If you’ve read my previous posts, you’d know that I’ve been investing in unit trust funds for well over a decade.
I’m glad that I started investing early-ish in my working life, but I’ve become increasingly sensitive to how much their fees (if you’re not familiar, these go up to 5.5% in initial sales charges plus up to 2.0% in annual management fees) have been eating into my investment returns regardless of whether the funds performed.
I’ve been on the look-out for more cost-efficient ways to grow my money for awhile now, so when I heard that the Singapore-headquartered StashAway was coming to town, I was excited.
I made my first deposit in November 2018 and for the most part, have been consistently dollar-cost-averaging into two separate portfolios of different risk indexes since then.
Given that I’ve been invested for almost three years now, I think this is probably a good time to check in and see how I’m doing.
But first, some basics on StashAway for context just in case you’re new to this particular robo-advisor — in which case, you’ll likely have the following questions in mind:
What is StashAway and how will it grow my money?
To put it simply, StashAway is a robo-advisor: An algorithm-based investment tool that typically divvies up your cash and puts them into buckets of global, regional, index and sector-driven exchange-traded funds (ETFs) based on your risk appetite.
So instead of investing directly into individual ETFs — which can require a huge outlay of cash, given how much weaker the ringgit is in comparison to the U.S dollar which many of these ETFs are priced in, you can buy into many ETFs in fractions or slices (versus buying the entire cake = pricey) via StashAway.
Once you deposit your cash in ringgit, StashAway converts it into U.S dollars and does all the ETF buying for you.
And as the term ‘robo-advisor’ suggests, the algorithm-driven platform relies on little to no human supervision to grow your cash, hence the significantly lower fees. Plus, this also means not having the ups and downs of human emotions (which have been known to lead to not-so-great investment decisions) in the mix.
Convenient? Check. Dollar cost averaging (DCA)-friendly: Check.
But now you’re wondering…
Is StashAway safe?
StashAway is licensed and regulated by the Securities Commission (SC) Malaysia, which means that it’s being run according to the SC’s strict rules and regulations.
Plus, all investor funds in Malaysia are held at a custodian bank (Pacific Trustees’ Citibank Berhad account), so that in the event that StashAway goes belly up, its customers’ money is kept separately and untouched from the company’s own assets.
So yes, it’s legal and safe (but not without the market risk that come with investing in stocks since ETFs are essentially baskets of stocks) to use.
How much will it cost?
The annual fees at StashAway are priced according to a tiered system, which means that the more you invest, the lower your fee rate:
And if you’re using StashAway’s cash management portfolio, StashAway Simple, it’s free, save for the underlying fund’s annual management fee:
However, be aware that the funds that StashAway invests in do charge operation fees as well, although they tend to be significantly lower than say, unit trust funds where the ratio typically ranges between 0.5%-2.5% per annum).
At StashAway, the approximate expense ratio across its subscribed funds is 0.2% per annum, while its foreign exchange fee is an 0.1% on the spot rate.
Now that we’ve got these basics out of the way, let’s get to the bits you came here for: My returns.
How am I doing?
I made my first deposit in November 2o18 and for the most part, have been dollar-cost averaging monthly (with the exception of the first few months of 2020) in addition to making a handful of lump-sum deposits when the markets were down.
I started out with two different risk indexes: 14% and 22%, but tweaked both on several occasions to arrive at my current 22% and 36% risk index portfolios:
Despite the constant short-term fluctuations (which I expected) and massive dips in March 2020 thanks to the COVID-19 outbreak and more recently, because of China’s regulatory crackdowns, both my portfolios have consistently been in the green and have grown nicely since my first deposit.
Here’s the breakdown of both:
22% Risk Index Portfolio
Time-weighted return = 18.65%
Money-weighted return = 8.33%
36% Risk Index Portfolio
Time-weighted return = 25.44%
Money-weighted return = 10.69%
If you’re wondering what the difference between time- and money-weighted returns are, here’s StashAway’s explanation of both.
