How to Invest Using a Robo-Advisor (in Malaysia) and Why

Every once in a while, humans create really cool stuff at the intersection of technology, finance and psychology. The psychology part is crucial: it’s not enough to create something good — it needs to match human behavior.

Otherwise nobody would use it.

Today we’ll look at one of those recent inventions: Robo-advisors. Which I’m convinced is a great way to invest for most people.

Call me a geek, but I haven’t been so excited about something finance-technology related since I discovered Bitcoin three years ago.

Why and how? Let’s explore this cool new technology together — which has just been given the green light to operate in Malaysia. And by the end of this article, you can decide whether to give it a try or not.


WTF Is a Robo-Advisor?

Robo-advisors are a type of software which helps people invest. Using mathematics and algorithms, they put people’s money into a bunch of assets, chosen according to how much risk they can handle.

I know, when you heard the term “robo-advisor” you probably thought of a super-intelligent robot you could throw questions to: “Jarvis, which stock should I buy tomorrow so I can be richer than Jho Low in two weeks?”

And not only would Jarvis tell you the answer, he’d automatically handle all the New York Stock Exchange paperwork, make lightning-fast 2,000% trades, and even buy you your damn yacht while you’re watching Rami Malek at the cinema.

Is this the real life… Is this just fantasy?

No, we’re not there yet. But even based on today’s technology, robo-advisors offer incredibly powerful (though not immediately obvious) benefits. Let’s look at how these work, then I’ll tell you why they’re so useful.


Girl smiling at phone at coffee table
Not only does technology make you smile; it changes the world


How Do Robo-Advisors Work?

Think of robo-advisors as software that invests your money automatically. Automatically being the keyword here. All you need to do is bank transfer money to the robo-advisor, just like how you would top up an e-wallet.

That’s it. You don’t need to do anything else. Once your money arrives, the software automatically invests your money into a portfolio of Exchange Traded Funds (ETFs) that both of you have agreed on earlier.

(In case you’re wondering why it’s always a portfolio, and not just one thing they invest in — this comes down to the principle of “don’t put all your eggs into one basket.” And why ETFs? Because they’re the most cost-efficient way to invest right now. Click to learn more about investment portfolios and ETFs.)

Back to automation — you can even set up your bank to automatically send money to Mr. Robo every month on salary day. Boom! You’ve now automated your investing process. You’ve taken your willpower out of the equation.

Which is actually where most people fail at building good habits. Depending on willpower fails — because people get tired, and guess what happens if you see the latest cool iPhone ad?

Instead, automate. Keep this up over a few decades and you’ll be rich.

And yes, you can withdraw your money back to your bank anytime.


“But I Don’t Like Risky Stuff…”

Ah… the paradox of investing. Everybody wants high returns, but nobody wants high risk. Is this the real life… Is this just fantasy?

The good news is, robo-advisors actually allow you to choose, whether you want very low risk, if you’re a high roller, or somewhere in the middle — and it’ll recommend a portfolio for you. Even better, if you don’t know what kind of risk you can handle, the software will help guide you.

So just answer a couple of easy questions, then Mr. Robo will say, “Okay Nora, I think you’re comfortable with a very low-risk portfolio. If you agree, this is where we’ll invest your money.”

Even better, you can start with a ridiculously low amount, like RM 1. So even if you’re not fully comfortable yet, why not start testing with something small? If you’re reading this, I’m pretty sure you can afford RM 10 to learn something cool. 😉 This isn’t like unit trusts, where the minimum amount is RM 1,000.

Because the best way to learn things is to try and experience them for yourself.


Stack of coins on table
Start small, learn fast


Why Are Robo-Advisors So Powerful?

Okay, if you’ve been following my writing, you know I’m not easily impressed, and I usually stay away from passionately recommending things. So why is mr-stingy so giddy about robo-advisors?


1. (Almost) Nobody Wants to Study Investing

Back when I first started writing about money, one of my hobbies was reading documents like company prospectuses and mutual fund annual reports. (Seriously, don’t you find those exciting?)

But over the years, I’ve realized that I’m the weirdo in the room. Almost nobody wants to get into that stuff, even though it’s exactly how you should approach investing. Most people would rather watch Narcos on Netflix than study Benjamin Graham’s “The Intelligent Investor.”

I’d really love for everyone to deep dive into finance like me. I really would. But the reality is, it’s never gonna happen. I’m not judging; I just understand human behavior better now. So knowing this — how should people who don’t like investing invest?

