XSpot Wealth - Frequently Asked Questions

It is important to answer every question. If you do not see the question you had in mind here please reach out to our colleagues in the chat and ask. Or better: Book a free consultation appoinment and our specialists can explain everything in a live meeting or conference call.

General

Junior

Safety FAQ

Is my money safe with you? What happens if XSpot goes out of business?

While we are here to stay for good, we are always happy to discuss the most important concerns for our clients. XSpot is an EU regulated MIFID II compliant investment company following stringent regulatory and monitoring guidelines and both internal & external audits. Having said that our clients’ money is always staying segregated (separate & never mixed) from company’s assets. We are also a member of the Cypriot Compensation Fund.

When clients investing in our portfolios, we are holding securities only from major stock exchanges on their behalf with prominent custodians. So, since those securities are held under our client’s names in an adverse scenario for XSpot, clients can just request their securities to be moved to a different custodian.

Is there a chance to lose part of my capital when investing?

While you cannot lose all your invested capital as we mainly invest in ETFs from major stock exchanges mainly holding stocks, government and corporate bonds, commodities and real estate based on your profile, you have to be aware that depending on the investment profile you have chosen, you might see some bumps along the way. That’s why all our portfolios come with a planned investment horizon.

In XSpot we will be always transparent with you. Each investment profile has a measured 1-year VaR95 (Value-At-Risk with 95% confidence level). This is the maximum drop your portfolio has experienced in the last 5 years so it gives us a pretty good chance predicting that will stay within these levels. Every portfolio will have a VaR95 metric which means that there are 95% chances your portfolio will not lose more.

Example: A client chooses to invest his EUR 50,000 in the High Risk portfolio for the next 5 years which has yearly expected* investment income of 7.0% in order EUR 17,500 euros before fees in the form of dividends and might also benefit from further upside price growth. For this portfolio our managers have measured a VaR95 of 12.96% which means that there are 95% chances the portfolio will never lose more than 12.96% or EUR 6,480 in any given year. VaR95 means there are still 5% chances your portfolio can drop more than 12.96%

*expected means the predicted sum of dividends from the securities invested for the year ahead, as measured from prominent sources i.e Bloomberg Terminal.

Where do you keep my investments?

Your investments are always kept under your name with (Tier I) Banks regarding our custodians. Our portfolios are always invested using ETFs which are then kept in the custody of major A- credit rating banks with stable outlook. In a situation where XSpot goes for administration, you will be contacted by the appointed administrator to transfer the titles under your name in any custodian you choose.

Why ETFs and not Mutual funds?

It’s true that ETFs and Mutual Funds have a lot in common. Under both types of investment one can enjoy a great amount of diversification using a blend of many different assets both in sector & geographical level.

There are some important differences though, which makes our professional team use only ETFs for all our portfolios:

Liquidity: ETFs are listed in global stock exchanges and trade like stocks meaning that we can enter or exit a trade when the market is open within seconds using our terminals. While Mutual Funds on the other hand settle in T+2 or T+3 sometimes, meaning that when someone decides to exit the investment, he will have to wait another 2 or 3 business days. This is increasing the risks of a portfolio dramatically in a volatile market.

Low costs: Mutual funds tend to have very high management fees like 1-2%, unlike the ETFs we choose averaging 0.10%-0.20% management fees. For a EUR100,000 portfolio it is an average difference of 1.35% or EUR1,350 per year.

Transparency: Because ETFs are listed securities, they must report their earnings daily unlike Mutual Funds.

Tax Advantages: It is known that ETFs can offer some tax advantages for investors. As they are passively managed strategies, they tend to realise fewer capital gains than actively managed funds.

Flexibility: Mutual Funds normally require much higher initial investments and incur high entry and exit costs and possible lock-up periods. While on the other hand ETFs can start from as low as few hundreds, have no entry or exit fee, and no lock-up period. Complete freedom.

For the above reasons we consider ETFs to be the single most effective way of long term investing.

Why ETFs? Why not single stocks or bonds?

Global markets today are more correlated than ever. And we don’t mean geographically only but also in asset class terms. That’s why we believe that the job of traditional asset manager of hand-picking stocks & bonds with the aim to outperform global benchmarks is long gone mainly because of high costs, low diversification and lack of technology.

We believe in a new era of asset management where clients’ portfolios can diversify globally in thousands of securities with a fraction of the costs of traditional portfolios, with clients having access at their investments whenever they feel like.

Why is it important to have access in my portfolio?

It is so old fashioned not being able to monitor your funds 24/7. At XSpot you can do this even from your mobile and should you want to request to close your investments, you could have your funds back as early as next business day.

Do costs really matter when investing?

One of the most important discussions in today’s investing is cost and most importantly the TER or Total Expense Ratio for a portfolio.
TER= Total costs / / Total assets
The TER is comprised of all costs your portfolio will incur, directly or indirectly, and your asset manager is responsible to explain the potential impact these will have over the course of your investment. A TER would normally include:

Asset Management Fees
Success Fees
Execution Fees
Settlement Fees
Custody Fees
Entry Fees
Exit Fees
Minimum Account Holding fees
Statements Fees
Other hidden fees

A healthy TER is anything below 2% which lets your portfolio ‘breathe’. We know S&P500 is averaging 6% Total Returns per year for the last years. So if your asset manager/bank is charging you in total 3-4% per year, it means your portfolio is left with just 2-3% only, so no wonder why you end up with small profits after 10 years.

