Mutual Fund vs Robo-Advisor. Which Investment Is Better For You?

Hello Grasshoppa,

In the past, I have some posts about Mutual Fund & Robo-Advisor but I have never made any comparison of both investments before. What are the common similarities and differences of both investment platforms? Today we will be exploring more on both investments to see which investment suits you better. As an investor, each of us may have different investment goals to achieve but ultimately our common goal is the profit or ROI.

What are the Similarities between Mutual Fund & Robo-Advisor?

1. Both are professionally managed funds

2. Both funds invest based on your accepted investment risk

3. Both are affordable to invest with minimum investment amount for as low as RM100

The above are the Similarities. Now let’s look at the Difference & What Makes Each Investment Platform Unique.

Mutual Fund

Advantage : You are able to speak to your agent or financial planner for investment guidance. PS : Only if they know what they talked about. If you use platform such as FSM, there are options where you can consult your financial planner or invest via their recommended funds.

Disadvantage : Your agent or investment platform are paid up to 5% of your investment amount to do their job. Imagine investing RM1000 & you have to minus 5% of your investment amount to pay your agent. That’s RM50 before you even earn any profit from your investment. Watch out for other hidden cost such as management fee & switching fee that may take up to 2% of your total investment amount per annum. Another disadvantage that you may face when investing in Mutual Fund is the decision making process is done by human. Why is this a disadvantage to you? There are times where humans tend to get emotional & that may affect their investment decision while managing your fund.

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Advantage : What I personally like about Robo-Advisor is that they invest based on facts & data. Since it’s Robo-Advisor & not human, we do not pay ROBOT any Load Fee or Sales Fee. We only have to pay their management fee which is as low as 0.2% with no hidden charges. That means that we spend lesser on any miscellaneous fee to maximize our investment profit. All you have to do is answer a few questions & your answers will indicate the amount of risk you are willing to take. You are also able to adjust the investment risk from time to time.

Disadvantage : It may be a disadvantage to some non technology savvy investor since Robo-Advisor is new. They may prefer to speak to someone rather than going through those questionnaire. Since Robo-Advisor is pretty new, they have yet to be a proven concept during bad financial times although the past data has proven to be effective against bad financial times.

Robot Dance

What are My Thoughts on Mutual Fund vs Robo-Advisor?

Personally I have invested in both Mutual Fund & Robo-Advisor. In fact, my first investment is actually in Public Mutual which I sold it later with 20% profit for my vacation to Phuket. LOL. Trust me I regretted this decision not because of not holding it longer but because of my decision to use it for vacation. Many years later, I started to invest again in Mutual Fund via FSM which I sold it off years later to invest in Robo-Advisor.

Currently I am using StashAway who is the first Securities Commission Malaysia Licensed Robo-Advisor. My Risk Index with StashAway is currently at the highest which is 36% & my investment return since November 2018 is 7.9%. I think it’s quite good for a less than 6 months old investment. With that investment return, I am definitely in for long term. Excited to invest with StashAway now? Let me share another good news. Your minimum investment amount can be as low as RM50. That is ridiculously affordable for anyone. Ditch your favorite RM50 meal now & start investing now with StashAway.


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