Random ads start popping up while you are bored at home during the circuit breaker scrolling through your social feeds. “This is the best time to invest!”, they said. But is it really? When you have exactly no clue on how to invest during this extraordinary time of extreme volatility? With that logic in mind, the ‘investment opportunity’ seemingly fades away instantaneously. You cower back onto your couch and then another brilliant idea pops out of nowhere – Robo Advisors. Maybe, this is the one? Well, let’s reduce that uncertainty and do a deep dive into one of the most popular and earliest robo-advisors in Singapore: StashAway. And here’s a Stashaway Promo Code for reading our cringey intro!
The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security.
Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult a professional.
StashAway: The Best Choice If You Plan to Invest and Forget
The brand literally means stash away.
All you have to do is set up a monthly deposit cycle, risk tolerances, investment goals, and StashAway will be your fund manager. It’s that passive. No need to pick up a business book to get ahead in the stock market.
Robos like StashAway automatically and intuitively rebalance your portfolio to your target allocation of stocks, bonds and alternative investments like gold when times are tough. This automatic rebalancing helps you to buy low and sell high – increasing your overall returns and maintaining your risk profile.
You can do one-time deposits too if you can’t afford the monthly upkeep. But we usually don’t recommend it due to the basic concept called dollar-cost averaging.
What is dollar-cost averaging, you ask? In overly simplified terms, it is an investment strategy by dividing your investments across multiple entry points at rather regular and consistent time intervals.
Doing so helps investors manage or hedge the risks of their overall positions in the stock market.
The overall takeaway of this strategy: It takes away the need to ‘time the market’.
Not Recommended if You Want to Do it Yourself
There’s a whole lot of other factors when it comes to financial planning. Having asset allocation, incorporating tactical aspects of investing just isn’t enough.
StashAway has tried to address this with their financial goal settings, which helps Singaporeans focus on homeownership, retirement, travel, and even college. But the fact that a dropdown list cannot encapsulate your goals shows that financial planning can get really complex along the way. Don’t forget, your goals will change or complicate over time.
It just doesn’t come close to sitting down with someone to capture the whole picture. That is something no robo-advisor can do to date with algorithms. There is a limit to what passive investing through robo advisors can achieve.
If you are well-informed and think you can do it better, robo-advisors may leave you kicking and complaining at the end of the day. And we don’t want any of our readers to feel that way.
Regarding transparency, yes, there would be a full breakdown on your portfolio, as seen above but if you want to know exactly what and the prices your trades are made, AutoWeath would be a better option in this sense. Reason being, AutoWealth’s client assets are held in legally segregated Saxo (our partnering MNC custodian) custody account under their own name.
Management Fees: How on Earth are They So Low?
Fees are undoubtedly a huge consideration when it comes to choosing your financial advisor.
It will impact your returns and we know it’s inevitable that you have doubts about the transparency of the fees and costs of your investments.
To prevent any surprises, make sure to know what the annual fees are, as well as what else you may be charged for.
|StashAway Pricing Structure|
|Total Investment (SGD)||Annual Fee Rate (Incl. GST)|
|Any additional amount above $25,000, up to $50,000||0.7%|
|Any additional amount above $50,000, up to $100,000||0.6%|
|Any additional amount above $100,000, up to $250,000||0.5%|
|Any additional amount above $250,000, up to $500,000||0.4%|
|Any additional amount above $500,000, up to $1,000,000||0.3%|
|Any additional amount above $1,000,000||0.2%|
So you may ask, how are the management fees for StashAway so low?
Robo advisors are typically cheap and low cost. They bring users high-quality portfolios at significantly lower costs.
But, if you were just comparing costs, they do still cost more than the lowest-cost all-in-one funds available.
One notable example of said funds include Vanguard’s Target Retirement Funds and LifeStrategy Funds.
These funds only cost 0.12% to 0.16%.
Of course, having such technology is a double-edged sword and would mean that there is a lack of human interaction or with your personal manager, which some may prefer.
StashAway Simple: No Management Fees, Even Better!
Not sure where to park your cash but don’t want to be tied down to a fixed deposit? Not to mention, fixed deposits now have incredibly low-interest rates.
StashAway Simple is a cash management portfolio that earns a projected return rate of 1.9% (Update: The projected return rate has changed to be at 1.4% from 1st September onwards) per annum. This portfolio gives you the flexibility of choosing when you want to withdraw your cash.
Bonus: You may wish to take a look into parking your cash into SingLife and earn up to 2.5% P.A. for the first $10,000 SGD!
Note: There are no management fees involved with Simple. The funds in which StashAway invests your cash have net total expense ratios that average around 0.20%, after rebates, and they will reimburse any rebate that the fund managers offer. The projected returns are net of the total expense ratio, and are the returns you can expect.
The returns are NOT interest-based. There will be days with more/less returns than others, and possibly days with no returns. So don’t expect your returns to be credited daily!
P.S. You can contact them via WhatsApp and you can expect a pretty prompt reply.
StashAway Academy: Nuggets of Wisdom
Managing your personal finances can be a daunting task and admittedly, there is simply too much to know. If you’re keen on a hands-on approach in the future instead of solely relying on robo-advisors or simply just to expand your knowledge, it is highly recommended to set aside some time to listen to what the industry experts say.
