Who offers micro-investing apps in Australia?

author-avatar By on April 28, 2021
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Who offers micro-investing apps in Australia?

What if we said you could turn your spare change into a small fortune? If that sounds good, you need to hear about micro-investing.

If you had absolutely no effing idea what was happening during the whole GameStop saga and investing terminology like ‘short selling' and ‘bear market' has got you more confused than a chameleon in a bag of skittles, you’re not alone. That stuff is complicated, but investing doesn’t always need to be. That’s where micro-investing apps come in.

Investing in the share market is becoming a lot easier thanks to the rise of micro-investing platforms. You’ve probably heard of one of them - Raiz - but there are a few other players in the market designed to make investing easy and accessible for rookies.

See also: Beginner’s guide to investing


The table below features savings accounts with some of the highest interest rates on the market.


What is micro-investing?

Micro-investing is when you invest very small amounts of money over time into an investment portfolio, rather than the large amounts often required by standard share trading. Some micro-investing platforms allow you to round up your purchases to invest your spare change: for example, if you buy a $3.50 coffee and the remaining 50 cents is then invested into your portfolio.

The idea behind micro-investing is to make investing easier and more accessible for beginners. Think of it as training wheels for new investors. You could also earn a better return on your money by investing it through a micro-investing platform than by storing it in a traditional savings account, particularly with interest rates on savings accounts currently so low.

What micro-investing platforms are available in Australia?

  • Raiz Invest

  • Spaceship Voyager

  • CommSec Pocket

  • Sharesies

Raiz Invest

Raiz, one of the first micro-investing platforms in Australia, is also the most well-known, having spawned a cult-like following from millennials. In just six months in 2020, more than 300,000 new investors started using it.

Raiz is a mobile app that allows users to automatically round up the spare change from their purchases and invest it into a selected mix of exchange-traded funds (ETFs). Users can also choose to make lump sum deposits or set up recurring payments into their investment portfolio.

Raiz users can choose from six different diversified portfolios with varying risk portfolios:

  • Conservative

  • Moderately Conservative

  • Moderate

  • Moderately Aggressive

  • Aggressive

  • and Emerald, the ethical investing fund

You can withdraw your money from Raiz at any time for free, and there are no minimum account balances required. Raiz charges a monthly $3.50 maintenance fee for accounts with balances below $15,000. Accounts with more than $15,000 won’t be charged a monthly maintenance fee but will be charged a monthly account keeping fee equal to 0.275% p.a. of the balance.

Spaceship Voyager

Spaceship is another micro-investing platform quickly gaining popularity in Australia, having doubled its number of customers in 2020 to 100,000. It’s a mobile app that allows users to deposit lump sums or set up recurring weekly, fortnightly, or monthly payments into three different portfolios:

  • Spaceship Universe Portfolio

  • Spaceship Origin Portfolio

  • and Spaceship Earth Portfolio

Users can track the progress of their portfolio through the mobile app and link their portfolio to an external bank account to deposit and withdraw money.

It doesn’t cost anything to sign up with Spaceship Voyager, and there are zero fees on the first $5,000 invested. For balances above $5,000 users are charged a percentage of their balance:

Fees

Universe Portfolio

Origin Portfolio

Earth Portfolio

Fee on the first $5,000 invested

Zero

Zero

Zero

Fee on the balance above $5,000

0.10% p.a.

0.05% p.a.

0.10% p.a.

Total annual cost on a balance of $10,000

$5

$2.50

$5

Source: Spaceship

Spaceship does not charge any brokerage fees, withdrawal fees or exit fees, and investors can withdraw their money from Spaceship at any time.

CommSec Pocket

CommSec Pocket is a micro-investing platform offered by Commonwealth Bank (CBA) that was launched in 2019. CommSec Pocket is a little different to other micro-investing apps because, unlike the others, you need to be a Commonwealth Bank customer so you can link your CBA transaction account to deposit and withdraw funds.

CommSec Pocket has seven different ETFs available for customers to invest in, based on different ‘themes’:

  • Aussie Top 200 (IOZ)

  • Aussie Dividends (SYI)

  • Global 100 (I00)

  • Emerging Markets (IEM)

  • Health Wise (IXJ)

  • Sustainability Leaders (ETHI)

  • and Tech Savvy (NDQ)

Commsec Pocket investors have to make a minimum trade of $50, which can then be invested either as a lump sum or via recurring fortnightly or monthly payments. It charges $2 per trade for investments under $1,000 and 0.2% of the trade value for amounts above $1,000, so if you’re investing the minimum of $50, you’re being charged 4% for each trade.

CommSec Pocket also charges a late settlement fee. Cash is withdrawn from your account two days after your trade has been completed, rather than straight away. If there aren’t sufficient funds when CBA withdraws this money, you will be charged a $10 late settlement fee.

