Investment

You don’t need StashAway (or other robot advisors) with eToro

Investing bites is a series of short-one idea posts. This is not an investment recommendation.

I like robot advisors like StashAway and had invested with them. But if you trust eToro as a financial service provider, you should consider ditching all the robots and build the same portfolio for zero fees.

Building the same portfolio

Depending on your risk level, you can build the exact portfolio in eToro like the 26% risk level portfolio in StashAway.

or close to copying the 6.5% risk portfolio:

To do that, check the asset details in the app, and you allocate the funds based on the % used in the app. (In picture: Building a 14% risk portfolio)

Why switch from robot advisors to eToro?

eToro charges about 2-2.6% of forex exchange fees when you deposit. There are no transaction fees or yearly fees when you buy the underlying shares. Should you plan to hold your investment for the longer term (>3 years), eToro will save you thousands in the long run.

Closing of trade. You can close a position instantly at the market price. This is usually not the case with StashAway. The price you redeem an investment can be very different from the price you withdraw from the system.

Dividends from the ETF will be credited into the account.

Portfolio optimization

One of the benefits of robot advisors is the famous portfolio re-optimization. So keep yourself informed of the updates.

Cons of using this method

eToro is not licensed in Malaysia, and some say it’s a scam. It’s, however, regulated by the Australia ASIC (for Malaysian accounts). My personal view is that neither guarantee fund protection, so the question is, which government do you trust more? Note: I am not trying to convenience anyone to sign-up for eToro; I am merely suggesting a way to build your portfolio if you are already an eToro client.

Consistently open trades as the same portfolio allocation as StashAway. (Aka no reoccurring deposit as highlighted by Marcus Keong ) You need to periodically fund the account to achieve dollar cost averaging like StashAway. This will test your determination to invest for the longer term. *note: once you are used to allocating your funds according to the app %, it takes less than 15 minutes/month to set up the trades. That’s 180 minutes (3 hours) a year. It’s relative if that’s worth it to you.

ETFs in eToro is CFD products, meaning you can accidentally short the shares and will incur fees.

Conclusion

I am not advocating that robot advisors are not good. If you do not use/trust eToro, this method is out of consideration. But if you have both, what makes you choose to fund the same investment at a higher cost?

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