My experience with Selma: Investing for Beginners

++ Use my invitation code ad406aa26 and get CHF5000 managed for free for 12 months!++

++This is post is my opinion only. I recommend products on my blog that I use myself. I may receive a commission for links posted, which helps me finance this blog and website.++

After my divorce, I realized I needed to radically take care of my money matters. I started investing with Yova but also stumbled upon Selma and decided to try them out.

Similar to when I selected Yova as my robo-advisor, my premise to invest with Selma stemmed from still feeling like a beginner when investing for myself. I knew that ETFs would provide good exposure and diversification in theory but I wasn’t yet ready to select them myself. In addition, selecting another robo-advisor would further help me to diversify my asset allocation as Selma and Yova follow distinct investing strategies.

Since I hadn’t bought any stocks directly yet at that point, I wanted to allocate some of my cash into ETFs and Selma provided a very simple and stream-lined way of doing this. Plus, I wanted an easy and simple way to invest my money after my divorce, without much fuss or complications.

What is a robo-advisor?

A robo-advisor is a digital asset manager that uses an algorithm to ensure that each investment portfolio follows the ideal investment strategy for its owner. It generally uses a set of predetermined rules based on the investor’s risk profile and financial situation. Because they use algorithms, robo-advisors are generally cheaper than a human portfolio manager and there’s no need to constantly self-manage your portfolio or consult an advisor. I think of them as investing in auto-pilot and a great alternative to a picking and choosing your own stocks.

How does Selma work?

Selma offers two products:

• An investment account
• A 3rd pillar account

For the investment account, Selma creates a mix of investments that matches one’s current financial situation with a minimum account opening amount of CHF2000. It takes care of buying, selling and maintaining one’s investments to optimize earnings. Selma creates a personalized investor profile through a series of chat prompts with Selma, the platform’s investment bot. This profile can be updated at any time and Selma makes the necessary adjustment to your portfolio (called “your investment planet”).

Your money and investments are held by Saxo Bank in your name and backed by bank grade encryption and infrastructure. The 3rd pillar account is kept by VZ Vermögenszentrum. In addition, Selma is also regulated as an Independent Financial Advisor in Switzerland. Overall, a fairly safe place to invest in.

Invest with Selma

Selma lets you test drive via a demo account for free. You create your account with just an e-mail address, answer all the questions and receive your investment plan for your “investment planet”. Only then do you decide whether to deposit money. You can see how Selma works without spending a single franc. :)

You’ll create an investment plan through Selma’s chatbot by answering a series of questions related to your current financial situation. Selma is very informal, with lots of emojis and has a nice way of asking some personal financial questions. It guides you through the whole process — a simple user interface helps determine your investor profile.

One question that Selma asks that is particularly important is how much risk you’d be willing to take. Selma keeps your risk tolerance in mind when selecting the assets for your “investment planet”.

Further, Selma gives you an overview should be a market fall or another financial crises (worst-case scenario) and an opportunity to assuage any fears through a live chat with one of their staff members (although they are not available on the weekends but they’ll e-mail you back quickly).

This transparency fosters a sense of trust for me in Selma: it’s not always be rainbows and sunshine when you invest (in the short term) and Selma makes that clear without setting off alarm bells for the beginner investor.

Another infographic I quite liked is the one below: if I had invested 4 years earlier, my CHF3k would have nearly increased by 30%! Another incentive to start investing sooner rather than later.

At the end of the questionnaire, you’re presented with a summary which you can amend at any time and Selma gives you the recipe in which ETFs and other asset classes it will invest for you.

Note: Selma does not let you pick individual, specific stocks, however, you can select for sustainable ETFs/stocks which adhere to ESG criteria (Environmental, Social and Governance). Your performance of these products may vary as you’d be investing in different companies. Although Selma, does not charge you for switching to the sustainable investing track (or changing your investor profile), additional fees and foreign exchange fees maybe passed on to you.

Invest with a savings plan

In addition to the initial deposit, you can set up a monthly savings plan via standing order (e.g. CHF100, CHF200 etc). This amount is then gradually invested for you in ETFs. The purchased ETFs are communicated transparently in your dashboard’s log. Selma invests in distributing and accumulating ETFs — any dividends will be reinvested back into your portfolio.

You do not pay any fees for the individual savings plan transfers at Selma. However, there are annual custody fees, but these are very low. With my link here (enter code: ad406aa26), your first CHF5000.- will be managed free of charge for 12 months — a savings of CHF34 that you can use to invest instead!

Selma’s Fee Structure

Selma’s fee structure is quite transparent and easy to understand. Because it is a robo-advisor with an advanced algorithm and artificial intelligence to manage accounts, it can keep its costs quite low and passes those savings onto its clients. It’s a very affordable way to build a well-diversified portfolio for long-term investment with little effort. Selma is neither the most expensive nor the cheapest robo-advisor on the market, but offers great customer service and many tips and tricks tailored to your personal financial situation.

The fees are lowered if you also include a 3rd pillar account or have account over CHF50k. For me, this is very enticing as my current 3rd pillar provider is vastly overpriced, so I will most likely transfer my 3rd pillar to Selma.

Additional costs: TER (approx. 0.22% per year) and Swiss stamp duty (0.075–0.15% per transaction).

Selma: Pros and Cons

My experience so far with Selma has been nothing short of simple and pleasant. Its user interface is minimal and intuitive. For someone who is either a total beginner or someone who wants to get re-acquainted with investing, like me, Selma is a great start. Because it is completely automated once it is set up, I can just forget about it until I get the urge to check it. The customer service has also been top notch via their chat feature.

In addition, only having to start with CHF2000 and fairly low management rates were a big draw for me. I didn’t to commit too much money at first and knew that I wanted to gradually increase my investment amount via monthly transfers.

Use my invitation code ad406aa26 and get CHF5000 managed for free for 12 months!

++This is not financial, legal or investment advice and is not a solicitation to buy or sell products. I assume no liability for the accuracy of the information on my website, blog articles and any emails. Trading securities on the stock market is risky and you could lose your entire initial investment. I assume no liability for your decisions. I recommend products on my blog that I use myself. I may receive a commission for links posted, which helps me finance my blog and website.++