It is an often heard misconception that investing is rocket science — hard to understand and best left untouched.
Perhaps these retail investors had lost hard-earned savings in investments when they panicked in the last market crash or read about others who did. Paralysed by the fear of investing, some end up sitting on piles of cash which would slowly and surely be eaten away by inflation over time.
Some are motivated to take a stab at investing but are unsure where and how to start. It can be a bewildering experience when faced with a wide array of investment products, and many come with a high cost of investment and high barriers to entry.
Two years ago, Mr Gerard Lee, chief executive officer at Lion Global Investors (LGI) embarked on a journey to champion a meaningful initiative to make investing accessible and available to the masses.
Lowering the Barriers to Entry
It is a fallacy that you need to accumulate substantial wealth to invest. To some, the long-term benefit of investing is clear, but they are held back by the wrong notion that that they need to fork out large amounts of money to start investing.
To empower the man-in-the-street to take a step towards investing, LGI has launched new funds with low barriers to entry.
Recent examples include the LionGlobal All Seasons Fund (Standard) and LionGlobal All Seasons Fund (Growth), which allow investors to start investing with only $100, through the firm’s participating partners.
Investors may also choose to invest in these funds consistently through a Regular Savings Plan with a low subsequent investment amount of $100. The low entry barrier and flexibility makes it affordable for most mass retail investors to invest for the long-term and take advantage of dollar-cost averaging at the same time.
When you practise dollar-cost averaging, you are buying a fixed dollar amount of a particular investment regularly, regardless of the price. Over time, you would purchase more units when prices are low and fewer units when prices are high.
Keeping Cost Low
It is prudent to understand the impact of investment cost on our investment returns. Cost is kryptonite for investment returns, as it eats into returns over time.
On the flipside, with lower costs and fees, we will take a shorter time to recoup our investing costs which translates into potentially higher returns.
That is why LGI has worked on keeping cost low. It is especially evident for the new LionGlobal All Seasons Fund (Standard) and LionGlobal All Seasons Fund (Growth).
These funds have a low annual management fee of only 0.25 per cent per annum (p.a.), and their total expense ratios are capped at a low 0.5 per cent p.a.
Research1 has shown that the expense ratio is the most proven predictor of future fund returns.
The expense ratio expresses the sum of all operating expenses charged on an ongoing basis to the fund’s assets as a percentage of the fund’s average net asset value. They include annual management fees, trustee fees, legal fees, auditor fees and other operating expenses like custodian fees, printing and distribution fees, and amortised expenses.
The annual management fees of the underlying active funds in these LGI funds’ investment portfolios are fully rebated. This practically means that only one layer of fees is charged.
By keeping the cost of investment low for investors, LGI aims to offer a better outcome for investor returns and load-adjusted returns over time.
Making Investing Simple for the Masses
The LionGlobal All Seasons Fund is a fund of active funds and exchange-traded funds (ETFs) that comes in two portfolio options — LionGlobal All Seasons Fund (Standard) and LionGlobal All Seasons Fund (Growth).
This makes it simple for investors to choose an option that may be more suitable for their risk appetites.
Furthermore, as people become Internet natives and more self-directed when it comes to learning and exploring new things, LGI has made it simple for investors to invest in these funds online through its information portal “LGIDirect”.
Mr Lee said: “Our objective is to make global investing simple and low cost for the average person.”
It is not intellectually demanding to invest for potentially better returns. Neither is it a rich man’s privilege. Everyone should have access to high-quality investment products that have low barriers to entry and come with a low investment cost.
One such option is the newly launched LionGlobal All Seasons Fund.
To learn more about how investors can invest simply in a low-cost, globally-diversified portfolio of active funds and ETFs through the LionGlobal All Seasons Fund (Standard) and LionGlobal All Seasons Fund (Growth), visit www.lgidirect.com.sg/allseasonsfund for more details.