, which are expressed through the use of ETFs. We also do have partnerships with real estate and alternative investment providers so please ask us for more information.


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Question 19.

Long-term, passive, public market investments (robo-advisors / ETFs) have been gaining a lot in popularity lately, and understandably so given their benefits.

What would you say are the most underrated investment options for other asset classes (real estate, currency, direct equity, etc.)?


Good question.

My answer would be redirecting your time from learning the grip of trading to building your overall financial strategy – this is the biggest gap in the markets and the reason why we built Rosecut.

Learning how to buy directly ETFs vs. real estate, currency, direct equity is like learning how to grow cotton/linen/wool in order to find clothes suitable to you, in 21 century you just need to figure out which brand and which cut suits your body and purpose!


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Question 20.

What is the best ratio between fixed asset like properties and cash investment in the wealth management?


Another good question!

Typically private banks suggest 20% allocation (40% maximum) to fixed assets to avoid liquidity squeeze. We can go deeper on this in a Rosecut article so watch this space!


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Question 21.

In your case study, if I had £1000 spare and decided to take the two ETFS can this be done through your platform?


Sorry not at this stage. There are plenty of fast and cheap online brokers around – I would recommend taking a look at their reviews and pick one that you like, and just buy the 2 ETFs and resist the temptations of trading!


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Question 22.

Why shouldn’t I just put everything (after emergency cash) in a cheap multi-asset fund that handles rebalancing etc. (Vanguard LifeStrategy / Blackrock MyMap…) and forget about it?


This is one way of doing it and you would pay a cheaper fee to them compared to other providers. However they are more suitable for people who don’t need help with their overall financial strategy and are happy with more of a market tracker.

Rosecut on the other hand will offer regulated advice, develop a financial strategy and try to generate superior returns by actively managing the investments for you.

You should be aware that past performance is no guarantee of future performance.


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Question 23.

For those wanting to invest GBP (£)1,000, you mentioned a global equity ETF and a short dated bond ETF. How and where can one invest in them?

See the answer to question 21 above.


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Question 24.

What is your annual fee?


1% + VAT all inclusive. By ‘all inclusive’ we mean custody fee, transaction costs, management fee and even product costs are already included. Frankly we charge 50-60% less than the private banks who charge a 2-3% cost.


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Question 25.

I’m in my first job, less than one year in, therefore don’t have a lot in savings yet. I’m already building up my emergency fund, but also want to start investing.

Given the crisis now, do you think it’s a good time to start, or is holding my cash in my savings account actually a bad idea, since you mentioned the zero rate environment? What would be your biggest advice on this? How much (% of savings) would be a safe amount to start investing with?



Well done on building up the emergency fund and having the awareness to invest! There are a couple of points to consider here:

1) Investing is never “safe”, you have a risk of losing your capital, partially or even all. But you have a chance to make profit and grow your assets also.

2) If you don’t invest, your cash is gradually and surely losing value in terms of purchase power, 2-5% a year for the past 10 years.

3) How much cash to allocate for the first try? Some people start with £100, some others start with much more. I would encourage you to ask yourself to find this figure: if this amount of money disappears tomorrow, would it impact my life fundamentally? Start with the figure that you answer “no” to.


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Question 26.

If I am saving money for a down-payment on my first property in London I am planning to buy in 1-2 years (which I am going to live in), what investment options do I have?


Not much, perhaps a Cash ISA. Typically investing requires minimum 3 years of time horizon. The key point here is that you will really need to buy the property within 1-2 years though, otherwise this can go on forever and you lose the value of purchasing power, AND miss out the potential return for the years between.

For example, if you had put this cash into investing in 2016, at Rosecut medium risk portfolio, you will be looking at 30-40% gain on your capital.


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Question 27.

Is there a progression of asset classes you see or would recommend?


Too big a topic to be addressed in Q&A.

In essence, ETF is one of the best inventions in recent years to;

1) lower the barrier to invest,

2) lower the burden of diversification,

3) increased accesses to different asset classes and regions.


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Question 28.

I make co-investments with my wife – does it make sense to purchase these assets under a company that we co-own e.g. for tax benefits?


For this you will need to take individual tax advice and highly depends on your personal plan and wishes.

Tax benefits may vary as a result of statutory charges and their value will depend on individual circumstances. Specific risks associated with particular investments are detailed on this website and in our printed literature.


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Question 29.

I want to sign up - how do I get started?



We are delighted you want to become a Rosecut client!

You can sign up for free via this link https://app.rosecut.com/signup.html or download our app on either Apple iOS or Android on Google Play and start your journey with us today.

Try to complete as much as the online profile as you can and bear in mind;

The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested. This may be partly the result of exchange rate fluctuations in investments which have an exposure to foreign currencies.

You should be aware that past performance is no guarantee of future performance.


Missed the webinar itself? You can watch the catch-up video here - enjoy!