Asked by Anonymous
Asked on 23 Jul 2019
Hello, I am about to invest in Stashaway for the first time and would like to learn from the community any tips/suggestions/advise when it comes to investing with them. Is it recommended? Or are there any other options?
Nothing about the platform, but instead, are you ready to start investing?
My main concern with many retail investors using passive based instruments is that because markets have been doing well, everyone can show fantastic 10 yr annualized returns, but when we see a 20-40% drop, many will sell off because it's just too easy, only a press of a button away.
So my question is that if that happens, what do you do? Will you say Stashaway is bad? You can't, because they just follow the global market. So figure out the game plan before investing a single dollar in any product.
If you want a hand-off approach towards investing, Stashaway is alright. But so is many other robo-advisors. Hard to tell difference between them. Main differentiator between the different robo-advisory are the engine that determine the asset allocation as well as fund selection.
The engine is based off a finanical model that takes in economic data.
The good thing about robo-advisors is they are mostly investing in low-cost broadly diversifed ETFs from big name issuers such as Vanguard and Blackrock. And they are mostly investing passive products. Even then, most charge on average about 0.70% pa, excluding the fund expense ratio. All in cost, I suspect comes in at about 0.9%-1% pa.
Strange thing about Singapore is that passive product does not seems to have the same amount of traction as compared to US. Maybe it is the lack of education or could just be the way the advsiory business is being set up in Singpaore. My main concern with active funds is that although the market has been doing pretty well for the past decade, most active funds across asset classes (in US context, doubt the stats will change much for any active funds anywhere else in the world) are underperforming the benchmark.
Note that most active managers collect their fees regardless of the underlying fund performance. The probability of you choosing an advisor that can construct a portfolio that generate consistent alpha in the long run is close to NONE, which is as good as the probability of a fund manager selecting winning stocks in the long run.
Google "SPIVA report". Some argue active management would have better results in bear market. Once again, the SPIVA report would beg to differ. Perhaps the only good thing about having an advisor is that they can help calm your nerves in a market crash. Go get a dog for that. (apologies for my humor)
Would recommend you read the following books :
Lastly, do your own due diligence.
Agreed with Hariz on readiness of the investor. You need to be clear of your investment objectives. Your need, ability, and willingness to take risks also need to align with your financial goals.
A platform is just a place for you to execute your investments. Perhaps it might be good to consider the adviser's alpha as well? In down markets, the ease of selling away with a click of a button may work against you.
The key to a successful investing experience is to stay invested. It may sound crazy but at times, doing nothing may be the most difficult thing to do. Having the option for you to talk to someone amidst the volatility of your investment journey is definitely a plus.
I think it’s a good approach if you want hands off. I have channelled some funds monthly for about 2-3 years and the returns so far is about 13%. Of course, the market is on a bull run so everything is nice and rosy. But when the market is down, be prepared to see negative returns.
You must have the determination and PATIENCE to keep you money in and monthly deposit in StashAway. Don't be pessimistic and think you can do better than the robo advisor if you have not seen gain initially. Lastly
Sign up with my link and we'll both get up to $10,000 SGD managed for free for 6 months! https://www.stashaway.sg/referrals/jiajingw29
There's a ton of other options, because if you're looking at long term results across a portfolio that is going for 20 years or longer, many things beat Stashaway. The SNP500 alone.
Emerging Market Index. Or if you wanted significantly higher alpha, active funds that outperform the strongest index in the world by 4 percentage points net of fees.
Some people would take two approaches to Robos
1) Trading regularly
2) 5 - 10 year approach, which is optimal because you get a very sweet risk-adjusted return. At some point in 2018, it's risk-adjusted return was so much better that I had to refer a client to it compared to my own product. So I don't look down on it, but I'm doubtful whether it's the best instrument for your situation.
If you insist on looking at Robos or ETFs that it comes with, I'd still go with Stash compared to the SNP500 immediately - because I've written extensively on it and you can see that it has drops as high as 89%. https://www.moneymaverickofficial.com/post/why-you-should-invest-aggressively-now-and-how-you-still-can-have-peace-of-mind Yes. I'm not kidding. So it can be a bit hard for a newbie to stomach if it happens to you immediately, compared to the asset allocation that Stash will do for you. I also think that Stashaway, although it may not be as fee friendly as say, Autowealth - is better. The CIO just seems like quite a visionary. But please, don't take any of this as formal advice. Do get it from a professional. That's what it always boils down to anyway - because no one who's giving you advice here will take responsibility for what happens except a professional. https://www.facebook.com/luke.ho.54