Stashaway Malaysia Review | The Best Passive Income in Malaysia
Passive income is something that everyone wants. We all want to be richer without having to do anything for it, but most ways to get passive income are not truly passive. However, there is one type of passive income that exists in Malaysia that is truly going to make you richer without you ever having to think about it, and that is Stashaway Malaysia – one of the best robo advisors in Malaysia.
In this article, we are going to do an in depth Stashaway Malaysia review so you can truly create yourself passive income.
- What is Passive Income
- What is A Robo Advisor
- How much more would you have
- What is Passive Income
- The best robo advisor in Malaysia
- Goal Based Investing
what is passive income
Passive income is the idea of being able to get money without having to work. In general, there are typically two main ways to create passive income. The first way is to spend years building something that will constantly give you money in the future.
This could be something like selling items on Shoppee and having a team deliver it, or it could be to create some sort of online course and sell it on cousera. This path will be able to make you passive income without really needing any money to start, but it will require a lot of time at the beginning.
The other way of making passive income is to make your money work for you. The most common way is to invest your money in order to make more of it in the future. This type of passive income in Malaysia would mean that you would need a lot more money to start, and some time to choose your investments, but after that, you truly have passive income.
Stashaway Malaysia is more like the latter. Except the only time you need to spend is to sign up for an account and tell them what goals you have for your life. Also, unlike most other investments, you don't really need a lot of money to start (in fact, we're willing to start investing in this for you, more on that later).
The reason this is possible is because Stashaway Malaysia is a Robo Advisor
what is a robo advisor
A robo advisor is what people call this new kind of investing. In the old way of investing, you would have to talk to a consultant who would suggest what investments to make and some other group of people would be responsible for investing that money for you.
However, when it comes to robo advisors, the company will be able to determine what types of investments you should make depending on a bunch of questions that you answer online. And instead of having humans investing your money for you, 'robots' would be doing it instead.
The reason why robo advisors are becoming more and more popular is because having humans do the work requires paying those humans. Which means you would be paying a bigger percentage of your money that you had set aside for investment to these people than to actually being invested.
In fact, a unit trust will typically charge between 3-5% in sales charges (which means you will lose 3-5% before you even get a chance to have your money invested) and will also charge another 1.5 – 2% each year as a management fee.
However, robo advisors will typically only charge a management fee (which means you can start for free) of under 1% because their investments are typically in exchange traded funds.
The other major reason is even though these people may be professionals, they are still humans which means they will still get emotional when the stocks they choose go up and down. This means that they will not be able to make the best decisions for you, unlike a 'robot'.
In fact, Warren Buffet (one of the most successful investors in the world) has publicly challenged hedge funds (more advanced versions of unit trusts) managers to beat the most basic exchange traded fund (the US stock market: S&P 500) in 2008 and in 2018, when the challenge was officially over, the exchange traded fund went up by 125.6% whereas the hedge fund ended up around 36%.
This is the big reason why having a more passive investment approach is actually better for majority of the people in the world, and robo advisors will be able to get you there with the least amount of work.
How much more would you have if you avoided those extra fees.
Stashaway Malaysia – the best robo advisor in Malaysia
Now that we understand why robo advisors are the best type of passive income investment you can make in Malaysia, let's look at the best robo advisor – Stashaway Malaysia.
Stashaway is one of the first robo advisors in Malaysia and has quickly become the go to robo advisors for the majority of Malaysians. On top of having management fees between 0.2% – 0.8% (use the calculator above to see how much more you would be able to have if you're able to reduce your fees), Stashaway also has access to investments around the world, including the exchange traded fund that Warren Buffet was talking about.
This means that you can truly have access to some of the best investments around the world WITHOUT having to do any real work. So how do you take advantage of this even more? Let's look at it in the rest of this Stashaway Malaysia review.
The three most important things when it comes to passive income is: 1 – is it really passive; 2 – what is the expected return and 3 – how much are you going to pay to get #1 and 2.
Because Stashaway is a robo-advisor, it truly is passive. On their site, they claim that their proprietary program called 'Economic Regime-based Asset Allocation' would have returned 8.56% – 10.57% each year for the past 15 years, which would have done better than the US stock market of 8.41%.
Of course, past performance does not guarantee anything going forward, and technically Stashaway Malaysia was not in business 15 years ago so the phrase 'hindsight is 20/20' is very true in this situation.
And finally, to answer question 3 – how much do you have to pay to get access to this investment. Stashaway charges between 0.2% to 0.8% in fees depending on how much you have invested. However, the index funds that they invest in (also known as exchange traded funds or ETFs) also has a small fee of around 0.2%.
This means your fees would be somewhere between 0.4% to 1%, lower than the typical unit trust management fees of 1.5% to 2%. But most importantly, Stashaway Malaysia does not charge any sales fees which means 100% of your money you put in will go into working for you (compared to unit trusts which tend to charge between 3 – 5%).
So what's the verdict on Stashaway? It depends.
Stashaway vs Unit Trusts
Although we say Stashaway vs unit trusts, it's not really a fair comparison since there are so many unit trusts out there which cover different things. If you wanted exposure to specific areas or things in the world (say tech companies in China or durian plantations in Malaysia), unit trusts would be better (because this isn't Stashaway's business).
However, if you're simply judging which is better based off the 3 criteria mentioned, then Stashaway would be a better investment simply because it has a much lower fee and is just invested in index funds (which we mentioned, is what Warren Buffet has said is one of the best ways for everyday people like us to invest).
Verdict between Stashaway vs unit trusts: Stashaway
Stashaway vs ETFs
When it comes to Stashaway vs ETFs, the winner will be dependent on what you value more.
Because Stashaway is a robo advisor, and robo advisors just invest in ETFs, the underlying investments can be the exact same. That means you can do exactly what Stashaway is going to do for you yourself and save on the fees. However, that also means that you're going to have to do more work regularly compared to just using Stashaway (since Stashaway has an auto invest feature which automatically takes money out of your account and invests it).
But besides that, Stashaway would automatically rebalance your portfolio (which means that it will automatically buy and sell the different ETFs based off the current situation, making sure that you have the right long term exposure that you want). Trying to mimic something like that will take a lot of work.
That said, the decision on whether Stashaway is better or investing yourself in ETFs is going to be based off of whether you think giving up the passive investing and the auto rebalancing is going to be worth 0.2 – 0.8% in fees.
Another cool Stashaway Malaysia feature: Goal Based Investing
Besides the pasif income that Stashaway Malaysia provides, they also have something called Goal Based Investing. Just as it sounds, goal based investing will automatically allow you to separate your investments for different purposes.
This makes it much easier for you to see where you are when it comes to your different goals (and for those who have gone through creating your own Financial Roadmap, Stashaway is a great next step!)