StashAway vs Cryptocurrencies: Which One Should You Choose?

So I know many of you in Malaysia and Singapore have heard of StashAway, which is a simple, actively managed investment tool with the goal to grow your money and a potential option to achieve financial freedom sooner. Personally, I'd recently created a new account StashAway after I did my research and found many positives that I feel is great for diversification of my investment portfolio. Coming from a person who is more bullish on the cryptocurrency space than the stock market, I'll do an article to weigh up the pros and cons of StashAway and how it fare compared to cryptocurrency investment.

Note that the review I'm giving is also referenced from the Youtube reviews on the app by SuyinOng and Your Money Game.

What is StashAway?

StashAway is an active management investment company where you can buy ETFs, bonds and fixed deposits. You can use the platform on the desktop and mobile app, both have very simple and clean homepage backgrounds which gives a very nice first impression. It's so user-friendly that the agreement terms have a summary so that you can focus on the important terms and conditions which saves you time for the reading!

According to the agreement: "they will open a securities brokerage account with Saxo Capitals Market Pte Ltd, which is also regulated by the Monetary Authority of Singapore (MAS), which is authorized to carry on business in both dealing in securities and providing custodial services for securities in Singapore. They will use our monies maintained in a Trustee account run by Pacific Trustee Berhad to buy and sell investments on our behalf through this account with Saxo. Saxo in turn has an arrangement with Citibank to hold investments which they buy and sell, and an arrangement with HSBC to hold the monies they transfer for the purchase and sale of investments and returns." Conclude from this summary, they are pretty transparent in telling you how they use our funds and the investments we make are regulated. Besides, StashAway is also regulated by the Securities Commission of Malaysia, so this company is definitely legal in their business. You can read more here.

The registration is also user-friendly according to your investment goals. You can input your financial goals so that you can have a clear idea of how much you need to invest monthly to reach your goal. For example, if you plan to retire early, they will help you allocate your assets with a more balanced financial risks to align with your goals. You are able to invest in fractional ETFs as low as 0.0001 units of an ETF, and the assets are spread across the world so that you are able to build a "Ray Dalio sort of portfolio" consisting of US and international equities, bonds and gold. You can always re-balance your portfolio according to the risks that you want to take by adjusting the risk index between equities and bonds.

As you can see from the graph, the risk index can be toggled between 6.5% to 36% from just 5% Equities-95% Bonds to 100% Equities-0% Bonds, so it's up to you to decide how much you want to risk your investments. Suyin and The Money Game currently uses a 36% risk index which is 100% equities. In my opinion, holding some bonds would be beneficial especially during a COVID-19 pandemic like now as there are many uncertainties with the world economy.

For the fees, the active management fee is 0.8% if you have the first RM50,000 in your portfolio, and the annual fee rate goes down according to your total investment amount, down to 0.2% if you have a portfolio above RM3 million. There is also an expense ratio of 0.2% p.a., while the currency conversion fee is 0.1% on the spot rate. If you're new to investment and you're worried they'll take those percentages from your account, they don't. Like any ETF, StashAway calculates the fees already before injecting the remaining balances to your account. The good news about using the platform is there is no account setup or exit fees and no deposit and withdrawal fees.

StashAway vs Celsius Network

So how does this platform fare compare to a Centralized Finance (CeFi) Cryptocurrency platform? I'll take Celsius Network as an example because of my experiences in using the platform. If you're new to Cryptocurrency investments and would like to get started, you can start by learning how Celsius Network works to earn you passive income using your cryptos with my previous article on Celsius and many more articles that you can find in PUBLISH0X first before you continue with this article.

Here's the summary about Celsius if you're lazy to read those articles. Celsius Network is a platform where you can earn interests on your Cryptocurrencies without any complicated conditions, including the biggest cryptocurrencies such as Bitcoin, Ethereum and USDT. They work like banks where they use our deposited money to lend to other institutions, charge them high interests and giving back the depositors 80% of the profits while keeping 20% to themselves for operations and profit, thus the reason why they are able to give high interests on our cryptos. Currently, Celsius is offering weekly compounding high interests of up to 22.4% which is something unheard of in the traditional Malaysian banks.

