Stashaway, a Roboadvisor: My impressions so far

So after a few years of working, I finally saved money in the bank, that is equivalent to a year’s worth of salary. Whatever extra I have saved is now in Stashaway. Stashaway is one of a few Roboadvisor that have set up shop in Singapore. It is regulated by MAS and what it does is that it uses algorithms to make investment decisions on your behalf. The algorithm is tweaked based on the risk appetite which will then decide the allocation of equities and bonds. The higher the risk appetite, the greater the potential returns. But also, the greater the loss, should the economy undergo a recession.

I have been using Stashaway as my main investment vehicle for the extra money that I have saved. It makes little sense to put so much money in the bank that offers you so little in terms of interest rates, that the money you save in the bank are actually shrinking after taking annual inflation into account. With that being said, it also does not make sense to invest all your money saved in equities and bonds in case you need cash immediately and as an emergency. Having some form of financial liquidity is essential.

Stashaway invests my money in a basket of ETFs or exchange traded funds, which are essential a group of stocks that is bundled into a single index. Thus in buying an ETF, you are essentially buying a group of stocks. This hedges your bets in the performance of the stocks, so that you are not heavily exposed to the extreme volatility and risk when it comes to buying single stocks. Prices go up and down according to market movements. So the ETFs that Stashaway has invested in are usually stocks from S&P index, European firms, emerging markets like China. For bonds, they are usually US treasuries and a portion of gold.

So far I have been getting small amounts of dividends from these ETFs which is enough to cover the management fee in using their services. The service fee is 0.8% of the total amount invested, charged at an annual basis.

What I really like about Stashaway is how easy it is to open an account and make regular contributions to your account. You don’t have to choose the ETFs yourself to make the investments. The algorithm developed by the team in Stashaway will decide it for you. While some may prefer the flexibility to choose ETFs based on their investment preferences, Roboadvisors take that out of the equation and makes investment simple and painless.

Stashaway also has a beautiful mobile app that is available on iOS and android phones that gives you a quick and visually appealing way to check on your investments, the allocation of equities and bonds and how much returns you have made based on your investments. Stashaway also provides a quick and simple way to make withdrawals if you ever need the money for something else. In other words, the money is not locked in and you have total flexibility to deposit and withdraw coupled with great transparency in how the money is invested.

I think Stashaway is a great option for busy people who wants to get into the business of investing and make their money grow over time, without being too bogged down with the technical financial jargons and decision making in investing in the right instruments based on your needs. I am definitely continuing to use their services and we will see how they perform over the coming years. Meanwhile, I have been making regular contributions to my account under Stashaway. In time, it will be my second signification repository of cash savings that allows me to grow my faster and get better returns that the traditional banks.

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