StashAway Review 2021 – Best Robo-Advisor in Singapore?
With the recent advancement in technology, new technologies are popping up all the time. One of the new disruptions are Robo-Advisors in the complicated investing world. The main tenet for using these form of investments is its simplicity. They abstract away a lot of complexities of investing and make it fuss-free as possible for their customers. After using StashAway for slightly over a month, I believe I now have enough experience with it to give my honest review of the product.
How I got started with StashAway
I was initially sceptical of these advisors as I felt that I could do my investments by myself. The main points of concern for me was the fees and lack of transparency. By using this service, I’m essentially giving away the control of what specific stocks I’m buying to the fund manager.
A couple of months ago while I was doing my tax planning, I stumbled upon the SRS scheme. As I further did my research, I found out that there weren’t many investment options available for me to use my SRS funds for. The ones that stood out to me the most were these Robo-Advisors. They were the only option which allowed me to invest in a global portfolio instead of a local one.
StashAway currently (2020) offers 2 main products: Invest and Simple. In this article, I’ll mainly talk about their Invest product.
Basket of Indices
The main difference between StashAway and a traditional mutual fund is that StashAway invests in a basket of ETFs. Instead of attempting to beat the market by picking specific stocks for their customers, they reduce the risk by following the market. As statistics have already shown, most hedge fund managers lose out to the market. These managers incur transaction fees which get passed on to their customers in the process of rebalancing the portfolio.
There are many advantages for StashAway to buy into broad-based ETFs. The most obvious ones will be diversification, low fees and low maintenance. By using StashAway’s service, you’ll be getting even more diversification as you not only buy into 1, but multiple ETFs with your money.
StashAway makes it really easy for customers to customise the risk profile. Once you’re logged in, you will be able to create multiple portfolios. For each portfolio, you can decide which StashAway Risk Index you want for that portfolio.
The StashAway Risk Index is defined as having a 1% chance that the portfolio will lose that amount in a given year. This makes sense as a higher risk portfolio consists of more equities which are seen as more volatile investments.
|StashAway Risk Index||Equities %||Bonds %|
You’ll be able to see the actual composition and the ETF once you select the Risk Index. I really like this feature as it solves the 2nd concern I had about the transparency of my investments. Upon further research, I really like the diversification StashAway provides with their portfolio allocations. Not only do they invest in riskier stocks such as China Tech, but they also hedge the risk with Gold.
StashAway mainly invest in foreign assets. Therefore if you’re an SRS investor like me, this is an absolutely perfect setup. Personally, I went ahead with the 36% risk index portfolio as I am still young and have a relatively high-risk appetite.
Fees and Charges
To every investor out there, the Fees and Charges of their investments is definitely a big consideration. After all, you pay these fees regardless of whether you gain or lose money.
StashAway implements a stack-based pricing system. Your management fee depends on the amount of money you have invested with them. The first $25,000 will get charged 0.8% fee, and any amount after will get charged its corresponding tier. For those confused, this is similar to the income tax bracket system.
|Total Investments||Annual Fee|
|0 – $25,000||0.8%|
|$25,000 – $50,000||0.7%|
|$50,000 – $100,000||0.6%|
|$100,000 – $250,000||0.5%|
|$250,000 – $500,000||0.4%|
|$500,000 – $1,000,000||0.3%|
For example, if you invest $30,000 with StashAway, your annual fee will be (0.8% x $25,000) + (0.7% x $5,000) = $235.00.
On top of this, the underlying ETFs that StashAway purchases will charge approximately 0.4% p.a. of expense ratio. This means that your investment will cost around 1.2% p.a. for the first $25,000.
Personally, I feel that these fees are too high for a Robo-Advisor. For most people investing with Robos, the management amount will not be that high and will therefore likely be slapped with the higher management fee. Of course, this fee is definitely still much lower than the fees you’ll pay if you purchase all these stocks individually.
Strategy for StashAway
After my analysis, I think that StashAway is very suitable for people looking to invest their SRS funds. Given the current options, Robos are still the only accessible way for people to invest their SRS funds in a global and diversified portfolio. I will highly recommend people to do so as it is risky just investing in Singapore stocks.
This is how I am using StashAway to invest my SRS funds.
- Top up $15,000 (limit) to my SRS funds in December every year to lower my assessable income.
- Transfer this $15,000 to StashAway Simple to earn up to 1.9% to park the money.
- Schedule an internal transfer every month of $1,250 into my 36% portfolio.
As technology improves, there will be more and more options for people to invest their money. New Fintech companies come and go almost every month. The rise of Robo-Advisors is definitely something that has made investing much more convenient for many. By allowing customers to invest their SRS money, this means that the government has also acknowledged that these Robo-Advisors are here to stay.
I really like the transparency and customisability that StashAway provides with their product. The app is really sleek and easy to use as well. I find that I’m routinely going into the app just to play around with their investment option. The entire sign up process is very quick and easy so it provides a very low barrier of entry into their product.
This is definitely a modern investment product that deserves all the praises its been receiving.
More Robo-Advisors are allowing customers to use their retirement funds to invest such as Endowus. I will definitely be making a comprehensive review of this product sometime later as it seems like their fees are lower. However, we have to take note that fees are only one part of the equation. Ultimately, the returns that we’re getting from our investments is more important.