Does Raiz Work?

Raiz is an Australian micro-investing app that invests your spare change in a diversified portfolio.  I’ve been using Raiz (previously known as Acorns) for the past year and I’m going to share my results so you can get a clearer idea of what it does and whether its a good tool for you.

If you’ve been using Raiz, let me know in the comments if you’ve been having success.

How Raiz Works

Raiz invests your spare change from purchases you make into a diversified portfolio.  You link the app with your bank account.  So every time you make a purchase, it will round the purchase up to the nearest dollar and transfer the difference into a raiz investment account.

The more you spend the more you’ll end up saving.  What I love about Raiz is that it works in the background.  I don’t even notice the small amounts being transferred out of my account.  It really is set and forget.

You can also choose to setup a regular reoccurring investment.  I’ve set Raiz up so that I deposit a small amount each week.  This really boosts my investing and saving!

Your money is invested in a diversified portfolio that has been put together with the help of Nobel Prize winning economist Dr. Harry Markowitz who is the father of modern portfolio theory.  In lay-mans terms your money is invested in stocks and bonds from around the world.  You do get a choice of different portfolios – from low to aggressive risk.  You can also choose to invest only in social responsible companies.

My Raiz Investment Results

I’ve been using Raiz for over a year and have managed to see a return of 26%.  With a balance of around $2500 this is around $300 in profit.

So I can safely say the Raiz does work.  I have managed to grow my savings by just leaving them invested and keeping the app connected with my bank account.   A return of 26% is obviously pretty amazing and I don’t expect this to continue every year.  My goal is to simply beat inflation by a few % points.  I’ve chosen the aggressive portfolio as I’m still young.   Based on your age and investment goals you might want to choose a lower risk, lower return portfolio on Raiz.

Raiz vs a Savings Account

Savings accounts aren’t really for saving!  Did you know that every year your money in that savings account is worth less and less.  That’s because of inflation.  It’s the reason why your grandparents were able to buy a house for $20k.   And your great great great grandparents were able to buy their house for $1000.  Every year money is worth less.  So one of the goals of investing is to beat the inflation rate.

The inflation rate varies but if you’re getting less than 3% interest on your savings then you are losing money.  Banks don’t tell you this.  And you’re parents probably didn’t teach you this either.  But it’s simple maths.

Raiz has been setup to beat inflation and actually grow your wealth.  I have a rule – don’t save for the sake of saving.  Save to invest!

Raiz vs Traditional Managed Funds

The best thing about Raiz is that you can get started for just $5.  Traditional managed funds require much more capital and usually have ridiculously high fees.  I hate managed funds.  In my opinion they are great at making the fund managers risk and doing not much else!

Raiz charges a $1.25 monthly fee for balances under $5k.  For balances over $5k the fee is just 0.275%.  Both of these are really low.     You’re also not locked in like you are with a term deposit.  You can withdraw your funds at any time.  Honestly you’d be crazy to open a term deposit with a bank these days with such low interest.  It should be illegal!!

What you need to know:

  • You can get started with just $5.  I would recommend trying to start with $100.  But everyone needs to start investing somewhere.  If you start with $100, the $1.25 monthly fee won’t eat into your profits as much.
  • It works with Australian bank accounts.  You don’t need to be with a specific bank.  Raiz uses direct debit.
  • Raiz offers cashback on shopping.  I don’t like this!  Don’t be fooled into spending money you wouldn’t spend, just to get some extra cash in your investment account.
  • You can withdraw your funds back to your bank account at any time.  This takes between 5-7 days as Raiz needs to sell the shares you own.  This is known as the settlement period and is normal for funds like this.
  • Your portfolio will earn dividends.  Companies distribute profits back to share holders sometimes.  You will see dividends show up in your account.
  • You can change your portfolio at anytime.  I recommend a more aggressive portfolio for young students.
  • Raiz is secure.  They use the same platform as Acorns in the U.S (raiz used to be called acorns in australia too).  They have a good reputation and there have never been any security scares.
  • You can signup through their mobile app which is nicely designed or signup through their website.  You’ll instantly notice how much nicer their app is to use compared to bank apps and sites!

You can find out more about Raiz here.


This post is for educational purposes and should not be considered as investment advice. This post is based on individual experience and journalistic research.

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