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SUMMARY
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A Low-cost Investment Platform
Ever since I have been doing financial freedom coaching sessions, one of the challenges I encounter is the availability of a low-cost investment platform that allows an individual to access global Exchange-Traded Funds (ETF) with small investment requirements.
There are micro-investing platforms in the US, including Stash, Robinhood, however, they are only available to US residents. Saxobank and InteractiveBrokers, though can allow international investors, they require an initial deposit between $2,000 to $25,000 to open an account. Aside from that, custodian fees are taken every month which will eat up the fund. Hence, this is not advisable for individuals who can only invest 500 USD or less, and most likely irregularly too (not every month).
Also, when directly investing with brokers (Saxobank & Interactive Brokers), the investor will be bombarded with more than 40,000 plus instruments, which will be challenging for an average individual who has lesser/no knowledge about choosing the right investment instrument. That is why retail investing comes in (e.g. Zurich, Metlife, RL360) to help out an individual filter which investment instruments to use by providing model portfolios as per the risk profile of the investor. However, this will require an individual to save regularly every month (which is a good way of forcing oneself to save up but may not be feasible for some). Additional charges will also be incurred since these funds are managed funds.
However, this article is about a low-cost investment platform which
- does not require a huge initial deposit (less than 500 USD)
- can invest with any amount, either regularly (monthly) or anytime when money is available
- provides access to global funds (exchange-traded funds or ETF)
- has low-cost fees, thereby maximizing returns
- allow’s goal-based savings and automatically helps you calculate your monthly savings to reach a goal
- gives a model-portfolio that is based on an individual’s risk profile
StashAway vs. Sarwa
In 2017, Sarwa was established in the United Arab Emirates (UAE) which I believe is the first micro-investing platform in the country. This is similar to Stash and Robinhood which I mentioned earlier.
However, Sarwa is limited only to clients in the Middle East & North Africa (MENA Region). Considering that I have already done financial freedom coaching sessions worldwide (e.g. Korea, Mexico, Seychelles, Ireland, UK, US, Indonesia, Philippines, etc.), I was actively looking for a similar low-cost investment platform but not only limited to MENA residents. And I found StashAway which is based in Singapore (www.StashAway.sg).
The good thing about them is they can cater to anyone in the world (of course except those countries on the FATF blacklist. But for citizens under FATF blacklist but residing outside their own country, they may be onboarded.)
So there were two options, Sarwa for MENA clients and StashAway. However, looking at the cost, StashAway seems to be better. Here is a comparison.
StashAway |
Sarwa |
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| Account Management Fee (Annual) | 0.20% – 0.80% | 0.85% |
| Expense Ratio for ETF (Annual) | 0.15% – 0.25% | 0.10% (average) |
| Broker | Saxo Bank | Previously Interactive Brokers but now with Saxo Bank |
| Portfolio Model or Investment Strategy | ERAA (Economic Regime-based Asset Allocation) | Modern Portfolio Theory (MPT) |
| List of ETFs | Click Here | Click here |
| Minimum Initial Deposit Requirement | None | $500 |
(Note: The data above are clickable and you will be directed to the actual source of information)
At that time, my recommendation was, if you live in the UAE, you can still go with Sarwa even though with a little higher charges since if you will open an account in StashAway Singapore, though it has lower charges, you might be paying higher for international transfer charges.
However, the good news is, StashAway (www.StashAway.ae) is already in the UAE and they have launched last 16 November 2020 (click here for news). So this means, no more international transfer charges for those living in the UAE!
That’s why I am so excited to share StashAway’s platform with you since,
- it can allow you to invest with any amount, with no lock-in period, no monthly minimums
- it has lower fees
- it requires zero minimum deposit to open an account (so you can even start 100 AED for your savings)
- your funds will be invested in global exchange-traded funds (see here). The underlying ETFs also have very minimal charges for fund management fees.
- there is no need for you to go into the nitty-gritty details of scouring through various investment instruments because a well-balanced portfolio is already prepared for you as per your risk profile
- there is an automatic rebalancing of your portfolio, so no need to do anything. Just continue investing to reach your goal.
DISCLAIMER: I am not affiliated with StashAway. Any investment involves risk. I should not be liable for any loss arising from your own investment decision. Please perform your due diligence.
Why am I excited with StashAway?
I am because aside from being a low-cost investment platform and with all the benefits I mentioned above, it is also aligned with what I have always been preaching about saving – that it should always be goal-based (click here to read more). And they have a tool to help you out with that.
You can save up for a specific purpose, then as per your risk profile (e.g. conservative, balanced, aggressive), it will already calculate how much you need to save every month to reach your goal.
With their app or web-based portal, you can already see how much your money has been growing (screenshot below was taken after 2 months when my initial deposit was allocated to the global ETFs – I already got $72.64 growth from $680.09. Nice! However, please note that past performance is no guarantee of future results).
You can also view which sectors and regions your money is allocated to,
And you can also see a full asset breakdown. You can even click on the specific sector which will provide you the exact details of the fund (e.g. Small Cap will give you this fund).
Regulations
Of course, we want to make sure that our money is safe that’s why I have to also do my due diligence. So far, I have crossed check with the Monetary Authority of Singapore, they do have the license and are listed with the regulatory (see here). They are also regulated by the Dubai Financial Services Authority (click here).
With regards to the money, the broker is SaxoBank, basically, the money is not with StashAway. So in an event of bankruptcy event, the money is held with the custodian bank. They have a full article related to security. You can click here to read them.
So how does this work?
Basically, you just simply open an account with them, transfer funds, and allow your investment to run on autopilot. Simple.
FULL DISCLOSURE: Referral link ahead.
One more thing, if you decide to start saving with StashAway, they have an awesome referral scheme wherein BOTH OF US (the referrer and the referee) would benefit. We both will have six months’ worth of fees waived (on up to $50,000 StashAway portfolio). That’s a win-win situation for both of us. You won’t be able to get this benefit if you are not referred (Terms and Conditions Apply). So be sure to click on the referral link below:
My Referral link: https://www.stashaway.ae/ref/allan-calumpang
If you have questions about the platform, please do not hesitate to reach out and I’ll be happy to guide you.
