In this article, I will share my experience in investing my own money into the two most talked about Robo-Advisor brands: Stashaway & Wahed Invest. You will understand in plain English:
- What is a Robo-Advisor?
- Who is the Robo-Advisor for?
- Pros and Cons of the Robo-Advisor
- Can you withdraw money easily in an emergency?
- How to start?
Do note that this is MY EXPERIENCE that I’m sharing. Everyone’s portfolio and results will be unique.
Investing Problems Millennials Face
Some Millennials and Gen-Z don’t know where to start when it comes to investing their money. We are sandwiched between outdated advice from Baby Boomers and the uncertain changing future.
You can invest in property, stocks, mutual funds, and buying gold, to name a few. Between juggling work, family, and maintaining a social life, who has time to research and figure out all this?
The investing pros spread their money around, and they call it diversification. An example is Unit Trust and Mutual Funds. I remembered that my mom used to invest in this. She pays a monthly fee to her agent, and the money will then be handled by a fund manager to pick winning investments.
But alas, humans have emotions and are prone to make mistakes. Which is where the Robo-Advisor comes in to solve this problem:
What is a Robo Advisor?
You can think of a Robo Advisor as a digital mutual fund manager. Instead of relying on a human fund manager to pick out winning investments, the fund manager is now replaced with AI technology to pick out investments using 100% data, and 0% emotions.
The AI robot will spread your money around according to your financial goals and risk profile.
They typically work best in medium to long term time frame (min 5 years).
Another classic case of AI technology slowly phasing out yet another human job.
Who is the Robo-Advisor For?
Robo-Advisors make a lot of sense for people like me, because:
- I already have a bit of saving in Fixed Deposit and looking to invest in something a little riskier.
- I tried buying individual stocks, but I always lose money, plus the fees are expensive!
- I have a medium to high-risk tolerance, and I can stomach the market fluctuations.
- I couldn’t be bothered to research and pick my own investments.
- I trust a computer to make decisions using data more than I would a human managing my money.
- I can’t allocate the same amount of money each month for investment in this because I have a lot of other commitments.
Who is the Robo-Advisor Not For?
If you’re conservative, it will make more sense to place your money in fixed deposits or buy gold.
If you enjoy doing financial research and take control of your money, you might be better off purchasing your investments manually.
From my observations, the two most popular Robo-Advisors used by Malaysians currently are:
Both diversify your money around the world. The key difference of Wahed Invest is that they will only put your money in Shariah compliant investments.
Simply put, with Wahed Invest, your money will not be involved in these non-Islamic businesses:
- Excess debt
- Adult Entertainment
- Impure Food stock
- Usurious Institutions
Some people might find the industries above against their moral values anyway, so you don’t necessarily have to be a Muslim to use Wahed invest.
Unlike Wahed Invests, StashAway is free to place your money in both Shariah-compliant and non-Shariah compliant investments.
Putting RM 1,000 in each Robo-Advisors
The best and fastest way to learn about both of these Robo-Advisors it to jump right in. On the 7th of June, 2020, I deposited RM 1,000 of my own money into StashAway & Wahed Invest each in their most ‘aggressive portfolio.’
I let the the thing run for a few weeks before I wrote this post. Here’s what I found out:
Key Difference Between Wahed Invest & StashAway For Me:
This is the result for MY UNIQUE portfolio, (everyone’s portfolio will be unique and different):
|Financial Assets||Stashaway||Wahed Invest|
|100% Shariah Compliant||✔️|
|Very diversified portfolio||✔️|
|Mostly US stocks||✔️|
|Invest in Malaysian stocks||✔️|
|Can withdraw money easily?||✔️||✔️|
How and Where is My Money Diversified?
In order to test these two Robo-Advisors fairly, I set both at the riskiest profile.
Each Robo-advisors will use different algorithms and profiles depending on your risk input & your unique financial situation (age, income, savings, etc).
Note: Your portfolio might be different because it will depend on the questions that they ask you at the beginning.
Stashaway’s Riskiest Portfolio
After I deposited my first RM 1,000, the value went straight down to MYR 978. Mind you that the world is still battling the effects of the Corona Virus.
