StashAway is a robo-advisor that helps investors gain investment exposure to global equities without having to spend the time and effort to monitor their portfolio.
And why not. We increasingly rely on technology to simplify many daily activities in our lives today – from knowing exactly when the bus will arrive at the bus-stop to keeping in touch with our family and friends 24/7 to getting our favourite dinner served to us at our doorstep after a long day at work.
Why Should We Invest Via A Robo-Advisor In Singapore?
- Simplify the investment process
- Reduce conflicts of interest that a human financial advisor may introduce
- Offer access to professional portfolio management solutions via complex algorithms
- Lower management fees, by removing human advisors
- No minimum investment amount, no lock-up of capital and no withdrawal fees
- Equally good customer service support
- Offering comprehensive solutions such as cash management accounts, goals-based or income investing, option to invest SRS funds
Today, there are more than 10 robo-advisor platforms in Singapore that we can invest our money with. Robo-advisors simplify our long-term investment needs by providing a digital platform to automate our investments and portfolio management. In essence, the rise of its popularity is mainly because it takes over much of the heavy lifting work for investors.
Using complex algorithms, robo-advisors are able to simplify the process of assessing an individual’s risk profile, select a suitable and diversified basket of investments catered to the individual and manage his or her investment portfolio through market and lifecycles.
This reduces any instances of conflicts of interest that a human financial advisor may introduce, plugs potential knowledge gaps that many younger, inexperienced or uninterested investors may have as well as even out the playing field by offering access to professional portfolio management via its complex algorithms.
A robo-advisor’s algorithms not only put investors on equal footing, it also minimises human intervention within its entire value chain, and thereby reducing cost for its investors via lower management fees. That being said, most robo-advisors still offer good customer service support and employ highly skilled fund managers and programmers. What’s even better is that robo-advisors may also offer no minimum investment amount, no lock-up of funds and no withdrawal (sales) charges.
Finally, even though robo-advisories are newcomers, they are rapidly adapting to customers’ requirements by offering more products. For example, StashAway also provides a cash management account – StashAway Simple – in addition to its investment solution. Apart from investing in its goal-based portfolio, we can also choose to invest in its income portfolio. We can also invest our SRS funds in the portfolios.
We decide to test out Singapore-based StashAway to find out easy (or difficult) it is to start out, and what we can expect in terms of service standards and investment methodologies. Below is a walkthrough of our sign-up process, complete with screenshots and learnings.
Opening A StashAway Account
StashAway was founded in 2016 and operates under the Monetary Authority of Singapore’s Capital Market Services Licence (CMS100604-1). StashAway uses a proprietary investment strategy based on the theory of economic cycles, Economic Regime-based Asset Allocation, or ERAATM. This enables it to monitor economic trends and valuations to rebalance its customers’ asset allocation mix for the long-term.
StashAway charges a fee of between 0.2% to 0.8% per year, depending on the amount that we have invested. Currently, StashAway is giving 50% off its management fees for 6 months, for up to $50,000 in portfolio value. You can sign up here after reading this walkthrough.
On the sign-up page for DollarsAndSense readers, you also read more about StashAway’s investment methodology, its unique features and gain useful financial insights, as well as receive exclusive sign-up perks.
Here’s a step-by-step guide to opening an account:
I went ahead to “Get Started”. First, I had to fill in some personal information about myself. Many platforms require such information, and moreover, robo-advisors’ algorithms need this to do its job assessing my risk profile and recommending a suitable investment basket for me.
It even highlights this at the bottom of the screen.
It then asked me if we want to invest for a life goal. This was a natural choice, as I think we should always try to save for a life goal. If you’re unsure, you can hit this option to look at some life goals you choose to start investing for. Otherwise, hitting “General Investing” is fine, as you’ll still be able to change this option later on.
I picked to start to “Plan For My Retirement”. Of course, you can pick more than one goal to invest for if you want! Personally, I also have a toddler and may want to start saving for his education in about 20 years.
