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 don't you. We increasingly rely on technology to simplify many day to day activities in our lives today – from knowing exactly when the bus will arrive at the bus-stop to keeping in contact with our family and friends 24/7 for you to get our favourite dinner served to us at our doorstep following a long day at work.
Why Should We Invest Via A Robo-Advisor In Singapore?
- Simplify the investment process
- Reduce conflicts of great 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 with no withdrawal fees
- Equally good customer service support
- Offering comprehensive solutions for example cash management accounts, goals-based or income investing, choice to invest SRS funds
Today, there are more than 10 robo-advisor platforms in Singapore that we can invest our cash 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 principally 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 a person'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 said, most robo-advisors still offer good customer service support and employ highly skilled fund managers and programmers. What’s better still is that robo-advisors may also offer no minimum investment amount, no lock-up of funds and no withdrawal (sales) charges.
Finally, despite the fact that robo-advisories are newcomers, they are rapidly adjusting to customers’ requirements by offering more products. For instance, StashAway also provides a cash management account – StashAway Simple – along with its investment solution. Apart from investing in its goal-based portfolio, we are able to also choose to invest in its income portfolio. We can also invest our SRS funds within the portfolios.
We decide to test out Singapore-based StashAway to find out easy (or difficult) it's to start out, and what we can expect in terms of service standards and investment methodologies. Here is a walkthrough of our sign-up process, complete with screenshots and learnings.
Opening A StashAway Account
StashAway was founded in 2021 and operates under the Monetary Authority of Singapore's Capital Market Services Licence (CMS100604-1). StashAway utilizes a proprietary investment strategy in line with the theory of economic cycles, Economic Regime-based Asset Allocation, or ERAATM. This permits 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% each 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, additionally you read more about StashAway's investment methodology, its 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 needed to fill in some personal information about myself. Many platforms require similarly info, and moreover, robo-advisors' algorithms need this to complete its job assessing my risk profile and recommending an appropriate investment basket for me.
It even highlights this at the bottom of the screen.
It then inquired about 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 are unsure, you can hit this option to look at some life goals you decide to start investing for. Otherwise, hitting \”General Investing\” is okay, as you'll still be able to change this option later on.
I picked to start to \”Plan In my Retirement\”. Of course, you can pick more than one goal to invest for if you would like! Personally, I also have a toddler and could want to start saving for his education within 20 years.
Even if I had no clue how to start planning for my retirement or just how much I would actually need, StashAway provides a simple calculator to kickstart this process. There's also an option if I \”already understand 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 perhaps 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 going for a guess that the algorithms did some math to arrive at those figures. I did increase my retirement 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 they're increasing the retirement age to 65 and re-employment age to 70 by around 2030, so it’s not far-fetched for all of us to work till 70.
I was requested how much I expected to receive in CPF LIFE payouts. This can 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 whenever you retire in Singapore to get a better knowledge of this. I selected $1,350, as this was the amount I can be prepared to receive on the Standard Plan basically saved up to the Full Retirement Sum.
I left the ultimate two entries at $0 since 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 possibly could basically tell that if I invested $570 diligently every month until I turn 70, I would have close to $1.29 million in my retirement. This exceeds my required amount. Reading the fine prints on the bottom left, I realised it was because there's a 90% probability I'd 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 could be invested. Interestingly, almost half of it will be invested in fixed income (for example bonds). Close to a third come in equities, about 15% in hybrid funds and also 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, you will find 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 tell my \”StashAway Risk Index\”. This defines the potential loss of a given portfolio, meaning there is a 99% chance that the maximum amount I lose on my small portfolio is 14.0%. This is due to the risk level I'm prepared to take.
In green, the words \”Adjust Risk\” permits us to take on riskier or less risky investments.
# 2 Portfolio Composition
Here, I will tell my portfolio is being invested quite evenly in growth and protective (or defensive) investments. To see 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 through 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 in it. There is no minimum amount in Singapore dollars (SGD) transfers, but there's 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 wish 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 too.
Finally, I will need to actually make the transfer from my banking account. StashAway will provide a unique reference code which i need to use, for them to recognise it originated from me.
Now, I'm all set, and ready to start accumulating my retirement amount of money.
And if you follow the same steps like Used to do, 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.
StashAway is giving 50% off in management fees for 6 months, for up to $50,000 in portfolio value. Which makes it perfect for taking StashAway on a try out and see if it is the robo-advisor for you personally. You can also start investing your SRS funds with StashAway to begin growing your retirement nest egg today. Sign-up for free today at this link!