What is Micro-investing?
Micro-investing is a great way to get started if you want a simple and easy way to invest. In micro-investing apps you can invest as little as $5 at a time and is at a very basic level so is easy to understand when you are first learning to invest. Most micro-investing apps have well layed out interfaces and a number of portfolios or investments that you can invest in. You can then pick which investment you want, how much you want to put in and if you want to set up any direct transfers. Each app has different features which I will explore further below, as well as explaining which app would suit which type of person.
Raiz (previously known as Acorns) is a micro-investing app and was one of the first ones on the market in Australia. It allows you to invest small amounts of change into one of six portfolios they offer, which include balanced to high growth portfolios as well as an ethical option. They also offer Raiz Rewards, where if you shop through the app you can receive money into your investing account.
Pros
- Easy to start, as little as $5 to invest.
- Six different portfolios to choose from, so you can choose low risk through to high risk.
- You can use the round up feature, which invests the change from your daily purchases into your portfolio. This builds up quickly without you even noticing!
- Can also set up recurring weekly, fortnightly or monthly transfers to put more money into investments.
- Can invest lump sums of money to invest in your Raiz portfolio.
Cons
- Charges a $3.50 fee per month, which if you have a low balance will eat into your returns very quickly.
- Each portfolio is comprised of a range of funds, with different % weightings in each. While you can choose from one of the six portfolios, you can’t choose which funds to invest in or what % they will be exactly.
Type of people who would like Raiz:
- People who like a nice app interface.
- People who are looking for an easy to use platform.
- People who are investing only small amounts.
- Like the round up feature.
- Would use Raiz rewards.
Spaceship Voyager
Spaceship Voyager is another micro-investing app available on both the apple and google play store. Spaceship has three different portfolios to invest in, all of them instantly giving you a wide range of companies that you are invested in. Spaceship voyager makes investing simple and affordable.
Pros
- No fees under $5000.
- No minimum investment.
- Three different portfolios to choose from.
Cons
- Ideally we want our investments to be over $5000 so in this case we would then have to pay higher fees.
- There are only three portfolios to choose from with set % for investments, not giving you much choice in what to invest in.
Type of people who would like Spaceship Voyager
- Hate fees.
- Want to keep it simple.
- Investing for the first time or investing only small amounts.
- Perfect for when you are first starting but once you have started to build up your portfolio to around $5000 it may be worth looking to invest with an online broker.
Commsec Pocket
Commsec is Commwealth Bank of Australia’s Brokerage/trading platform. Commsec pocket is almost the mini version, with cheaper brokerage fees but a much smaller selection of stocks to pick.
Pros
- 7 different ETFs (ETF is basically a basket of companies, for example the top 200 companies in Australia) and you can choose which one you invest in. Each of these ETF’s are transparent and you know exactly what you are investing in.
- You OWN your investments (CHESS sponsored).
- No ongoing fees, only fee is $2 per trade up to $1000.
- Links to a Commsec account so when you are ready to move to the big leagues all of your investments will be there together.
- Can set up auto transfers into your cash account.
Cons
- A higher entry cost- minimum of $50, which is still cheap compared to most other services which is a minimum of $500.
- You are required to create a commonwealth bank transaction account in order to open a Commsec account. The transaction account has a monthly fee that is charged if you don’t have $2000 coming into the bank account each month. Therefore this isnt a great option unless 1) you already have a Commonwealth transaction account or 2) you are happy to move your banking to Commonwealth.
Type of people who would like Commsec Pocket
- Those who already have a commonwealth bank transaction account or are happy to move their banking to CBA.
- Want more choice in what they are investing in.
Vanguard Personal Investor
Vanguard in one of the largest investing fund managers in the world, which started in the US and also has an Australian Branch. They have many different funds to choose from that are available on the share market, including ETF’s, active funds and wholesale funds. They have only recently started Vanguard Personal Investor, which allows people to invest in these Vanguard funds with no brokerage (trading) costs & just a management fee of 0.2% per annum.
Pros
- No Brokerage costs for Vanguard funds.
- I wide range of fund options with exposures to different markets across the world.
- Easy to diversify and choose your own % of funds.
Cons
- Vanguard hold the shares, but have them under your name (not CHESS sponsored).
- Most expensive- minimum of $500.
- Non-vanguard shares have a $19.95 or 0.15% brokerage fee, whichever is greater.
Type of people who would like Vanguard Personal Investor
- Those that want more choice without feeling overwhelmed by the whole share market.
- Those that want to invest larger sums without having to pay $10+ brokerage fees
- People investing regularly to make use of the management fee.
My General Thoughts
Full disclosure, the only one of these micro-investing apps that I have used is Raiz. I didn’t use it for long before moving to an online broker as I was investing large amounts and was happy to pay $15 for brokerage.
There are a few things I want to touch on when it comes to these micro-investing apps. Firstly, I want to talk about fees in general when it comes to investing. Obviously, with any fee, we want to keep it as low as possible. When investing, ideally we want to keep our fees to under 1%. So if you were to use Raiz, you need to be investing $350 a month to keep the $3.50 fee/month to 1%. If using Commsec pocket , each trade you need to buy $200 of shares to keep the $2 fee to 1%. Spaceship has no fees under $5k which is great and the Vanguard Personal Investor already has fees under 1% at 0.2% which is also good when regularly investing. Taking this into consideration, if you were going to be investing less than $350 a month it might be worth starting off with Spaceship instead. Or if you will only be investing here and there it might be worth using Commsec Pocket where you are only paying per trade rather than a fixed rate like Vanguard.
Secondly, I also just want to emphasise that these kinds of platforms are best for when you are first starting out, especially in regards to Raiz and Spaceship. Investing should be for the long term and used as a way to create wealth, so obviously we want this wealth to build to more than $5k. These platforms are great to build good habits and understand investing better but soon the fees will eat up more returns than you would like. Once you have the hang of saving and investing it may be worthwhile looking for an online broker to continue your investing journey. These platforms often will charge per trade only but range from about $9.50-$19.95 per trade. Therefore you will be required to put in larger sums if trying to keep fees below 1%. This isn’t too much of a problem if you have good habits in place as you can let your account build up to an amount of $1000-2000 before investing. It doesn’t matter if this takes a few months to build up as on most of these online brokers there are no fees unless you are actively trading, unlike the apps Raiz, Spaceship (amounts >5K) and Vanguard Personal Investor.
Those are just a few things to consider, but at the end of the day it really comes down to personal preference. If you are brand new to investing and don’t have too much to invest yet download one of these and give it a go! If you have larger amounts of money you are looking to invest it may be best to skip these and go straight for the online platforms. I will have another post coming up about the online platforms to choose from and their pros/cons.
Thanks for reading 🙂
Mind Over Money 
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