At the time I had heard of people talking about Acorns (now Raiz), an App that gives users the option to squirrel away their spare change virtually in a diversified portfolio. As well as setting up regular investments or making a lump sum investment. What appealed to me was that there was no minimum, I could start with less than $50.
How I use Raiz:
Now a month or so on I use Raiz in 3 ways:
- I have linked my current bank account and credit or debit cards so that Raiz will automatically round up my transactions and invests the “change”. For example, if I buy a coffee on my card for $4.60 then Raiz invests the extra 40 cents.
- I also have a recurring payment, which is similar to setting up a set amount to go into a savings account. I have a set amount each week going to the account and I hardly miss it.
- Last but not least, I have made one-off investments, my biggest one was putting the money for my car registration, which is due in a few months, into my Raiz account to see it grow.
So what happens with the money you invest?
Raiz has a selection of portfolio options for you to choose from ranging from conservative through to aggressive. They have managed fund portfolios which invest in a variety of investments via Exchange Traded Funds (EFTs). An EFT is like a combination of managed funds and shares. It is basically a diversified portfolio designed to track and measure the stock market. Of course, there is always some risk that the market will go down, because it wouldn't be sustainable if it was always going up.
- By shopping online via Raiz Rewards at stores such as Kikki.K, HelloFresh, Woolworths, Net-a-Porter, Lorna Jane, BCF and Bonds, just to name a few, you will get a percentage or an amount invested back into your account. For example if I shop online at Nike via Raiz Rewards I can expect to receive 3.5% of my purchase invested back into my account. If you do do this, make sure you read and follow the terms & conditions.
- There is also the option to set up Raiz Kids, where you can allocate money towards an investment account for your kid/s. You can select what percentage of your top ups you'd like to be allocated to this account, or you can split your contributions evenly between several kids that you may have account for.
Now for the business end of the App, the fees, because there is no such thing as free money. If the balance of your account is less than $5,000 then you pay $1.25 per month. This amount comes out of your linked bank account. If your balance is over $5000 then the fee is 0.275% of your account balance per year. So if you have say $10,000 in your account that is $27.50 a year. They certainly make it easy to understand.
- In the one to two months I have been using Acorns I have found it really easy to use and have made some returns.
- I like that if I need to I can withdraw the money at any time without penalties, which makes investing amounts like my car registration easy to do.There are no limits to the number of withdrawals and deposits you can make, and no fees for making them.
- I do like that it's accessible for all as there is no minimum balance required. Some managed funds elsewhere you need a minimum amount of $5000 or more. Whilst I am comfortable with the fees involved if you think you are only going to invest a really small amount each month the $1.25 fee will soon start eating into any returns. So that is something to keep in mind.
If you think that Raiz might work for you, sign up using my link and get a bonus $2.50 added to your account. Sign up here. Just so you know I will also get $2.50
I'm only providing details of my own experience, general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on my content.