At XSpot we believe that a low TER will help a portfolio grow over the years better than a higher TER where the managers might still do a great job, but still the effect of high fees can ‘eat’ much from your income/growth. That’s why we don’t complicate fees & we charge what we believe is fair to offer world class services and let your portfolio grow over the years. Below you can see an example of the impact of total expenses in a portfolio of 100,000 EUR with 4 different providers after 10 years.

Assuming a EUR 100,000 portfolio invested with 4 providers, and that all managers applied only 1 rebalancing per year and there was no effective change in capital over the period of 10 years. If all providers invested in the same Growth Portfolio targeting a gross 6.50% per year, after a 10-year period with XSpot you’d make extra 33% against Traditional Manager A or 76% more than Bank B. That is a whopping EUR33,000 extra savings against Traditional Manager A or EUR74,000 against Bank B without calculating any compounding on your returns.

So now you understand why costs are so important. Those EUR 1,000 extra per month can go towards your mortgage repayment, kids college fund or even topping up your investments!
So make sure you ask your asset manager of the total costs for your investments not only in % terms but also in EUR terms and always compare to make an informed decision by projecting them 5 or 10 years forward.

How is the old rhyme? Time is money.

Once you fill the entire online application form in less than 30 minutes, our algorithms will automatically score your answers and present you with the best plan. You can then discuss the options and your needs with our specialists to build your personalised plan. All during the free consultation meeting or online.

I do not have a lot of money

You only need a minimum of EUR 5,000 to start a Smart portfolio with us diversifying in thousands of securities and you have instant access on your money all year round.

I do not need to invest. This is not for me

Many people believe that keeping their money in a bank account is the best they can do. But with inflation averaging 2% per year in EU your money will be losing value over time. In Greece for example the cumulative inflation increase over the last 10 years was around 10%, So for EUR 10,000 that’s around EUR 1000 loss in real terms assuming that your bank is not charging you any negative rates.

That is why we need a plan to put our hard earned money to work for us. From cash to extremely low risk money market products, government or corporate bonds and stocks, we have the investment plan that suits you.

I do not understand investing / It is too complicated for me

You do not need to worry about this. That is why we have all the experts managing your portfolio. We will only ask you some questions before opening the account to understand what your goals and objectives are. Then it is our job to find the best way to reach them and manage the risks arising.

I do not want to ‘lock’ my money for long

We fully understand you might need your money back anytime that’s why we are investing only in very liquid instruments like ETFs so we can liquidate your investment and process the withdrawal back to your bank account within 24 hours. This is assuming your request is given on a business day (no weekends and bank holidays)

My child is over 18. Can I still open a Junior account for my child?

Any person over 18 is considered an adult so you would not qualify for a Junior Wealth account but can open either a Smart or Private Wealth account. This can be done jointly with one or both parents.

My child will soon become 18. Is the account automatically converted?

No. We will never convert the Joint account ‘automatically’. After your child becomes 18 you would need to inform us that you want to change the main holder of the account and jointly sign with your child. By this we would be making the child (now adult) the main account holder of the account, and the parent a sub-account holder.

What Are the Documentation Requirements?

For Account Holders we need Passport/Identity Cards and Proof of Residence.

For the Child we need Birth Certificate or Passport/Identity Card

What Are the Fees on This Account?

The management fees for Junior Wealth are 0.60%. You can check all fees which can impact the investment / saving plan here. https://xspotwealth.com/en/junior-wealth/

What does Junior Wealth account Offer to Young Account Holders?

In simple words it gives parents and other members of the family the chance to save money for their children and secure a better future for them. Parents can make the best investment for their children by opening a Junior Wealth account. Let us give you an example: 50,000 euros is considered a well respective amount for the beginning of your child’s future studies. If you start a saving plan for your child with 10,000 euros today adding 100 euros per month in a Junior Wealth Growth plan, under the worst scenario you are predicted to have more than 55,000 euros in 15 years from now.

What is the minimum initial deposit amount?

The minimum initial amount is 1000 €

Who can deposit money on my Junior Wealth account and how can she/he do that?

Parents or guardians and up to 2^nd degree relatives. So apart from parents; uncles, aunts, grandparents, godfather, godmother are most welcomed to add money in the saving plan of the kid.

Can a Parent Use the Money in a Child’s Savings Account?

Any parent listed as the custodian/guardian on a Junior Wealth account can make a withdrawal and use the money as he/she wish; however, the money should be used in a way that benefits the child.

Can I withdraw money from the account?

For the benefit of the savings account, we discourage small withdrawals, however any of our clients can close their account at any time and request the full amount back to their bank account.

Can minors access their saving account before turning 18?

Minors cannot hold savings accounts in their own names. A minor can, however, open an account, managed by an adult parent/guardian, until the minor becomes 18. This is the idea behind Junior Wealth accounts. The adult may withdraw funds from the account, but the proceeds must be used for the minor's exclusive benefit.

Do you offer ‘standing instructions’ facility to debit money from parents’ bank account?

Sure, we accept top-ups in the savings plan in any amount and any time you wish. You would have to set up a standing order from your bank to one of the banks we are collaborating with.

How do I transfer money from my Private Wealth account to my Junior Wealth account?

You can fund a Junior Wealth account in many ways. Send funds from your bank account or close a part of your investment in a Private Wealth or Smart Wealth account and transfer to a Junior account internally.