A lot has been talked and discussed Robo advisors and if you are living in the modern world, this is one thing that you should really consider, especially when it comes to growing your money. There are many types of Robo advisors out there and in Malaysia, a few might tickle your interest if you are looking at a more ‘local’ platform.
Understanding and accepting new methods
Picking the right investment for yourself can sometimes be scary as you might not be an experienced money person. On top of that, you might not have the time and space to monitor all the different elements in your investment portfolio. That is what Robo advisors do. Basically, it is a platform that can automate the process of investing for you. Based on what your goals are and your level of risk tolerance, it creates a portfolio for you and then manages it somewhat. In most cases, your money is used to invest into EFTs or Exchange-Traded Funds which are mostly stocks, investments and bonds grouped together. As these systems are automated, they have their own set of algorithms and platforms which will differ how and where your money goes. So, which one in Malaysia seemed to be the most suitable for you? We outline the few more prominent ones below.
StashAway – International markets and high risk
If you have been reading up on Robo advisors, you would probably have heard of StashAway and it has been one of the higher-risk advisors. Previously, more than 80% of its portfolio was on US stocks but this has since been reoptimized recently, pushing it to nearly 40% while investing into gold exposure and China tech-ETF. Between January 2014 and June 2020, the CAGR from StashAway is about 8.9%.
Raiz – Small investments from change
Raiz is a unique platform where you can link your account to it and then it will round up the amount from your expenses. For instance, if you paid RM10.60 for a purchase, Raiz will round up RM0.40 and then put that into your investments. It mainly invests in 2 unit trust funds from ASNB or Amanah Saham Nasional Berhad where 80% of it goes to the ASN Equity 3 Fund and the rest into the ASN Sara 1 Fund which has had a 3.9% and 6.1% annualized 10-years return rate (July 2020).
MyTHEO – Letting your money grow
Like every other Robo advisors, you can decide on the level of risk you are ready to enter into. Generally, this is one which gives your money stable growth. It is involved primarily in equities of which almost half of it is in US stocks while the other goes to stocks in the global market. Between January 2013 and June 2020, MyTHEO has had a CAGR (Compound Annual Growth Rate) of 8.59% which is quite steady among the others.
Wahed Invest – For the risk-taker
Wahed Invest puts their investments in US stocks mostly (up to 65%). It is a Syariah-compliant investment platform that works around 3 ETFs and 1 unit trust. It reports a growth rate of 9.25% which is considered extremely good for any market. It must be noted though that Wahed has one of the more aggressive investment portfolios around.
How do you choose?
Choosing the right Robo advisor for you depends largely on your risk appetite. Among those mentioned, you should:
- Decide your risk level – Are you the one who dares to take risks and put in a large amount of money to get faster and higher returns (and possible losses too)?
- Amount to invest – How much can you invest per month or week? If you set aside an amount monthly, you might want to go for something more steady like MyTHEO. If you invest a lump sum every quarter, then StashAway might be suitable for you. If you don’t mind rounding up small amounts from your expenses, then Raiz could be your advisor.
- Coverage – This depends on where you want your money to go. If you think the US markets are booming, then you might want to go for MyTHEO or StashAway. Otherwise, you might want to invest in Raiz for a more Malaysian investment portfolio.