$$$ KPO and CZM $$$: Automating Capital Growth Through StashAway

Tuesday, January 23, 2018

Automating Capital Growth Through StashAway

A reader asked how does StashAway fit into our strategy of increasing passive income. The short answer is it does not!

If you look at our portfolio, you will see a few counters that are very red. Those are some of my attempts at picking growth stocks as compared to the usual REITs/dividends stocks. When growth stocks do not meet its growth expectation, expect the share price to drop significantly! Personally, I find it extremely difficult to pick value/growth stocks and the idea was reinforced in my mind when I came across another article by Thumbtack Investor - What Makes You Think You Can Win? The Case For TheTrue Value Investor – LTC Corporation & S I2I Limited. Imagine the level of effort required for one to analyze a particular company, understand its business and forecast its growth. KPO just can't do it due to 1. limited/no knowledge in each and every industry/business and 2. limited time, so we have decided to outsource it to StashAway (paying a small fee in the process) while we continue to invest in REITs/dividends stocks for passive income.

The next question is why StashAway? I will share what I wrote on Seedly's Review Platform here:

- Fractional shares: every single cent is being invested (make all your money work for you)
- Investment framework which I feel differentiate themselves from other robo-advisors (do spend some time to understand it, how the different regime would change the portfolio allocation, how is the portfolio being reoptimized/rebalance)
- Actively engaging the public (talks and monthly CIO updates article)
- Excellent customer support
- Nice and clean UI
- The convenience of a mobile application
- No minimum amount required to invest (event students can do it!)
- Cheap for a hassle free investment service that provides diversification (as compared to unit trusts/mutual funds and diversifying yourself is not going to be cost-effective unless the sum is significant)

- Limited visibility into the transactions in the UI (everything can be found in the monthly statement but that requires the user to wait a few weeks for it)
- Exchange rate (SGD deposit to USD) cannot be found in the UI or monthly statement (this can be reversed/computed from the USD cash flow in the monthly statement)

I find the cons pretty annoying as they have all the data but are not presenting them to the users. Regardless, I believe the pros outweigh the cons, hence the 5 stars review.

On a side note, I would like to share my observation (walk the talk) - I met up with the CEO of StashAway, Michele and asked if he has invested his own money. He immediately logged in and showed me his account. Not so much of a pros/cons but I thought it shows a lot :)

Of course, do not take my word for it, do check out the other 99 reviews (65 + 24 + 11 - 1) too.

$500 per month - 50% probability of getting $934,618 by 2047 (30 years)

After tracking and reviewing it closely for the past 6 months, together with the increment in our salary, we are now more comfortable with allocating more money into StashAway! From $500 per month to $1,000 per month! This is how we will be automating (scheduled monthly transfer) capital growth through StashAway.

$1,000 per month - 50% probability of getting $1,869,384 by 2047 (30 years)

Oh. Back to our strategy! We are greedy and would like the best of both worlds (capital gain and dividends):
1. At least $1,000,000 portfolio in SGX for dividends/passive income (tax free!)
2. Around $1,000,000 StashAway portfolio through capital growth ($1,000 x 12 months x 30 years = $360,000 capital. An annual return of ~5.88% is required for 30 years which seems pretty realistic). No idea what we will be doing exactly with it (drawdown or buy other assets), will think about it when the goal is nearer. lol.
3. $1,000,000 in other assets (property and CPF)
4. Retire and enjoy life :)

What is your strategy?

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  1. So you tweak the risk level at 18?

    1. Hi usurper,

      The risk level is still at 28! We increase the monthly contribution. Why would you think the risk level has been tweak?

  2. won't that be taking on too much risk?

    1. Haha. Different people have different risk appetite :)

      I would say even at P28, it is pretty diversified and conservative. With the USD falling, it means I can buy more shares too! Why not?

  3. Hi KPO! I am new to investing in general and started putting $100 each into StashAway and Smartly monthly. Do you have opinions on the different robo-advisors in Singapore (think the last one is AutoWealth?)? Read a post about how they seem to be trying to copy Betterment in the US but get subject to the 30% dividend withholding tax + they charge relatively high fees, so was wondering about the feasibility of this in the long run. Thanks!

    1. Hi jia ying,

      Congrats on taking your first step towards investing/growing your money! You might want to look through the other articles I have written on robo-advisors as well:
      1. http://kpo-and-czm.blogspot.com/2017/08/effects-of-fees-on-return-stashaway-smartly-autowealth.html
      2. http://kpo-and-czm.blogspot.com/2017/08/who-has-lowest-fees-stashaway-smartly-autowealth.html

      30% dividend withholding tax is only on dividends. The portfolio they have are more for growth/capital gain in the long run. Fees are high if you compare with other robo-advisors in other countries. However, if you were to compare it with unit trusts/funds, it is on the low side.

      Hope this helps!