The price fluctuates up and down for the past three weeks and my portfolio value on 26th June is at RM 1,000.17, a 17 cent gain:
Key Takeaway for my Stashaway’s Riskiest Portfolio:
- 44% in International Stocks (mostly in emerging markets and in the UK). This is the riskiest investment in my portfolio.
- 34% in Commodities (Gold). This is possibly the safest investment.
- About 24% of my money is in the USA.
- About 22% in Europe, mostly in the UK.
- About 12% in Asia, mostly in China.
- None of my money is in Malaysia.
Below is the detail breakdown asset allocation by category:
Here’s the geographical breakdown of my money with Stashaway:
- North America, being the USA.
- Europe being the majority in the UK.
- Asia being mostly in China.
- There are no Malaysian assets in this portfolio.
Below is the portfolio projections in the next 5 years if I did nothing else to this portfolio:
So far, so good. Now let’s take a look at how Wahed Invest performed during the same period:
Wahed Invest’s Riskiest Portfolio
In Wahed invest, the riskiest portfolio is named ‘Aggressive‘. After 3 weeks, my portfolio value also went up and down. The lowest point was RM 979.39. Today, its value is at RM993.55, which is an RM6.45 loss:
My Wahed Invest’s Aggressive Profile Key Takeaway:
Here’s my portfolio breakdown with Wahed Invest, most of my money will be in the US and Malaysia:
- 45% of my money will be in Shariah compliant US stocks.
- 25% will be in Sukuk (Islamic bonds).
- 17.5% will be in Malaysian stocks.
- 10% in gold.
|Robo Advisor||Wahed Invest||Stashaway|
|Annual Fees per year < RM 50k||0.99%||0.8%|
|Annual Fee for RM 10k invested||RM 99||RM 80|
The fees generally get cheaper the more you invest with each platform. The above quotation would be a good estimate for people starting out.
If you are planning to invest way more than RM 50,000, click below for the full fee breakdown:
Personally, the management fee price differences are negligible and it shouldn’t be your main criteria to make a decision between the two Robo-Advisors.
- The management fee of less than 1% of your portfolio value is incredibly cheap compared to brokerage fees if you’d pick individual stocks yourself.
- Comparing to Mutual Funds, the Robo-Advisor fees are cheaper and transparent. (I don’t invest in them personally), but read this article, it’s so complicated I dozed off after the 2nd paragraph.
- Unlike other investments that require a certain minimum just to get your foot through the door, you can start investing using Robo-Advisors with a min of RM 100.
- Live your life. You’ll spend absolutely no time at all in research and following financial news.
- Depositing money manually takes time (1-2 business days) before they receive it and can start to invest it.
- You can’t pick what to invest in or which specific company stock to buy.
Withdrawing My Money
This is critical. I need to have full flexibility to withdraw my money at any time, just in case of an emergency. Let’s check out if it’s even possible and how easy it would be to do so:
Withdrawing Money from Wahed Invest:
On Wahed Invest, I can withdraw all of my current value if I wanted to. Nice!
Withdrawing Money from StashAway:
I can also withdraw all of my funds from StashAway including the 17 cent profit that I made! Sweet!
I would like to highlight that these are my opinion on my own experience and account. Everyone’s result will be different.
I like the concept of app-based investments and transparency over traditional investments.
Both apps made more money than I put in at some point, and I can withdraw my profits. Both of these apps gained my trust.
I will continue to observe what will happen in the next month before deciding to place more money.
At the moment, it is a dead-tie between StashAway and Wahed Invest. For Muslims who are strict on their investments, this would be easy to pick. If I had to pick one, I still am not 100% sure which one to choose.
In the future, If I don’t want any Malaysian asset, I’d put more money into StashAway.
If I don’t feel like money too spread around over the world, and want to focus on US stocks, I will deposit more money into Wahed Invest.
Link to Open Account:
Whichever your choice, you can click on the link below to open an account. I do get a small kickback, and you’ll be getting something too. Each benefit will be different:
With the link above, you will get a RM 10 bonus for signing up.
You portfolio of up to RM 30,000 will be managed for free for 6 months.