Unlike its sister app CommSec which has a minimum investment amount of $500 and charges a $29.95 brokerage fee per trade, CommSec Pocket is the more affordable alternative, although these fees do make it more expensive compared with other micro-investing apps.

Sharesies

Sharesies is the newest micro-investing kid on the block and works a bit differently from the other micro-investing apps. For starters, Sharesies doesn’t have different portfolios like Raiz or Spaceship. Instead, Sharesies allows you to invest in individual companies all over the world from a variety of stock markets, including:

  • Australian Securities Exchange (ASX)

  • New Zealand Exchange (NZX)

  • New York Stock Exchange (NYSE)

  • Nasdaq

  • Chicago Board Options Exchange (CBOE)

This means users can invest in Australian companies like Coles, Commonwealth Bank, BHP Billiton, as well household names like Apple, Tesla, Amazon, Disney or Coca-Cola in overseas markets. Sharesies also gives the option of investing in ETFs containing a number of companies or assets with a single trade.

Sharesies in Australia does not charge a subscription fee. It charges a transaction/brokerage fee for each trade you make: 0.5% for orders up to $3,000 and 0.1% for anything higher than that amount.

If you made a $5,000 trade on one company, you would be charged 0.5% on the first $3,000 ($15) and 0.1% on the remaining $2,000 ($2), which would cost you a total of $17.

Micro-investing platforms compared

The table below compares each of these Australian micro-investing platforms on the fees charged, minimum investment requirements, and the types of investment options allowed.

Platform

Fees

Minimum investment

Investment options

Raiz Invest

Brokerage: $0

Account fees: $3.50 monthly fee for balances below $15,000; or 0.275% for balances over $15,000

$5

Choose from six diversified portfolios with varying risk:

  • Conservative

  • Moderately Conservative

  • Moderate

  • Moderately Aggressive

  • Aggressive

  • Emerald (ethical)

Spaceship Voyager

Brokerage: $0

Account fees: $0 for balances up to $5,000; for balances over $5,000 users are charged a percentage of their balance

$0

Choose from three portfolios:

  • Spaceship Universe Portfolio

  • Spaceship Origin Portfolio

  • Spaceship Earth Portfolio

CommSec Pocket

Brokerage: $2 per trade for investments under $1,000; or 0.2% of trade value for amounts over $1,000

Account fees: $0

$50

Invest directly into seven different ETFs:

  • Aussie Top 200 (IOZ)

  • Aussie Dividends (SYI)

  • Global 100 (I00)

  • Emerging Markets (IEM)

  • Health Wise (IXJ)

  • Sustainability Leaders (ETHI)

  • Tech Savvy (NDQ)

Sharesies

Sharesies in Australia does not charge a subscription fee.

Brokerage: It charges a transaction/brokerage fee for each trade you make: 0.5% for orders up to $3,000 and 0.1% for anything higher than that amount.

$0

Invest directly in individual companies around the world as well as ETFs from the following markets:

  • Australian Securities Exchange (ASX)

  • New Zealand Exchange (NZX)

  • New York Stock Exchange (NYSE)

  • Nasdaq

  • Chicago Board Options Exchange (CBOE)

What are fractional share trading platforms?

Strictly speaking, fractional share trading platforms aren’t technically micro-investing platforms, but they’re similar in that they allow you to drip feed small amounts of money into stocks, making investing more accessible for beginners.

Like the name suggests, fractional share trading platforms allow users to invest in a fraction of a stock, rather than buying the entire stock, which can sometimes be quite expensive depending on the company. For example, Amazon’s current share price is just over $3,400. Instead of purchasing a single stock for $3,300, you could buy a tenth of that stock for $340 or one-hundredth of that stock for just $34 using fractional share trading.

Fractional share trading is only just beginning to take off in Australia with few platforms available, and as it currently stands you can only purchase fractions of US shares, not Australian ones. Some of the most well known fractional share trading platforms available in Australia include eToro (minimum investment amount $200), Stake (minimum investment amount $100) and ethical investing app Goodments (minimum investment amount $1).

If investing in the property market is more your thing but you don’t want to actually buy a property, then you’re also in luck! Some fractional investing platforms allow users to invest in the property market by purchasing a small stake in a property, rather than the whole thing. The four main fractional property investment platforms in Australia at the time of writing are BrickX, DomaCom, TicX and Bricklet.

See also: What is fragmented or fractional property investing?

Benefits of micro-investing platforms

Easy and accessible for beginners

Arguably the biggest benefit of micro-investing platforms like Raiz and Spaceship is that they make investing in the share market easy and accessible for complete novices. Raiz data from 2020 found 26% of first-time investors went on to make other investments elsewhere after using the platform.

