Introduction to StashAway - Robo-Advisor/Automated Investing

What are Robo-Advisors?
They are a result of technology disrupting the existing market. An example would be Uber/Grab disrupting the taxi industry, leaving taxi go unhired and ComfortDelGro share price to fall (near 52 week low). They allow the general public/retail investors to diversify and manage their portfolio according to one's risk level. Such services were only available to the wealthy in the past. A traditional financial advisor will be "You want to invest $100 per month?! Dun waste my time. I earn more than $100 per hour!". For the proper definition/better explanation, read this - Robo-Advisor.

This concept is not new and has been in the United States for many years. One of the biggest robo-advisor, Betterment has an AUM (Assets Under Management) of US$9 billion! Being a regular IT guy who is into investing, KPO was always looking at envy and wondering why there isn't one in Singapore. So when the news came that Singapore will finally be having one, I immediately signed up for it and was on the waitlist for months (both StashAway and Smartly).

Last week, I saw Finance Smiths blogged about setting up his wife account and I was wondering when will I get the invite. Today, when I was checking my email, turns out it went into my Junk folder! OMG! I was actually invited on the 11th July! Check your "Junk" folder if you are on the waitlist too!

I moved it out of my Junk folder and proceed to set up an account. After answering a few questions, I was then asked to select my first goal.

There are 4 goals to choose from:
1. Plan for retirement
2. Buy a home
3. Pay for your child's education
4. General investing

I have yet to select one properly because I plan to discuss this with CZM and see if we should automate the investment component of KPO Fund using StashAway. You can read "Managing Finances As A Couple" to find out more about KPO Fund. However, I can already imagine how CZM will behave. Whenever I show her investment/finance related article or have any money related discussion, she will lie on the bed and pretend she is falling asleep. lol.

I was playing with all 4 goals and found the "General Investing" goal to be pretty interesting. One can choose from 28 different risk levels! You read that right, there are 28 levels! You will definitely be able to find one that suits you or maybe not. Personally, I feel that this is slightly overkilled. A regular investor would not know the difference among those asset type and which would be more suitable to them. I feel that people will generally choose these risk levels - 1, 14/15 or 28.

Risk Level 1 - Conservative

Risk Level 28 - Very Aggressive

There is also a forecast* for the growth of the portfolio based on the risk level selected. The small prints at the bottom left corner states the following:

• Shaded Area: Range of results that will be achieved with a 90% probability
• StashAway Estimate: Based on historic performance there is a 50% probability that you will reach this goal or exceed it with this investment plan

Very Aggressive Forecast at the end of 30 Years

I always find it entertaining when I see a 50% probability prediction. That is like 废话 right? KPO estimate that there is a 50% chance Netlink Trust will drop below IPO price by end of the week. Wait a minute, already dropped below?! lol. On the bright side, there is a 90% chance you will be able to beat inflation :)

Once you have selected your goal, you will need to setup your account by providing various personal information, etc.

Robo-advisor charges differently as compared to regular investment. Instead of charging commission, they charge an annual fee on a monthly basis. The bigger your investment, the lesser the annual fee rate. You can refer to here for their pricing structure. Comparing it against Smartly, StashAway has a lower fee. On a side note, StashAway sounds cooler too, as though KPO has hidden a lot of money as compared to Smartly. Smartly sounds like a tuition centre I should send my children to in the future. Just kidding, I will most probably stick with StashAway because it has a lower annual fee.

StashAway - 0.2% to 0.8%

Smartly - 0.5% to 1.0%

What I like about it is that the robo/algorithm will rebalance your portfolio on a daily basis based on your risk level. Rebalancing of a portfolio is both time-consuming and expensive (commission) if one were to do it himself. Furthermore, StashAway has the concept of fractional shares which means that every single cent is being invested (make all your money work for you).

The thing which I dislike is there will be foreign exchange risk because your money will first be converted to USD. However, this is necessary as all investments are based on low-cost US ETF. Not to mention that the US also has a 30% withholding tax on dividends. On the bright side, dividends will automatically be reinvested (not an issue since we can get fractional shares).

Last but not least, one may wonder how safe is it to leave my money with them or a robot. lol. The answer is very safe since they have obtained a license (Capital Market Services License) and will be regulated by MAS (Monetary Authority of Singapore).

I found the below information on MASNET. They are legit. If the contact number +65 6248 0889 listed on StashAway doesn't work, try calling the mobile number below? Maybe the CEO will attend to you personally. lol.

More questions? Read their very comprehensive FAQ here.

You can read the following articles to understand more about the benefits of a robo-advisor:
- Finance Smiths: Why Do We Invest With Robo-Advisors
- FinTechNews: Awareness And Consideration Of Robo-Advisors In Singapore

Shall update you guys again once I discuss with CZM. Thanks for reading!

StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link

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