Review: StashAway Simple™ – Projected 1.9% pa, No Minimum Nor Maximum Balance With Full Liquidity

Update 01/09/2020: The rate has been reduced to 1.4% p.a.

Bank interests are down (eg. OCBC, UOB, StanChart), and alternative products that give decent returns at a low risk level are starting to get their time in the sun. While Singlife and Etiqa have launched insurance policies that closely emulate savings accounts, StashAway does something a little different with StashAway Simple™.

Instead of an insurance policy, StashAway Simple is an investment fund. It allocates 50% of the amount placed in it towards a money market fund, and the other 50% towards a short-term bond fund. These are low-risk asset classes, and StashAway claims that there is a 99% chance that you will not lose more than 1.7% of your money.

Wait, so the capital isn’t guaranteed?

As with every investment, there is a risk of losing one’s capital, and make no mistake – this isn’t a savings account nor a capital guaranteed insurance policy. Nevertheless, the underlying investments are relatively low risk, although this would do little to pacify risk averse savers who would certainly prefer their capital to be guaranteed.

Neither is the interest guaranteed. What then is the use of StashAway Simple when alternatives like Singlife Account, Elastiq, and Capital Gro Ease exist?

Possible use case

I think filling up Singlife Account for 2.5% pa is a no-brainer move for now. Unfortunately, the cap of $10,000 is quite low, and excess savings can be placed in places like StashAway Simple, Elastiq, or Capital Gro Ease.

Compared to StashAway Simple’s lack of deposit or withdrawal restrictions, however, Elastiq is more restrictive as your top-ups or withdrawals need to be in multiples of $500. Also, StashAway Simple allows for the use of Supplementary Retirement Scheme (SRS), while Elastiq doesn’t. StashAway Simple also has no minimum balance, unlike Elastiq which charges a fall-below fee for amounts less than $5,000.

Capital Gro Ease allows for the use of SRS, but it doesn’t have the flexibility of withdrawals like both StashAway Simple and Elastiq… Although if you are indeed using you SRS funds, would you mind the lack of liquidity? Hmmm.

For people okay with the (low) investment risk and wish to have unrestricted top-ups and withdrawals, StashAway Simple might be a more attractive option, but I do wonder about the size of this group of people.

Alternatively, people with a lot of funds, well in excess of $200,000 may also find this useful since it has no cap to the amount of money that can generate this 1.9% projected return.

Conclusion

I think StashAway Simple is a good idea with an unfortunate return rate given the added risk relative to its insurance peers of Singlife Account, Elastiq and Capital Gro Ease. 1.9% is a rather unattractive rate given that neither the capital nor interest is guaranteed, and it would be a lot more palatable if it were at least 0.3 to 0.5% pa higher than its alternatives.

The good:

• No deposit requirements or withdrawal restrictions
• No minimum balance
• No limit on the balance that can earn a projected rate of 1.9%
• Use of SRS allowed

The bad:

• Neither capital nor interest is guaranteed
• Return of 1.9% pa is unattractive compared to its capital guaranteed peers

The ugly:

• If its projected rate falls below guaranteed products

★ ★ ★ ★ ★ ★ ☆ ☆ ☆ ☆
6 Stars of Sethisfaction

The new score after its 1st September revision of returns to 1.4%:

★ ★ ★ ★ ☆ ☆ ☆ ☆ ☆ ☆

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