Let's compare on how much investment returns you can get between both platforms.

My parameters I used are as follows:

Initial Deposit: RM30,200

Monthly Deposit : RM1,000

StashAway Annual Return: 6% APY (Reference from StashAway's calculator)

Celsius's worst-case Annual Return: 7% APY

Celsius's best-case Annual Return: 11% APY (Both APY referenced from Celsius current & historical rates)

Number of years: 30

I mimic StashAway's calculator setup to fill in the rates that are published by Celsius. I select the APY range for USDT tokens because they are pegged to the US Dollar where the price is more stable. I set the APY in the range from 7% to 11% approximately. Currently, Celsius is offering 11.55% earn in USDT, so I assumed that the platform will earn a fixed APY of 11% every year for the next 30 years as the best case scenario, while earning 7% APY as the worst case scenario. To summarize the comparison, at APY of 11%, the projected amount accumulated at year 30 for StashAway is RM992,296, while the projected amount for Celsius with monthly deposits of RM1,000 is RM3,816,282. Without recurring monthly investment, the projected amount for Celsius is RM815,953. At APY of 7%, the projected amount accumulated at year 30 for Celsius with monthly deposits of RM1,000 is RM1,517,035. Without recurring monthly investment, the projected amount for Celsius is RM246,270. This comparison shows how much more powerful compounding interests are on Celsius than on StashAway. The reason I added the "Celsius Without Monthly Deposits" is for the people who chooses the coast FIRE your way to retire early without adding more investments but still it's not far off to reach your retirement goal compared to StashAway. Notice that I also didn't include the 5.12% you can also earned additional for holding CEL tokens because my calculations are all based in earning-in-Kind rather than earning-in-CEL.

StashAway's 6% gross return is also a pretty conservative number given that the best performing ETFs for the last 10 years brought a range between 5.8% to as high as 50%, and also according to Suyin's 1-year review, she managed to get a return of 16.88% which is a great return. Personally, due to the economic downturn, I'm not very bullish on the stock market now despite also holding some individual stocks in the U.S. market as the U.S. keeps suffering economically and socially from COVID-19 infections, which prompted more dollar printing which might increase the risk of very high inflation. Thus in my opinion, cryptocurrency can be a way to battle against USD inflation, because as more money is printed, the value of the currency decreases which also brings up Bitcoin and other cryptocurrency value against the dollar.

Summary

Both StashAway and Celsius have tons of similarities as they provide user-friendly interfaces, no deposit and withdrawal fees, regulated in their own ways and are considered trust-able and safe platforms to use. Although Celsius gives a much higher returns compared to StashAway, there's still the risk that Celsius might be hacked and your funds are not covered by an insurance but instead they have their own balance sheet to cover some of your losses. For StashAway, they guarantee that if an unlikely bankruptcy happens, the money held in trust or custodian account can't be touched because you are the owner of your account, not them (link here). The account is also segregated from StashAway's operations and assets, which guarantees that you can ahave full access and claim your assets no matter what happens to them (link here). Thus, I would say StashAway is safer than Celsius in that aspect, but I also like what Celsius did about securing their platform with 2FA and HODL mode (read my article above to know more). Personally, I would use StashAway Simple to keep my 6-month emergency fund so that I can get competitive interest rates of around 2.4% compared to what other banks are offering in their FD rates. Since I love researching and analyzing company fundamentals, I'm more of an individual stock picker so I won;t be using the investment platform at the moment, while also focusing on diversifying my cryptocurrency portfolio to many other tokens that brings great returns with a lot of use cases.

Here are my referral links if you plan to sign up Celsius & StashAway

Celsius: https://celsiusnetwork.app.link/1587314a52 (code: 1587314a52): Register an account to get free $20 in BTC when you deposit a minimum of $200 into Celsius Network.

StashAway: https://www.stashaway.my/referrals/haoyenl9vxv: We both get free up to RM30,000 management fee waiver per person (more info here)