These returns are pretty much in line with (if not better than) StashAway’s official performance numbers, which they’ve been tracking since each of the portfolios’ inception:
What I like about StashAway
Going into investing with StashAway, I expected affordability and ease of use (I can access the platform on my desktop and through its mobile app), and this is exactly what I got.
This was my first time investing in ETFs, which is something I’d been wanting to do for awhile (albeit indirectly).
I also like that:
- I’m able to diversify out of Malaysia without having to take care of the nitty-gritty of offshore ETF investing myself, like foreign exchange, trading fees, buying in fractions, withholding taxes (a portion of which are re-claimed and paid back to investors — something I wouldn’t be able to do on my own).
- They have a transparent, all-inclusive fee structure that costs less (percentage-wise) the more I invest. And obviously, the absence of sales, switching and withdrawal fees are a big plus.
- It’s a 100% hands-off or set-and-forget passive investment vehicle that re-optimizes my holdings for me when the economic environment changes, which means that all I have to do is make my deposit (I can also automate this if I wanted to) and focus on living my life.
- I can invest as much or little, and as frequently or infrequently as I like since there are no minimum deposit or lock-in period requirements.
- Their beautifully-designed and easy-to-navigate website and mobile app make accessing my portfolios plus their underlying assets and fund transfers super easy to do.
- They’re constantly evolving and improving. If you haven’t heard already, they recently launched their latest upgrade: Thematic Portfolios. These higher-risk portfolios give you market exposure to specific trends or ideas that have the potential to take off in the future. While the StashAway annual management fees for these portfolios are similar to their existing ones, the expense ratio runs slightly higher, at 0.52% per annum, which is still pretty darn low in my books.
If I could start my investment journey all over again, I’d absolutely go with StashAway to do away with expensive unit trust fees (note: there are robo-advisors that invest in unit trusts, like Endowus, MoneyOwl and DBS DigiPortfolio in Singapore) so I can maximize my returns.
What I don’t like about StashAway
For all its pros, there is one niggling con that I wish StashAway would fix (or should I say, eliminate): The lack of a fully customizable portfolio.
How it currently works is this: You feed the platform with as much information about your financial situation, goals and risk appetite as it needs. It then ‘designs’ your ideal portfolio by picking your recommended asset classes and allocation for you.
Yes, you can subsequently choose to have a more conservative or aggressive portfolio (I’ve done both) and now, specific, pre-determined ‘themes’ that you want to invest in with the introduction of their Thematic Portfolios, but that’s where your input ends.
Yes, this would effectively negate the whole ‘hands-off’ approach, but it would also give those of us who’ve been on the platform for awhile and want a say in how we diversify our ETF baskets a means of doing just that.
Do I plan to keep investing?
Yes, I do and I’m planning to stay invested for the next 15-20 years as a way to diversify out of Malaysia.
I may consider withdrawing the profits annually to live off once I retire, but seeing how this will disrupt the compounding effect on my funds, I may just leave the whole thing intact for a little longer before withdrawing my capital plus profits entirely once I start shifting into a more conservative investment approach.
What role does it play in my investment plans?
Right now, I’m looking at my StashAway ‘stash’ as an Employees Provident Fund (EPF) alternative.
StashAway isn’t risk-free the way EPF is, but this is a risk I’m willing to take since its returns have been beating that of EPF’s so far, and I like the fact that I have access to it (should I need to), so this is a no-brainer option for me as far as investment options go.
I’ve also started using StashAway Simple as a sinking fund and will probably continue to do so since it’s really easy to use and with a projected (but not guaranteed) return of up to 2.4% per annum, it sure beats keeping my cash in a savings account any day.
Thinking of investing in StashAway?
Sign up with my referral link to get 50% off your fees (I’ll also earn a small commission at no extra cost to you) when you invest up to RM100,000 for your first 6 months.
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THE MILLIONAIRE NEXT DOOR by Thomas J. Stanley and William D. Danko
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YOUR MONEY OR YOUR LIFE by Vicki Robin
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Disclaimer: Everything on this blog is published for informational, personal point of view and entertainment purposes only and is not a substitute for professional financial advice. Please consult a certified financial planner for advice on your own situation.