FAQ

Frequently Asked Questions

Frequently Asked Questions

Frequently Asked Questions

A roboadvisor (roboadviser) is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. This reduces costs and emotional errors whilst trading investment and retirement accounts on auto-pilot.

Why spend all your spare time trading stocks? Hours of trading may be unsuitable and you may have to stay up long hours trading to achieve the desired result. Our computer algorithms never sleep and trade on your behalf without the interference of human emotion. This helps eliminate human trading errors and emotional trading mistakes and allows you to concentrate on your business or leisure time.

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index.

Choosing where to invest your money is a difficult decision and will depend on many factors, including your overall investment objectives, risk profile and the amount of time you have to invest. It's therefore best to seek the advice of a qualified financial adviser who can help define your personal situation and identify the appropriate asset allocation.

The Money Pouch currently supports taxable investment accounts including individual, joint and trust accounts. We also support offshore QROPS and QNUPS pension trusts for British expats and offshore international retirement accounts for Americans living abroad. We also have trusts for Europeans, Australians, South Africans and many nationalities to reduce your tax burden and improve inheritance planning. Please contact us for more information.

Any national who is 18 years of age or over may open a Money Pouch account, except US residents. We only accept Americans who are permanently resident outside the USA. We do not accept green card holders or anyone resident in the USA. We do not accept anyone resident in the UK or Hong Kong or India. We do except British, American, Indian and HK expats who are resident outside of these countries. 

Anyone else worldwide can open up an account as long as you are not a resident in a black listed country such as North Korea or Nigeria. You can see a list of the available countries here.

Our account minimum is $10,000 which entitles you to invest in a diversified portfolio of low cost index funds (ETF's) which are rebalanced monthly automatically on your behalf by our trading algorithms.

Your assets are held in a brokerage account that The Money Pouch creates for you with Interactive Brokers. Interactive Brokers is a global brokerage firm based in the USA with equity capital in excess of $4.8bn. Interactive Brokers has the necessary technology expertise and security systems to support our investment approach. Your investments are held in a custody account opened in your name and secured with two-factor authentication. As both knowledge of your username/password and physical possession of a security device are required to login to your account, participation in the Secure Login System virtually eliminates the possibility of anyone other than you accessing your account. 

Yes, we encourage transfers from other brokerage accounts free of charge. We are able to transfer an outside brokerage account in its entirety and then it will be reinvested into your designated risk orientated portfolio. For retirement accounts which are transferable, we are then able to sell your transferred assets and invest you in the appropriate investment portfolio based on your risk preference.

We highly recommend that you sell the following types of investments before you transfer your account to The Money Pouch because we are not able to transfer them:

  • Bonds
  • Penny Stocks
  • Annuities
  • Options
  • Futures
  • Mutual Funds (including index funds)
  • Other Exotic investments

We make use of both leveraged ETFs (max 3x) and Interactive Brokers' Reg T Portfolio Margin Account for the best investment returns to risk. We only risk 40% of the amount of money you invest at any time in any account. Each account is leveraged at 4:1. In other words, your account will be leveraged in total at 1.6 times your current balance. So, for example, if you invest $100,000, we only use $40,000 which is leveraged at 4:1, so 1.6 times leverage or $160,000 is traded. This is why we call it "soft leverage". We feel this is one of the least risky ways to trade your account. If you have a low-risk tolerance and you're worried that your account will fall by more than 20% within any given annual period, we highly recommend investing in our conservative strategy.  

 

Whilst we do not accept U.S. residents, we strive to comply with U.S. SEC regulations for all of our clients. This includes important disclosures to clients about our fees, business model, anti-money laundering, anti-terrorist financing and cybersecurity, which we take very seriously. On this site, under "Investment Strategies," you can find:

  • A statement that an algorithm is used to manage individual client accounts
  • A description of the algorithmic functions used to manage client accounts
  • A description of the assumptions and limitations of the algorithm used to manage client accounts
  • A description of the particular risks inherent in the use of an algorithm to manage client accounts
  • A description of any circumstances that might cause the robo-adviser to override the algorithm used to manage client accounts
  • A description of any involvement by a third party in the development, management, or ownership of the algorithm used to manage client accounts, including an explanation of any conflicts of interest such an arrangement may create
  • An explanation of any fees the client will be charged directly by the robo-adviser, and of any other costs that the client may bear either directly or indirectly
  • An explanation of the degree of human involvement in the oversight and management of individual client accounts - in this respect, we always have a human overseeing all accounts and making sure the algos are functioning and connected to the servers. If we find better, more intuitive algorithms that we believe may do the task better, than clients will be informed via the "push notifications" in our Android & iOS apps. We also have a mechanism to come completely out of the markets and sit in cash if markets drop 10% in a short period of time. This adds to client safety and we will also make sure they are suitably informed via the apps.
  • A description of how the robo-adviser uses the information gathered from a client to generate a recommended portfolio and any limitations - you can see the limitations under the "risk questionnaire". All client data is kept confidential, private and is never redistributed or shared with third parties other than Interactive Brokers.
  • An explanation of how and when a client should update information he or she has provided to the robo-adviser - clients should update their information if their circumstances change, e.g. change address, change jobs, become widowed, divorced, have children, etc.

Any financial advice is given by our partner firms and we don't take this task lightly. Partners are informed to obey SEC's requests below.

Provision of Suitable Advice

An investment adviser’s fiduciary duty includes an obligation to act in the best interests of its clients and to provide only suitable investment advice. Consistent with these obligations, an investment adviser must make a reasonable determination that the investment advice provided is suitable for the client based on the client’s financial situation and investment objectives.

You can read more about the SEC's guidance for roboadvisors here. You can also read the SEC's investor bulletin for roboadvisors. Which is a useful guide if you are not familiar with roboadvisors and their function.