Right, get someone qualified to do it for you.


2. People Don’t Have Time

Okay, let’s say you’re part of the minority (yay, my people) that has some interest in investing: words like “PE ratio” and “200-day EMA” light up your eyes. Alas, you also have a very demanding job, and a young baby at home.

The problem here isn’t that you lack motivation. The problem here is you don’t have time. Do you have enough energy to thoroughly research new opportunities and monitor your current investments after office hours?

I don’t even have kids yet, and I’m already struggling like crazy.

When you’re young, life is about exploration. When you get older, it’s about priorities.

So if you don’t have time, the next best thing is to hire a professional to help. Who you can trust to be focused 24/7 (robots don’t get tired remember?) on things you can’t fully manage yourself.


3. Robo-Advisors Make Things Really Cheap

“Okay, I’m sold. I want a professional to manage my money for me. But aren’t financial advisors expensive?”

Which brings us to the coolest thing: Because robo-advisors are mostly software-based, they make it really cheap for people like you and me.

How cheap? First, I’ll compare them with unit trusts. Expensive unit trusts in this country charge 5.5% sales fees and about 1.7% for annual fees.

Expect robo-advisors to have 0% sales fees, and annual fees between 0.5 to 1%. That’s about 2 times cheaper even before you count sales fees, which if you do — is 7 times cheaper — for the first year.

Also, remember how I said the minimum investment is something ridiculously low like RM 1?

There’s no way in the world you would be able to buy highly-efficient ETFs from the USA using small sums of money like RM 1.

But due to the wonders of technology (and pooling together funds from many people), robo-advisors make this happen.

It’s a formula that we’ve seen time and time again. Take a previously exclusive product, then use technology to make it much cheaper — so that most people can use it. Like how AirAsia made flying available to everyone. Boom!

“Just wondering… wouldn’t a human financial advisor be better?”

It depends. Yes, you get an actual person to talk to, and if you’re lucky he/she could turn out to be really good at investing. (Bonus if they’re hot!) But it’s gonna be expensive. Thousands of Ringgit per year kinda expensive.

Maybe human advisors are more suitable for rich people who need lots of customization and cuddling. But for most of us, robo-advisors should be more than enough.


p.s. my robot is hotter than yours


“But Is It Safe? My Mother Said Fixed Deposits Are Best…”

Yeah, and your mother also said don’t stare at your phone so much but look where we are today?

The good news is that the Malaysian government (through the Securities Commission) sets rules around robo-advisors. Before any company can start offering “Digital Investment Management” services, they need to apply for a license.

And from what I’ve been told — it’s not easy to get one. There are lots of requirements designed to protect consumers, for example, in case the robo-advisor goes bankrupt — the government makes sure consumers can still get their money back.

Which of course you can. Robo-advisors merely manage the funds for you. The actual assets don’t belong to them. Instead, they’re stored by custodians/banks, who still recognize you as the rightful owner.

Breathing easier now?


“What About Returns? My Unit Trust Agent Says…”

“We just won 10 awards recently, including BEST FUND MANAGER! Our funds have done crazy well over the last 10 years!” *shows fancy graph*

To that, I offer some historical data, proven time and time again:

  • The majority of actively-managed funds (what your unit trust agent will likely sell you) do worse than passively-managed funds (like ETFs)
  • Funds with high fees do worse than funds with low fees
  • Nobody can accurately predict the market

Also, the USA and Malaysian stock markets have been in a spectacular “bull run” over the past 10 years. So it’s been easy to show that funds are doing well. But how long will this last?

Everyone gets blinded by returns e.g. “I want 12% profit!” (conveniently forgetting about 7% fees). But the truth is, for most people — choosing low-cost funds is going to be better in the long run.

Legendary investor Warren Buffett agrees on costs:

“Costs really matter in investments. If returns are going to be 7 or 8 percent and you’re paying 1 percent for fees, that makes an enormous difference…”


Hand, pen and calculator over calculation sheet
Remember, you STILL pay fees whether your funds make money or not


Should You Do It?

Consider investing with a robo-advisor if you:

  • Find investing scary, and have no interest (you should!) to learn how to invest. You’d rather someone smart do it for you
  • Are new to investing, and want a good starting point to learn
  • Are too busy to manage your own investment portfolio
  • Already have local investments, but wanna get some international ETFs priced in US dollars (you know, in case the Ringgit drops more…)
  • Wanna look cool af. When your long-lost-friend-turned-agent sends you that text:

“Long time no see friend
Wanna have coffee just to catch up…
BTW have you started investing?”

