Co-founder and CIO
01 March 2021
Note: As of 1 December 2021, StashAway Simple™ has a projected rate of 1.0%.
From 1 March 2021, StashAway Simple™’s projected rate will be 1.2% p.a.
As COVID-19’s impact on economies has yet to diminish, central banks continue to maintain low interest rates, and in some cases, further lower interest rates. Our investment team expects central banks to continue keeping interest rates ultra low in the coming months in order to stimulate their economies.
Given the continued uncertain state of the global economy, we’ll be adjusting the projected rate for Simple on 1 March 2021 to 1.2% p.a.
Remember, Simple is technically an investment. This means that our investment team continually monitors it. To determine the expected projected return on Simple, our investment team reviews the past rate and expected rate with the underlying fund managers, and also assesses the economic environment. We update the projected rate whenever macroeconomic indicators and interest rate news seem to affect the foreseeable projected rate. When Simple’s projected rate increases or decreases, we’ll inform you ahead of time, just as we’re doing now.
You might be wondering why we aren’t just investing in different funds to earn a better rate instead of now changing the projected rate. It’s because our focus is on risk management: Simple’s StashAway Risk Index isn’t changing for a slightly better return. We believe that cash management should simultaneously serve two equal purposes: First, it should keep your cash away from risk; and second, it should grow your cash.
We designed Simple to deliver the best possible return with the lowest possible risk point. The math on the projected rate of returns is quite straightforward: StashAway Simple™ returns are the sum of the amortised yield of the two underlying funds, minus fees that the underlying fund manager charges, plus any rebates from the underlying fund manager.
Your returns with StashAway Simple™ = amortised yield of underlying funds - underlying fund manager’s fees + any rebates from the underlying fund manager
StashAway Simple™ will keep returning 1.4% p.a. until 1 March. So, this means that money in StashAway Simple™ is still projected to earn 1.4% p.a. through 28 February. That 1.4% p.a. includes the rebates we calculate daily, and distribute quarterly. We’ll distribute the next round of rebates at the end of April.
Though you may be able to find better projected rates for your cash, remember, we always encourage you to consider the risk that you’re exposing your money to. Not all cash management options out there are the same. You don’t want to take unnecessary risk on your cash in order to grow it.
Whether we’re talking about cash management or growth-oriented investments, we can’t talk about returns without talking about risk. If you have enough set aside for your emergency fund and short-term needs, then you might want to consider a low-risk investment portfolio that would better meet your return expectations.
It’s more important to minimise your risk exposure for your short-term expenses and emergency fund portfolio than it is to slightly increase the potential returns.
If you’re seeking returns upwards of 2% on money that isn’t earmarked for short-term expenses and your emergency fund, you might want to consider a low-risk growth-oriented investment. Our lowest-risk growth-oriented portfolio has a StashAway Risk Index of 6.5% (compared to StashAway Simple™’ SRI of 0.1%), that earned a 3.4% rate of return in 2020. Though keep in mind, past performance doesn’t indicate what will necessarily happen in the future, especially when you increase your risk exposure. See our investment returns.