Even if I had no clue how to start planning for my retirement or how much I would actually need, StashAway provides a simple calculator to kickstart this process. There’s also an option if I “already know how much I need”. Based on my needs, I needed close to $790,000 for my retirement, or to invest $570 each month.
We can invest with cash or even choose to put in our SRS funds.
Some of the entries in the calculator were pre-filled, and I left those as they were. I’m taking a guess that the algorithms did some math to arrive at those figures. I did increase my retirement age to 70, as I believe people will be expected to work till later in their lives, especially with modern medicine and the rising cost of living. The government is already announced that they will be increasing the retirement age to 65 and re-employment age to 70 by around 2030, so it’s not far-fetched for us to work till 70.
I was asked for how much I expected to receive in CPF LIFE payouts. This may be tricky for people who haven’t started planning for retirement. You may want to read this Beginners’ Guide for CPF LIFE and Monthly CPF LIFE payouts when you retire in Singapore to get a better understanding of this. I selected $1,350, as this was the amount I can expect to receive on the Standard Plan if I saved up to the Full Retirement Sum.
I left the final two entries at $0 because I don’t have another retirement savings or plans currently. I guess it’s a good thing I decided to start investing with StashAway today!
I received two results: a chart and a portfolio composition.
In the chart, I could basically tell that if I invested $570 diligently every month until I turn 70, I would have close to $1.29 million for my retirement. This exceeds my required amount. Reading the fine prints on the bottom left, I realised this was because there’s a 90% probability I would end up in the green shaded area. This could be significantly lower than the $1.29 million mark. At the lower-end of the range is my $800,000 target. So, there’s a 90% chance I’ll end up with around $800,000 or more for my retirement.
In the second result, I gained some insights into how my monthly investments would be invested. Interestingly, almost half of it will be invested in fixed income (such as bonds). Close to a third will be in equities, about 15% in hybrid funds and the rest in commodities. This looks like a well-diversified, albeit very safe, investment.
My goal to “Plan for Retirement” is done. To proceed investing towards this goal, I now need to set up my account.
Here, there are three sub-sections: 1) personal information, 2) basic financial assessment and 3) verify your identity via uploading your NRIC.
Next, we need to “confirm investments”.
When I click the green “Review Portfolio” button, I will get to view my:
# 1 Portfolio Summary
Here, I can see my “StashAway Risk Index”. This defines the potential loss of a given portfolio, which means there is a 99% chance that the maximum amount I lose on my portfolio is 14.0%. This is because of the risk level I’m willing to take.
In green, the words “Adjust Risk” allows us to take on riskier or less risky investments.
# 2 Portfolio Composition
Here, I can tell my portfolio is being invested quite evenly in growth and protective (or defensive) investments. To view the investments, we have to look below, at the exact asset allocation.
# 3 Asset Allocation
This shows me exactly what I will be investing in and what weight it will hold within my portfolio. We can presume that these investments have selected by the algorithm based on my prior inputs. These investments are also primarily exchange-traded funds (ETFs) from around the world.
To continue, I now have to fund my StashAway account, by transferring money into it. There is no minimum amount in Singapore dollars (SGD) transfers, but there is a US$10,000 minimum for US dollars (USD) transfers.
Next, I have to indicate the one-time transfer, as well as the subsequent monthly transfers I want to make. My decision is be to stick to the $570 transfers each month.
I also have to indicate that I want to make subsequent monthly transfers of $570 as well.
Finally, I will need to actually make the transfer from my bank account. StashAway will provide a unique reference code that I need to use, for them to recognise it came from me.
Now, I’m all set, and ready to start accumulating my retirement nest egg.
And if you follow the same steps like I did, you too would be well on your way to investing your wealth for the future. To help you along, DollarsAndSense has partnered with StashAway to give you a headstart on your robo-investing journey.