You get to reply:

“Yeah man, I’ve got robots automatically doing that shit for me. You?”


Where Do We Go From Here?

The first robo-advisor to launch in Malaysia is called StashAway. They’re originally from Singapore and have been doing well there for the past few years.

If you’d like to try, they’ve even got a special promo for you, my beloved reader: To get a 50% discount on fees for 6 months, click here.

I also expect that in the near future, more and more robo-advisors will be launching here. Can’t wait to try those too and share my thoughts.

Because in our country, we’ve been stuck for too long with expensive, yet unimpressive financial products. Feels like I’ve been waiting forever, but now robo-advisors offering low-cost ETFs are finally here. I really hope we’ll have more innovative things coming soon.

Technology will continue to change our world and make people’s lives better. Will you be a part of that?


– – –


Pics from Pexels, Pexels, Pexels, Pixabay & Pexels.

Not a sponsored post, though if you sign up with my affiliate link, you’ll get an exclusive 50% discount from StashAway, and I’ll get a small referral fee.

Join more than 2,820 subscribers to receive free updates on living a better life.

I respect your privacy and will never spam you.


  • Hi Aaron, been following your content and it has been personally helpful for me, keep it up!

    I have been doing research about robo advisors and it certainly looks promising.

    However I would like to hear your thoughts about the fee structure, as we know, high fees can most certainly kill our gains, although it seems to have been said many times for robo advisor reviews in Malaysia that the fees are significantly lower than that of engaging a financial advisor/broker and buying unit trust, from what I’ve understood in the US, their robo advisors charge significantly lower fees (e.g 0.25%) but yet some savvy investors deem that too high as they can buy ETFs/vanguard fund for as low as 0.03% fees by going DIY.

    I your opinion, do you think the value of robo advisors outweighs its management fees? (Let’s say in the context of a millennial who isn’t the most savvy & active investor). Thanks!

    • Hello J,

      Thanks for dropping by. Yup, I think the value of robo advisors outweighs the management fees. The problem with going down the entirely-DIY ETF route is one may not have enough capital to buy so many ETFs. Also, it’s difficult to manage all the ETFs (time is your constraint here). Lower fees would of course be better, but the question I ask myself is: “If I were not to use the robo-advisors at 0.8% annual fees, what alternative do I have?”

  • Hey Mr Stingy, thanks for another great article. I made my first deposit recently in StashAway and am curious as to how your portfolio has been doing. Would you be willing to share about that?

    • Hi Apricot,

      Thanks for the comment. I think it’s performing slightly better than expected (something like 9% vs expected 6.5% after one year). The crucial thing to remember about robo-advisors is they’re not necessarily going after the highest returns. On the other hand, I would say robo-advisors try more to give good returns WHILE balancing the amount of risk they take + keeping fees low. In that sense, investment returns is only one piece of the “is this product good?” question. Hope this helps!

  • Thank you for the great write-up! My Stashaway portfolios are growing at 14% and 15% respectively and I have just increase my monthly auto debit to Stashaway. Cheers!

  • Do you foresee that we can use our EPF money to invest in robo-advisor funds? Or we haven’t reach that stage?

  • Hi,

    Thanks for the great content as usual. Keep it coming!

    I’m just tried your promo code mr-stingy-CAcAAg4MCA8NAA0HBAAJCg for Stashaway Malaysia and it was not valid. Just wondering if it has expired.


  • i really want to do this but theres certain part that i dont understands. Plus, I am a student, can i join this?

    • Hello Hakim,

      As long as you’re above 18 years old it should be fine! If there’s anything you don’t understand I recommend you go to the website and give it a try. After a while, you’ll learn what you need to know!

  • I would like to see more competition in the Malaysian robo-adviser arena, as this is likely to drive down the management fees levied to investors. For reference, UK robo-adviser fees are around half of those of StashAway, and in the US, they are around one-third.

    You have compared StashAway’s management fees with those of typical unit trust providers, and rightly concluded that StashAway’s are far cheaper. May I suggest a better comparison of costs would be between those of StashAway and buying the same ETFs through a normal broker. In this case I think you will find that StashAway’s costs are significantly greater.

    • Hey Terence,

      Thanks for the comment. I would love to see more competition too.

