Today I’m comparing four of the most popular Micro-investing Apps – RAIZ Invest, Spaceship Voyager, Commsec Pocket, and Superhero.
Micro-investing Apps have popped up in the recent handful of years as a solution to help people get started investing with little knowledge and little money. Often, the two biggest challenges when wanting to start investing to grow long-term wealth is that people don’t know which investment to pick (because there are thousands available all different types shapes, and sizes) and/or they don’t have enough money – they don’t want to invest a lot of money or they don’t have a lot of money to start. They just want to start small and grow a portfolio, however, that can cause some challenges because you may not have enough money to get into certain types of investments, and fees and charges (such as stock market brokerage) can eat into small investment amounts. So, Micro-Investing Apps have made an appearance as a solution to help people get invested with little fuss and little money.
There are a few of these apps popping up now in the marketplace but how do you know if they are any good and which one is best?
The first thing to consider when looking at these four investment apps is that they are all quite different! There are different reviews you can find on each but a big problem is a lot of people clump them together and compare them as though they are the same product – but they aren’t. They check the fees and whatnot and expect them to be comparable but the number one thing to remember is that these apps are all very different; they invest in different products and they have different features. It’s one thing to compare fees but they’re not like for like products. You won’t compare apples with apples, you’ll compare apples with oranges!
RAIZ has been around the longest out of the four. It came around mid-2016 from a US company called Acorns. It changed its name when it came to Australia and rebranded as RAIZ. The RAIZ slogan is to Invest Your Spare Change. The knockout feature when it comes to the RAIZ app is the ‘roundups’ feature; it’s the only product in the marketplace that I’ve seen that will enable you to invest small amounts of money using roundups from your nominated bank accounts. You nominate which of your bank accounts you want to link your app to – select the ones that you make purchases from regularly. You can link credit cards as well. For example, say you buy $3.50 coffee. RAIZ will round up that purchase to the nearest whole dollar $4.00 and take the difference of 50 cents from your bank account and invest it. It won’t take the small amounts of money every single time you spend – 50 cents, 50 cents, 50 cents, instead, it will clump the money together and take the money out of your bank account once or twice a month.
In all my time working in the financial planning industry, I’ve never seen another product that offers a roundup feature for investing. There are some bank accounts now available that will roundup purchases and add the difference to your savings account, but they have bank accounts, not investments. Of the four apps I’m comparing today, RAIZ is the only one that offers a roundup feature and it’s a brilliant way to get started. You won’t even see the money coming out of your bank account! You won’t even notice it. It’s a savings plan in the background of life to help you invest money without having to physically put the money in each month.
RAIZ invest in Exchange Traded Funds (ETFs). For argument’s sake, ETFs are a pool of stocks/shares that are put together on the share market by a fund manager and you invest in those as opposed to buying individual shares. There are seven portfolios in RAIZ – they start from conservative right up to the aggressive. You select the one that’s the most appropriate for you in terms of how long you want to invest. If you only want to invest for a couple of years you may like to stick to the conservative or moderate conservative portfolios, however, if you want to invest for five years seven years, or more, you may want to select the aggressive or moderately aggressive portfolio because the more aggressive the portfolio the more exposure to shares it will have. The RAIZ managers blend several ETFs to make their own portfolios
With all of these investing apps, they should only be used for long-term investing. If you only want to save for a few months for a particular item, don’t use an investment app, that’s not what they have been designed for. This is for long-term investing, so several years!
The minimum investment for RAIZ is $5. RAIZ charges an administration fee and a management fee which are very reasonable for the features offered. RAIZ is not the cheapest. You can invest in ETFs directly on the stock market through a trading account i.e. Commsec Trade account or a NAB Trade Account for example and the management fees will be a lot lower, but if you want to utilise the roundup feature and have it done for you, then the RAIZ fees are quite reasonable.
You can also add a monthly amount to your RAIZ portfolio and that money will get directly debited out of your bank account each month. Overall, from a savings perspective, I think the RAIZ app is excellent. I’ve been using it for about three and a half years now
started with zero. After three and a half years the portfolio is now worth about $11,500! That’s purely just from my roundups going out of my bank each month (which equate to about $40 per month (based on my level of spending) plus I also add $200 per month religiously without fail.
There’s also a rewards feature with RAIZ so every time I buy online I quickly check my RAIZ app to see if the retailer is in there i.e. Iconic, Dan Murphy’s, Lorna Jane, etc, big brand names, not no-name retailers. Even eBay is in there. So if you put your online shopping through there you get back a percentage into your RAIZ account as well which can add up over time.
Spaceship Voyager is different from RAIZ. It doesn’t invest in ETFs it invests in stocks/shares that are selected by the fund manager (a managed fund instead of ETF). There are two portfolios to select from; the Index or the Universe. They will have different amounts of shares in each and are managed by Spaceship. Traditionally, when comparing managed funds to ETFs, managed funds have been around for longer but ETFs generally have outperformed managed funds.
