StashAway Simple Review: The Fixed Deposit (FD) Killer?

After it’s launch in Singapore in late November last year (2019), StashAway has finally launched StashAway Simple to all Malaysian users today!

Now, if you have read my StashAway in-depth review earlier this year, you would know that my minor rant about the robo-advisor is not getting StashAway Simple readied to all Malaysian users back then.

So, what exactly is StashAway Simple?

Simply put, StashAway Simple is the company’s alternative to conventional financial vehicles like the Fixed Deposit (FD).


What Makes StashAway Simple so Special?

In my opinion, there are a few things that make StashAway Simple stands out among conventional financial vehicles like FD:

  1. Earn a projected return of 2.4% per year. (p.s. Maybank 12-month FD rate is at 2.10%)

     

  2. No minimum balance required – you can start using StashAway Simple at any amount, anytime you want (this is really StashAway’s trump card).

     

  3. No lock-in period like FD – deposit & withdraw anytime you want.

     

  4. Zero service + platform fee! The only cost involved is a (very) minimal fee of approximately 0.165% charged by the underlying unit trust manager.

    p.s. the fee is already been taken account in the 2.4%/year projected return, so don’t worry about the fee affecting the return. :)

     

  5. Shariah Compliant.

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StashAway Simple has just been launched in Malaysia


Where Does Your Money Go When You Invest Your Cash in StashAway Simple?

When you put your money into StashAway Simple, they are essentially invested in money market instruments that are extremely low risk.

If you are curious, the underlying money market fund of StashAway Simple is the Eastspring Investments Islamic Income Fund.


Is StashAway Simple Risky?

Every investment comes with its own risk.

That said, StashAway Simple is rated 1.8% under the StashAway Risk Index.

In other words, investing in StashAway Simple is just as risky as putting your money into FD – which is extremely low risk.


Should You Use StashAway Simple?

You should definitely consider using StashAway Simple if:

(1) You are looking for a better Fixed Deposit (FD) alternative for your savings.

Hate the high barrier of entry of FD? Dislike the long lock-in of FD?

I think you will love StashAway Simple.

(2) You are building up your emergency fund.

Looking to start building your emergency fund where you can have quick access to your money?

StashAway Simple is a great choice for you!

(3) You are looking for a place to park your cash while waiting for an investment opportunity.

If you are an investor that is currently parking your assets in cash, waiting for an investment opportunity, StashAway Simple is a solid place for you to place your cash.


Competitors

StashAway Simple solves a crucial headache of high-barrier of entry & long lock-down period of the conventional Fixed Deposit offered in the market.

To be honest, if StashAway Simple was to be released in Malaysia earlier this year, it would be a no-brainer for me to recommend this straightaway to people.

However, in the highly competitive space of financial technology and innovation, a 6-months period can change a lot of things.

A rise of new competitors in the space is one of them.

Introduced in April this year, BIMB’s Best Invest app allows investors to invest in its BIMB Dana Al-Fakhim money market fund from as low as RM10.

Since the underlying asset of both StashAway Simple and BIMB Dana Al-Fakhim fund are equally money market instruments AND both provide almost similar flexibility (low barrier of entry), they are without a doubt the closest and best solution for people looking for an FD alternative now.

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The BIMB Dana Al-Fakhim Fund via BEST Invest stands head-to-head with StashAway Simple

No Money Lah’s Verdict: Simple is the New Breakthrough

With the rise innovations in the financial solution space, it is refreshing to keep seeing new, innovative products from robo-advisor platforms like StashAway.

In many ways, in the financial services industry, simple is indeed the new breakthrough that the consumers need.

Personally, I have always enjoy using StashAway to complement my investment style and I have long waited for StashAway Simple to be introduced in Malaysia.

Now that it is finally here, I am super excited to give it a try and I highly suggest you to check it out too!


Related: Read my full review on StashAway HERE


How to Build Your Emergency Fund?

An emergency fund is one of the least discussed topics in personal finance. Yet, it is the most crucial aspect of our financial life that will save us in times of unexpected crisis, if prepared well.

In spite of Covid-19, if you are still earning an income, you should really consider to start building the foundation of your financials via an emergency fund.

Typically, most people would opt for Fixed Deposit (FD) to build their emergency fund. That said, if there is a better alternative in town, would you be interested to learn more?


What is an Emergency Fund?

An emergency fund is essentially the money that you allocate on the side in case of unexpected financial emergencies like unemployment or a loss of income.

As a minimum, one should aim to build a 3 to 6 months’ worth of emergency fund (ie. 3 - 6x Your Monthly Expenses).