      I haven’t done a comparison of costs between Stashaway vs buying ETFs through a normal broker for the below reasons:
      1. The low buy-in fee. You can get started with Stashaway with RM 1. A much more affordable way to invest for most people. You wouldn’t be able to buy the same through a normal broker.
      2. The time commitment. I don’t think most people have the time/energy to buy/manage a basket of 10 ETFs like StashAway would automatically do for you. Also, let’s say the minimum buy-in to make the international brokerage fee worthwhile is RM 1,000 for each ETF. That would mean you need to start with minimum capital of RM 10,000. Back to point number 1.

      If you’ve done a comparison of costs StashAway vs buying ETFs through a normal broker, I’d love to read it though. 😀

    • Not really. It’s a bit like a combination of multiple ETFs. For a slightly higher fee than if you bought it all yourself.

  • I like I’m Super Stingy here. I buy unit trust without paying a single fee because of promotion from

    Check out the website on a monthly basis to find this promo.

    Talking about fees, if you stay with Robo-advisor for 10 years, you end up paying 10% 🙁

    • Hey Super Stingy,

      Thanks for the tip. However how did you get 10% fees for staying with a robo-advisor for 10 years?
      (1% x 10 years is not equal to 10%, because fees are calculated yearly, and also your investment grows yearly.)

      By that math, most unit trusts charge about 1.7% per year for annual fees, so 10 years of unit trusts would be 17%?

  • Hi Aaron,
    May i know what is the projected returns investing in this robo advisors compared to FD which sometimes we can get 4.x% per annum?

    • Hi David,

      The whole idea of investing in robo advisors is maximizing your returns for the amount of risk taken. There are many portfolios, depending on your ability to handle risk. So if you’re willing to take more risks, then you can aim for higher returns. Likewise, if you’re conservative, the expected returns will be lower.

      However, they are always going to aim for more than 4.x% per annum. Because at that kind of return rate, might as well put into FD (almost 0% risk).

  • Hi Aaron,first time visiting your blog. Love the way you write. Keep up the good work!! The question I want to ask is have you started using stashaway?

    • Hi Joanna,

      Thanks for the comment and your support. Yeah, I’ve started using it already, and it’s been a really good experience so far! Any thoughts from your end?

  • Hi Aaron,

    thanks for this article. Definitely very helpful for myself who is new to investing.
    Regarding the promocode from Stashaway, i can’t seem to link to the promocode after registering.

    Do you have the promocode as referral from your side directly ?

    Thank you,

    • Hey Joshua,

      Sorry for the trouble and late reply.
      What error message are you getting when you try to use the promocode? (I’ve just tried the link and it works.)
      The code itself should be: mr-stingy-CAcAAg4MCA8NAA0HBAAJCg. Hopefully this helps…

      • Can you check your referral code please? I tried using the one you gave Joshua but it doesn’t work.

        • Hey Daniel,

          As long as you use my referral link — everything will work. You don’t need to manually key it in. Anyway, I’ve emailed you…

  • Great post, Aaron! I just signed up for Stashaway last weekend, but am still unsure about it. I’ve read that a big portion of the funds get invested in U.S equities and bonds, which means that there’s a 30% withholding tax on dividends that eats into your profit. Would Stashaway still be a worthwhile investment despite this? Would love to hear your take on this.
    P.S: On a possibly non-related note, I’ve noticed that Public Mutual has come up with a new U.S equities fund just this week (coincidence?). I’d imagine that the withholding tax would still apply in this fund, in addition to their crazy high sales + management fees. *shudder*

    • Hey Michele,

      Thanks for your support! Haha, great question. Sham has also asked a similar one, so here’s my answer:

      Yeah, dividends are subject to 30% withholding tax, but in the example of StashAway… Their broker will actually try to claim some of these back.

      More info below:

      But also they’ve run some studies showing that withholding tax is just one of the factors — and having factored it into the equation, they’re still confident that their allocations are best returns given the risk.

      Ultimately, I don’t think robo-advisors will give you BEST/SUPERB returns. But if you’re looking for sensible returns and someone to take the load of researching/buying/selling from you — I think they make sense. Sounds really convenient, and that’s why I’m in it.

      • Thanks for explaining, Aaron. At this point, I’m pretty sick of paying our exorbitant unit trust fees, so I’m game for giving this a go. If anything, it’s further diversification for me. Let’s see what happens with this 🙂

  • Hi Aaron,

    What is your opinion on the high allocation to the US market which is subject to a 30% withholding tax?

Submit a comment

Your email address will not be published. Required fields are marked *