If fees are the enemy of investors, why should I pay you any?
Good question. Our aim is to create a fee structure that is both low and transparent. Akru’s tiered pricing ensures that the more you invest, the cheaper it becomes. On the one hand, we believe that management fees for a good investment solution are essential to keep the business running; on the other, these fees should be reasonable so that you, the investor, keep as much returns as possible.
Consider a typical long-term stock market investment: its returns are usually 8-10% per year, but most stock market investing services charge a sales commission fee of around 5-6%, as well as an annual fund management fee of approximately 1.5-2%. There are also other hidden costs that vary from service to service. Put it all together, and those fees will take a big bite out of your returns in the long run.
With Akru, we’re able to reduce––or even remove––a lot of these fees thanks to technology, while raising the bar on user experience. This isn’t necessarily new: algorithms are increasingly making appearances in our lives, whether it’s the custom, uniquely yours playlist that you listen to every week, or the rise of ride-sharing companies. At Akru, our aim is to make investing affordable and accessible.
Can’t I just invest in the same ETFs that you do on my own, and basically pay no fees?
Yes, you can—but, well, quite frankly it’s going to be a royal pain in the butt. Having worked on my own investment portfolios, I’m happy to report that doing all the research and ground work is fun for me, personally, because I like learning about the world and what makes it go round. What’s definitely not fun is the dirty work of actually getting the money invested.
Let’s say you want to replicate Akru’s asset allocation. Here’s a quick guide:
1) Ensure you have enough US dollars in your trading account. After you’ve opened a trading account and deposited American currency into it, you’ll need to ensure that you have the correct amount of US dollars every time you’d like to purchase the ETFs. This is because the currency exchange rate changes daily, and you don’t want to end up with too little or too much US dollars. Also, some ETFs are quite expensive, with prices ranging from a few hundred to more than a thousand ringgit. So this may not match your preferred monthly investment amount.
2) Wake up in the middle of the night to start trading during American stock market trading hours. Try to get decent prices for the ETFs you want to invest in.
3) Rebalance when the said ETF prices cause your asset allocation to go out of whack. This may not be easy if ETF prices are expensive.
4) Repeat this entire process for your monthly savings. Make sure you get the maths right for your various financial goals.
At some point in my investing career, I had wished that this entire process could’ve been automated. Presto! Today, we’re spoilt for choice thanks to robo-advisors.
One more thing: DIY investing isn’t necessarily costless. Firstly, there’s the typical broker’s cut for every trade you make, which can be quite expensive. Plus, you have to be absolutely committed and disciplined to manage your investments, as this could have the biggest long-term impact on investment returns. If you find that it’s all too much of a pain to do on your own, you may end up slacking off or not investing at all.
That’s why it isn’t such a bad idea to let a robo-advisor automate your investments for you.
What else is Akru doing for me in exchange for this 0.7% Management Fee?
To put it very simply:
- We diversify your money efficiently, no matter how big or small your investment is.
- We help you set-up and monitor financial goals to bring clarity to your financial life.
- We rebalance your portfolios if price changes cause them to go haywire.
- We keep costs low and we absorb trading costs.
Are there really no other fees that I have to pay?
There are a few others:
- ETF fees of 0.03%–0.13%. These go to ETF managers themselves––not Akru. More conservative portfolios have fixed income unit trusts which charge 0.3%–0.5%.
- Admin fee of RM10. This is paid only once when you open your Akru account.
- Cash transfer fees of RM1 per transaction. This only applies if you use a third-party payment gateway, but it’s completely free if you transfer funds through your bank account.