Now, it is crucial for us to understand the mechanism around an emergency fund:

It is not about growing the fund like what we do with investing. Rather, with an emergency fund, we are trying to preserve the value of your emergency fund so it doesn't lose its value with time.

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Where to Place Your Emergency Fund: Money Market Fund

Money Market Funds are funds that invest in low-risk assets such as government securities, treasury bills, commercial bonds, and other highly liquid securities.

This means that unlike stock market investments that are generally volatile, the low-risk assets in a Money Market Fund is relatively stable & consistent.

Reason being, most assets under a Money Market Fund have a maturity date where it almost always ensures a return. 

Normally, most assets under a Money Market Fund matures in 1 year or less. This ensures the liquidity of funds that allow you to buy and sell relatively easily.


Money Market Fund vs Fixed Deposit (FD)

(1) Competitive Return

Money Market Funds generally pays a return of 3.0 – 3.5% annually. On the other hand, FD rates have been hovering in an average of 2%.

(2) Better Liquidity

Money Market Fund is generally more liquid than FD. This means that there is no lock-in period and you can deposit and withdraw whenever you want.

(3) Lower Barrier of Entry

Not only that, a Money Market Fund also has a relatively low barrier of entry compared to FD. This means that you can start investing in Money Market Funds from as low as RM10 and still enjoy the returns.

In comparison, there is a relatively high cap for FD deposits that ranges from RM10,000 to RM100,000.


What are the Risks of Investing in Money Market Funds?

Investing in a Money Market Fund is not without its risks, although it is quite minimal relative to the stock market.

(a) Interest Rate Risk 

Interest rate risk refers to the impact of interest rate changes on the valuation of fixed income securities.

Essentially, when interest rates rise, fixed income asset prices generally decline. This may lower the market value of the Fund’s investment in fixed income securities, which will affect the net asset value (NAV) of the Fund.

The opposite may apply when interest rates fall.

(b) Credit/Default Risk 

Credit/Default risk refers to the ability of issuers of fixed income assets (eg. a company’s bond) to make timely payment of interest or profit.

This means that if the issuer faces any challenges to make payment, it may impact the value as well as the liquidity of the fixed income assets of a Fund.

To manage the risks involved, a Money Market Fund will normally opt for high graded bonds and securities. This means that the chance of default will be relatively low and hence ensure peace of mind.

All in all, Money Market Fund’s investment in low-risk assets ensured it’s stability, making it a great FD alternative to build your emergency fund. 

That said, please be reminded that it is NOT a capital and return guaranteed vehicle as there are still some risks involved in it.


3 Money Market Funds Options

There are many money market options out there, varying in fees and deposit amount. For the options below, I am going to share with you 3 options out there which is suitable for most people.

  1. BIMB Dana Al-Fakhim via BEST Investment App

The first money market fund that I think is a great option for most people is the BIMB Dana Al-Fakhim (Money Market Fund) via BEST Investment App.

Its low barrier of entry of just RM10 is the reason why I would recommend this to most people that are looking to build their emergency fund via money market.

To start, just go ahead and install the BEST Investment app on your phone (select Do It Yourself --> BIMB Dana Al-Fakhim), and start contributing to your emergency fund.

Install BEST Investment app HERE.

Click photo for more fund details.
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  1. Opus Money Plus Fund

The reason why I feature Opus Money Plus Fund is due to its overall fee structure that is lower than other money market options out there.

Typically, most money market funds have a management fee of up to 0.5%/annum. In contrast, Opus Money Plus Fund features a maximum management fee of 0.35%/annum.

Account Opening Details HERE.

Click photo for more fund details.
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  1. Phillip Capital Money Market Fund

The final option that I am featuring here is Phillip Capital Money Market Fund.

The reason for this feature is because I am personally having my emergency fund parked with them.

That said, when it comes to ease of access, Phillip Capital is the least friendly one as it requires applicants to still fill up physical forms to open an account.

Account Opening Details HERE.


4. StashAway Simple (Updated 15/6/2020)

Newly launched in June 2020, StashAway Simple comes into the scene as a reliable alternative to Fixed Deposit (FD).

For an in-depth review of StashAway Simple, click HERE.



Money Market Funds Comparison

Click to enlarge

No Money Lah's Verdict

Hopefully this article gave you a good idea on how to get started to build your emergency fund!

Do you have any other suggestions on where to place your money for an emergency? Share with me below! :)


p.s. Already have an emergency fund in place? Wanna kickstart your investing journey for a new (& consistent) income stream?

Scroll below for more info!