The management fees are lower than RAIZ and there is no minimum investment requirement. When your account balance is under $5,000 there are no fees at all! You can add a regular amount via a savings plan, but there’s no roundup feature.
This one is fairly new it’s only been around since about 2019 and offered by Commonwealth Bank. The main difference with this one is that you can pick from seven ETF funds – ETFs that are available on the stock market, not managed portfolios. Commsec has picked the seven that they like to offer to you – albeit a bit limited I think and it doesn’t include some of the biggest ETF fund managers such as Vanguard.
$50 is the required minimum to get started with this one. You’ll be charged brokerage every time you add money to your portfolio however it is very low – only $2 per trade (under $1,000). If you’re just getting started investing then you will probably trade with less than $1,000 each time so be aware that you will be charged $2 every single time whether you invest $5 or $50 or $100. Those fees may seem small but they can add up and they can eat into your returns.
The biggest thing I noticed with the Commsec Pocket app is that those brokerage fees, particularly when you get to higher trades, are the same as if you open up a regular Commsec Trading Account which you could then invest in any ETF or share available on the stock market so I’m not really sure why you would bother with the Commsec Pocket account. Yes, the brokerage is less when you’re getting started with low amounts, the brokerage is only $2 for a trade of under $1,000 vs. with a Commsec Trading Account it would be $10 for the same trade, but after that, if you invest higher amounts the fees are the same for both platforms but you will have way more selection with the Commsec Trading Account.
This app is one of the newest that just came onto the market here. This one is most suited for people who want to get into ‘trading’ – buying and selling shares or ETF. There are 2,500 different investments available to you via the Superhero app – shares, ETFs, listed investment companies (LICs), property funds.
The minimum to get started is $100 and after that, the brokerage is only $5 per trade regardless of the amount! $5 flat always. If you pick a Basic Account through Superhero there are no administration fees – unless of course, you invest in an ETF then it will have the ETF management fee attached of course. If you select the Advanced Account it means you get more reporting and more features such as being able to set a BID/ASK price for trading. You get more trading capabilities for an administration fee of $9 per month which I think is reasonable if you want those features.
When comparing to the Commsec Pocket app, I feel that the Superhero app with its $5 flat brokerage fee and 2,500 different investments is better value than the 7 ETFs on offer through Commsec Pocket (even with lower brokerage of $2). Superhero is better for flexibility and choice.
So… which is best?
The aim with micro-investing apps is to get started investing with little money but that doesn’t mean you just invest a couple of hundred dollars and then you stop otherwise the fees can really eat into your returns. The idea is to keep growing your wealth, so, I wouldn’t have multiple accounts i.e. open one with RAIZ, one with Spaceship, and one with Superhero, there’s no point diversifying your money to that extent. Just pick one to get started and build up your account, don’t stop.
One of the biggest downfalls with micro-investing apps is that they are so flexible and as good as that is, it can also be to your detriment because you could be tempted to
access the money early i.e. either to cash it out and spend it or to trade it (buy and sell regularly). Don’t do that – these apps are meant to be long-term investments, set and forget. That means selecting one of the RAIZ portfolios for example and leaving it. Or, selecting one of the two Spaceship portfolios and sticking to it, etc. Then, leave it alone. Don’t swap and change. Just keep adding to it. The worst thing you can do is chop and change between the apps or chop and change between portfolios.
Returns aren’t everything. Often people get caught up chasing high returns. Unfortunately, these four apps are quite different and unique and so their returns can’t easily be compared, however, instead of worrying about the return so much, you will make some money with all of them, just keep adding to them regularly over a long time.
At the end of the day, my personal favourite is RAIZ. I’ve been using that for three and a half years now and I think it’s a gem of a product. I love the roundups feature and I think that is the star of the show. If you want a simple way to get started investing (your spare change) and not even notice it come out of your bank account then I think the roundups feature is brilliant. Plus, add a regular savings plan without paying brokerage each time.
My next favourite is Spaceship. I think the fees are incredibly low for what it is however the portfolio choice is quite limited so if you’re more fee conscious or you just want to dip your toe in the water. Spaceship is very cheap.
If you want more trading capabilities you want more investment choice you maybe want to get into buying and trading shares I think the Superhero app may be very good because of the low $5 brokerage and the huge choice of investments, however if you’re using a micro-investing app, then you probably don’t need all of those features. You’ll likely want something easier (set and forget).
Commsec Pocket. Meh…
This is my honest opinion and a review of these apps, but it’s not financial advice. I’m not your financial adviser and haven’t taken into account your personal situation so you need to read the terms and conditions when looking into these to determine what one is best for you and your money.
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Disclaimer: This information provided is general in nature. It is based on the knowledge and experiences of the author and not intended to be taken as financial advice. It does not take into account the objectives, financial situation or needs of you or any other particular person. You need to consider your financial situation and needs before making any decisions based on the information. You may have to modify the information and do further research, for it to suit your personal financial situation. Therefore, before acting on the information, it is recommended that you consider its appropriateness to your circumstances or consult a financial adviser, tax advisers or legal professional to assist you in doing this