StashAway frequently holds FREE online webinars on certain issues concerning the financial markets. An upcoming one on 2nd June 2020 would be “Ask Me Anything Live with our CEO and Co-Founder, Michele Ferrario”, where you will be given an inside look into StashAway and their technology and investment strategy, with the opportunity to ask Stashaway’s CEO anything.
With this ever-volatile changing situation of COVID-19, StashAway understands the confusion and panic that investors may have. Thus, Weekly Market Commentaries discussing the latest global events and their impact on the markets are held via Facebook and it is definitely worth a listen.
Do keep a lookout on their Facebook page and StashAway’s website to stay updated on their new events and nuggets of wisdom.
SRS: What Is It and Why You Should Use This on StashAway
Singapore’s Supplementary Retirement Scheme (SRS) is a program kickstarted by Singapore’s Ministry of Finance.
Although this program has been around since 2001, we understand that many are still confused at what it can do for your retirement plans.
Here’s a quick write up about it:
In essence, the SRS scheme encourages all Singaporeans and foreigners to save more by incentivising the scheme with generous tax benefits.
Singaporeans and PRs can contribute to the SRS scheme for up to $15,300 SGD per year, and foreigners can contribute up to $35,700 SGD per year.
Contributions are 100% tax-deductible, meaning it reduces your taxable income for the year.
Let’s say you have an annual gross salary of $100,000 SGD. Your original tax bill would have been around $11,500 SGD (at the time of writing).
By voluntarily contributing the maximum allowable amount to your SRS account, it reduces the tax bill by $1,760 SGD.
Needless to say, if you earn more than this, contributing the same amount of $15,300 SGD, reduces your tax bill even further (up to approx. $3,400) since your marginal tax rate is higher.
Imagine doing this religiously for the next 10-30 years, putting the extra tax savings into good use (aka investing it back on StashAway) and benefitting from the returns on your SRS account.
All we can say is, the result will be exponential.
If everything goes according to plan, that is.
Here are 2 tables (1 for Singaporeans/PRs, 1 for Foreigners) to consolidate what we are trying to say:
|Tax Benefits for Singaporeans and PRs (assuming full SRS contribution of $15,300 SGD per year)|
|Annual Gross Salary||Marginal Tax Rate||Tax Savings Per Annum||Tax Savings after 10 to 30 Years of SRS||Approximate Returns from Tax Savings if invested over 10 to 30 years(Assuming 5% return)||SRS Account Value over 10 to 30 years (Assuming 5% return)|
|$100,000||11.5%||$1,760||$17,600 to $52,800||$4,550 to $64,150||$192,442 to $1,016,514|
|$150,000||15%||$2,295||$22,950 to $68,850||$5,950 to $83,650||-|
|$250,000||19.5%||$2,984||$29,840 to $89,520||$7,710 to $108,730||-|
|$350,000||22%||$3,366||$33,660 to $100,980||$8,690 to $122,670||-|
|Tax Benefits for Foreigners (assuming Tax Resident status & full SRS contribution of $35,700 SGD per year)|
|Annual Gross Salary||Marginal Tax Rate||Tax Savings Per Annum||Tax Savings after 10 Years of SRS||Approximate Returns from Tax Savings if invested over 10 years (Assuming 5% return)||Value of SRS Account over 10 years (Assuming 5% return)|
Like we said earlier, results will only be optimal if everything goes well. Maxing out the tax benefits every year also means temporarily allocating a substantial portion of your wealth away.
Plan your deposits wisely.
There is also a catch which we will be sharing below.
SRS vs. CPF – Are They the Same Thing?
SRS is fully voluntary. Additionally, an SRS account holder can choose from a wide range of options such as StashAway as to how they would invest their SRS funds. CPF investments, on the other hand, are generally managed by the CPF Board.
The way withdrawals work on the SRS scheme differs as well.
SRS is highly encouraged for foreigners residing in Singapore, since there are no penalties for early withdrawal and you can withdraw the whole lump sum as soon as 10 years from the date of first contribution.
For locals and PRs, penalty-free withdrawal only starts at the retirement age of 62. Failure to do so would lead to a 5% penalty. The withdrawal will also be 100% taxable.
With that said, penalty-free withdrawals are still 50% taxable for both foreigners and local/PRs.
If you are a local/PR, rejoice!
You can strategise and time your withdrawals over a 10 year period to withdraw everything from your SRS account.
That means you can withdraw up to $400,000 SGD tax-free over the specified timeframe!
Personal income tax only starts at $20,000 SGD.
Given that SRS withdrawals are only 50% taxable and assuming it is your only source of personal income upon retirement, the first $40,000 SGD of your SRS withdrawal will not be taxable (50% x 40,000 = 20,000 @ an income tax rate of 0%).
Will You Use StashAway? (StashAway Promo Code Included)
StashAway has one of the best user interfaces among the robo-advisors available in Singapore.
The app platform brings a fair bit of convenience to users to easily manage their portfolios and read professionally curated content on the fly. Not to mention, managing your SRS account on the platform has never been this easy.
It’s simply a hassle-free way of investing without burning a hole in your pocket.
So, if you are seeking a convenient, flexible and comfortable way of investing passively, sign up with our StashAway promo code here (The offer will be automatically applied when you sign up using our link). It may very well be the right one for you.
If the code is somehow unable to work for you, do write it to [email protected] and they will manually apply it.
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