When it comes to investing, many people have a lack of knowledge and/or a lack of funds working against them, and micro-investing apps address those barriers to entry. Unlike traditional investing where you need anywhere between $500-$5,000 to get started, you can start investing in the share market with your spare change through micro-investing apps.

Some micro-investing apps like Raiz have a roundup feature that allows you to drip feed your spare cash into the share market with virtually no effort at all on your part. It’s not hard to see why micro-investing apps have become so popular among younger generations with features such as these.

Choose from a range of diversified portfolios

Another major benefit micro-investing apps have going for them is that you can easily invest in a range of diversified portfolios without needing to have any knowledge about which stocks are best to invest in (although you should still check!).

You could get better returns than using a savings account

Micro-investing apps like Raiz are based on the principle that regular investing, even in tiny amounts, can lead to generous savings over time. With interest rates on savings accounts currently in the toilet, you could stand to earn a better return on your savings if you keep them in your micro-investing account instead of the bank.

But with that in mind, remember that bank accounts like savings accounts or term deposits are a different product to micro-investing apps. Deposits are generally risk-free and the government guarantee protects up to $250,000 of your money per bank. Micro-investing can still be risky, and you can lose your money.

Downsides of micro-investing platforms

Fees could eat into your returns

Depending on how low your account balance is, fees could eat into your returns if you’re not investing enough money regularly. For example, Raiz charges a $3.50 monthly account maintenance fee for balances below $15,000. This monthly fee could really make a difference for investors with smaller balances, which is why it’s important to compare micro-investing apps to find one with a fee structure that will work for your investing goals.

Don’t expect enormous returns

Micro-investing apps are designed as a gateway into the world of investing for beginners and while it’s definitely a great way for newbie investors to dip their toes in, don’t expect to see massive returns, particularly if you’re not investing regularly. According to Raiz data for 2019-20, the Moderate portfolio generated 2-year returns of 4.64% p.a, which is decent, but it’s possible to do better.

Raiz1.png

Source: Raiz. Past returns not an indicator of future returns.

Which micro-investing platform is the best?

As with any financial product, there is no ‘best’ micro-investing platform. Raiz and Spaceship may be the most well-known but that doesn’t necessarily mean they’re going to be the right platform for you. What makes a product right for you is how well it suits your needs.

For example, if you don’t want to think about investing too much and would prefer for it to happen in the background, Raiz might be a good option with their automatic roundup feature. Or if you’d like to be a bit more hands-on and choose the ETFs to invest in rather than picking a portfolio, CommSec pocket could be a better choice as you can directly invest in a range of ETFs like Aussie Top 200, or Tech Savvy. Sharesies may also work best if you prefer to directly invest in individual companies.

There are a few points of difference between these micro-investing platforms, such as:

  • Some charge brokerage fees, others don’t.

  • Some charge fees, others don’t charge fees at all or only charge fees on balances over a certain amount.

  • Some have a minimum investment amount, while others have a $0 minimum investment.

  • Some allow you to choose a diversified portfolio based on different degrees of risk, others allow you to choose a portfolio made up of certain ETFs (like the top 200 Australian companies on the ASX) and others let you invest in individual companies.

When deciding which one to use, it’s important to consider each of these so you can find the micro-investing tool that best suits your needs and investing goals.

Savings.com.au’s two cents

Like any other investment option, micro-investing carries some element of risk and there’s no guarantee that your investment portfolio will perform as you may have hoped, but if you want to start investing, micro-investing platforms are a good place for beginners to get their feet wet with fairly minimal risk.

Many micro-investing platforms allow you to choose an investment portfolio based on your appetite for risk (or lack thereof), so you can choose a more conservative portfolio if you want to minimise the dangers. Keep in mind this could also mean you may not see the same returns as someone who chooses a more aggressive portfolio, which in turns risks more volatility.

It’s also important to remember that investing is all about time in the market, not timing the market. The earlier you begin investing and the longer you invest, the more time you have to ride out the share market waves. Try not to panic if the share market fluctuates. At the beginning of COVID, share markets around the world tanked, including Australia’s, but as you can see the market has recovered most of those losses:

ASX1.png

If you had panicked and pulled all your money out of your investments when the market plummeted in March 2020, you would have made a huge loss. But if you had stayed in the market and ridden out the COVID wave, your money would have recovered and you could’ve even made a profit.

Investing doesn’t need to be scary, and it’s never too early to start. In fact, not investing early is perhaps the biggest investment mistake of all! Before you take out any financial product, always read the product disclosure statement (PDS) for each investment product and make sure you understand the key fees, features, commissions, risks and benefits.


Photo by Tim Samuel via Pexels

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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