Hi, I'm Kylie. I'm the investments editor here at Finder. And you may have noticed that
Raiz has recently done an update. So I figure it's a great time to do a hands on review
of the latest features, including investment options, shopping features, my personal experiences,
and whether I think it's a good return on investment for your money. So what is Raiz?
Raiz is a popular micro investment app that launched in Australia in 2016. But if you
live in the US or the UK, you might know it as the Acorns app and made a name for itself
mostly thanks to its roundup feature which collects your spare change and invest it into
a portfolio of exchange traded funds. So say you make a purchase of $1.90. It rounds up
to the dollar by collecting the 10 cents and investing it into the portfolio and increments
of $5 at a time plus. As a bonus, if you use the app to do your online shopping, a portion
of that is automatically invested for you. So here we've got the homepage which is the
today tab and you can see his straightaway you've got your investment portfolio balance,
your Super balance, if you use the super fund, and you've got your shopping rewards balance
as well. And if you scroll further down here, you've got your performance chart so you can
see how much your fund is going up over different time frames, which is really cool. And then
you've got the my finance tab, which gives you a really great rundown of what you're
spending your money on from month to month. So in the past tab, you get a summary of all
your transactions, including withdrawals, the returns, how much you're getting in dividends
from each of the ETFs. I really like how transparent this is. The only thing missing here for me
is the fees. And then over in the future tab, you have a nice chart which shows how much
you're going to have in your fund by the time you reach a certain age. So how do you invest?
Like I said before, the standout feature for Raiz is its roundup change feature which collects
your spare change and investment into the fund. You can also make one off investments
or you can set up regular payments, daily monthly or fortnightly if you like when you
sign up for rise you get six investment options to choose from based on your risk profile,
from conservative all the way to aggressive plus the ethical fund, which is Emerald. So
your risk profile basically refers to how much risk you're willing to take on for the
chance to get a higher return. So the conservative fund here is the least risky option. But it's
also the least likely to give you a high return when you eventually cash it. With the aggressive
fund, there's a high chance of your portfolio going backwards because of stock market volatility.
But when you cash in at the end over a long time frame, there's a better chance you'll
get a nicer return. So if you click through to the portfolios, you can see your investment
options. You can see here that the each of the portfolios have the same ETFs themes.
And if you click through to them, you can see the actual name of the ETFs here, its
performance over the last year and you can see some of the companies that it's following.
So each portfolio works by investing different portions into each of the different ETFs based
on risk profile. So with the conservative fund, invest the nice into the bond and cash
ETFs which are the safer investments and then over in the aggressive fund invest more into
the Australia large cap and Asia large cap stock funds which are a little bit risky.
And then you've got the Emerald portfolio which has invested into two ethical ETFs plus
the Australia bonds and Australia cash ETF. Alright, let's get into how that performed.
I bought into the last Annual Performance Report, the portfolios have returned around
8% on average with the conservative fund, the bottom performer at 6.9% and the Emerald
fund, the best performer at 10.1% after fee. So I think these returns are pretty good but
not incredible as a basic comparison we can put it next to the performance of CommSec
Pocket's funds, as you can say CommSec Pocket has outperformed Raiz's ETFs but by that same
token, because you're investing in just one ETF with CommSec Pocket, it's probably going
to be a little bit riskier than than investing with Raiz which is very diversified because
it's a whole portfolio of ETFs. And you can also compare it to the ASX200 index, which
is a basic benchmark for investment performance. So in the last financial year, the ASX200
index has performed exceptionally well. So in that sense Raiz's portfolios have underperformed
the benchmark, but will it continue to do so? It's hard to say.
So what are the costs, Raiz charges $2 50 a month for balances that are under $10,000.
And for balances that are over $10,000, it's 0.275% a year. So breaking that down further,
if you have an account of say $1,000, that's around 3% in fees each year. As far as investment
phase go for smaller balances, that's not amazing. As a general rule of thumb, you try
to keep your face below say the 1% mark. But on the other hand, you don't have to pay brokerage
fees, which is a big advantage over other apps say like CommSec Pocket which charges
$2 a fee every time you make a transaction. Now the shopping feature. The shopping feature
is often ignored and reviews, but it's a really nice addition to the app and it does go some
way towards making up for the fees. So using Raiz, you can browse through over 200 brands.
So when you shop through the app, you automatic get a percentage of what you paid back to
you, which is automatically invested into your fund. So as you can see here, you can
browse through the names, and it shows you how much they'll return to you, which is really
nice. And these aren't just no name brands. There are some really big names in here that
you engage with pretty regularly. So I love the design of this app. I think it's slick.
It's fun, and it's easy to use. And I'm also a really big fan of the roundup feature, it's
a really great way to invest your money without having to think about it just through everyday
purchases. And that's why I started using the app in the first place. I also really
liked the shopping feature. There's some great brands in that. And I like that you get a
cash reward back to you as an investment as if I needed an extra excuse to go shopping.
So it's great that there's no brokerage fee means that you can invest as much as you want
day to day without having to think about the extra costs. The investment options are a
nice mix of ETFs and they're relatively safe. So even when you have the aggressive portfolio,
you're probably not going to see your money going backwards over a lengthy time period
and you get the ethical portfolio option which is actually outperformed the others In the
last financial year, but on the other hand, the $30 a year account fee is a little bit
steep, especially if you're not adding much to the account. So if you're just doing roundups,
your returns might end up being swallowed completely by the fees. There are a few roundup
apps now just for savings accounts. So you might even be better off just using one of
those. So you don't get the freedom of choosing which ETFs you want to invest in as you would
with a regular trading platform, or even other micro investing platforms like CommSec Pocket,
but you do get a professionally selected portfolio of ETFs based on your risk profile, which
is what you really want from a robo advisor. So what did you think of the app? Let us know
in the comments below. And if you want any more information about other trading platforms
or if you want more information about Raiz you can follow the links in the description.