Building multiple goal based portfolios within StashAway

I have been using StashAway for a long time (since 2017) and one feature that I have been more appreciative lately is the ability to create unlimited virtual portfolios for either savings or investments.

If you’re not using StashAway, don’t worry, most other robo-advisors also offer something like this, and I found that this is a useful way to create savings goals without being forced or locked down by terms and conditions like monthly insurance endowment plans.

I find multiple virtual portfolios useful for one simple reason – you can set a goal for each portfolio and work towards funding that goal – just like a crowdfunding project on Kickstarter!

My multiple goals within StashAway – two are investments portfolios and one for savings

Multiple investment portfolios with varied risk levels

There are people who create multiple investment portfolios to try out their risk appetite and see what kind of volatility they can stomach to grow their investments.

I also like to create virtual investment portfolios of different risk levels to help me psychologically when investing.

For example, I set up 2 portfolios of risk index 22% and 36% – the maximum achievable in StashAway’s app. If you don’t know what their Risk Index (RI) is about, then you can read the review here.

The 36% RI portfolio has a higher expected return over time, but it also has a higher volatility and 1% maximum drawdown of more than 36% in a catastrophic scenario.

So every time I dollar cost average, I’ll try to split them into 2 portfolios – one safer and one more aggressive – so that if my aggressive portfolio were to come crashing heavily, my 22% portfolio – being the less volatile of the two – will help to calm my nerves and avoid me panic selling.

I can then act accordingly and invest more heavily in the more aggressive portfolio, as it will lower my average cost of my positions and heavily rebound during the eventual recovery.

Conversely, if the stock market is very bullish and going up, then having the more aggressive portfolio will let you ride the wave without you FOMO-ing on missing out on the gains.

Net-net, you get to psychologically coach yourself to avoid panic during a downturn and partake in the upside rally.

Goal-based savings plans

The second reason is using them as goal based savings plans. For example if you’re thinking of saving up for a travel fund to Tokyo in 1.5 years after this whole COVID situation – and expect that you need around $3000 (or $167 a month) to enjoy yourself there including flights and accommodation, then you can create a goal-based portfolio with a more conservative risk level and set yourself out to save $3000 in 18 months.

You can set a fairly low conservative risk level to help you grow your funds so you don’t have to exactly save exactly $167 a month, perhaps put $150 a month and let it grow hopefully with a conservative rate of market returns over 18 months!

At the end of it, just top up the balance if needed, and you’ll be pleased to see how the power of the market (through market risk premiums) has helped you grow your funds.

You don’t want to set it too aggressive because you don’t want your portfolio to lose a large chunk of value just before your trip.

The same concept can be applied to other goals like savings for a BTO downpayment or home renovation loan. It’s simple, easily configurable to anything you want, and there’s no lock in.

Automate everything with recurring transfers

You can also automate the whole process with their inbuilt recurring transfers, or use standing instructions from your bank and route the funds to the various portfolios.

You can read my guide to StashAway recurring transfers for a more detailed look into how it works.

Basically you set it once, and forget it, then let the automation take care of your monthly or weekly investment or saving plan.

It’s very easy, and very fun to see your money work for you towards your goals! The best part of all, there are no lock-ins (sell and withdraw any time) and you can always rename your goals for another use or change the risk levels of individual portfolios at any time.

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    1. My experience is that my DIY portfolio has higher returns (thanks to tech outperformance) but it’s definitely more volatile. For example, with some indexes at all time highs, it’s difficult to want to add more positions in my DIY portfolio, but I feel more comfortable with StashAway.

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