Raiz is a micro-investing platform that invests your spare change in a diversified portfolio. It’s one of a growing number of investing apps targeted towards millennials. I’ve had great success with Raiz over the past couple of years. In this post I’m going to share some tips on how you can get the most out of investment with Raiz.
Choose a Portfolio to match your age and capital
Raiz has 6 different portfolios that you can choose to invest in:
- Moderately Conservative
- Moderately Aggressive
The more conservative portfolios are invested mainly in bank deposits, bonds and large Australian stocks. Where as the aggressive portfolios also include international and emerging stocks.
I can’t tell you which portfolio will be best for you. But I can give you some general advice. If you’re just starting out investing – which most young people are – you might want to try one of the more aggressive portfolios. The aggressive portfolio will give you the best chance of gaining capital overtime. Where as the lower risk ones are designed to maintain your capital and simply beat inflation.
If you have a large amount of capital to start off with, you also wouldn’t want to risk it with an aggressive portfolio.
Just remember that when you’re young you can usually afford to take a few more chances. So don’t be afraid to take on a slightly riskier portfolio to begin with. With Raiz you can change your portfolio at any point.
Setup a Recurring Deposit
One of the best things about Raiz is that it will invest for you in the background. This is through what Raiz calls “roundups”. Every time you make a purchase, Raiz will round that up to the nearest dollar and transfer the difference into your Raiz investment account. The more you spend the more you’ll save.
While Roundups will work well for a lot of people, I’ve found that I wanted to save even more. You can do this through Recurring Deposits or a Lump Sum. You’ll find this feature on the “Transfer” page. You can choose to setup daily, weekly, monthly etc recurring payments. So if you regularly find yourself saving more than you’re spending, you should setup a recurring payment to automate the process.
Use a longer term mindset
It’s important to remember that Raiz won’t make you rich. It’s also not going to work overnight. You should see moderate returns over a long period. As of writing this post my investment, which is invested in the Raiz Aggressive portfolio has gained 26.99%. And this has been invested for two years.
When you start out, you may see a negative return. Remember you’re invested in the stock markets which go up and down. Raiz works because you invest small amounts at regular intervals. This is known as dollar cost averaging. Sometimes you’ll invest when the market is down. And sometimes you’ll invest when it is up. Over time, this will average out. So you’ll gain when the overall market gains in value.
Don’t spend money to make money
Raiz has a feature called “Found Money”. It’s a cashback feature for shopping. If you shop through Raiz then you’ll earn some cashback on purchases. If you’re already shopping at these stores then fair enough – but don’t go out of your way to spend just to get some cashback. Personally I hate this feature on Raiz. It goes against the spirit of investing and saving.
Raiz will automatically invest dividends back into the fund. And your gains will also be reinvested and automatically rebalanced. This is known as compounding and it’s one of the most powerful concepts in saving. Over time your money will grow faster. But you can’t take advantage of the compounding effect if you keep withdrawing. So resist the temptation to cash out. The harder you save to start with, the easier it will be later on.
If you’re new to Raiz.. Here’s $2.50
You can get a $2.50 bonus when you sign up to Raiz through this link.