I’ve been investing using the Raiz app for the past few years to invest and grow my wealth.
If you’ve been thinking about signing up, make sure you read my Raiz review to get a good overview of what the app does and whether it could be a good option for you.
What is Raiz
Raiz is a micro-investing app that lets you invest small amounts into a diversified portfolio of stocks. Raiz has built 7 different portfolios that offer conservative to aggressive investing strategies. You don’t need to know anything about investing in stocks. These portfolios have been put together by experts.
Stand out Features:
- Unlimited Deposits and Withdrawals – you don’t pay any fees when you deposit and withdraw. You can deposit as often as you like and withdraw whenever you want.
- Round Ups – a unique feature of Raiz. Invest your spare change.
- Change portfolios at anytime – You aren’t locked into one portfolio. While switching regularly isn’t an ideal (or profitable) investing strategy. You can move from one to another if your investment goals change.
- Instant Diversification – You get a diverse portfolio of stocks and bonds, even if you have just $5.
How much money do you need to get started on Raiz?
The best thing about Raiz is you don’t need thousands or even hundreds of dollars to start investing. You can sign up and start investing with as little as $5. Before apps like Raiz came along, you would have needed thousands of dollars to build a portfolio similar to what you get on Raiz.
How does Raiz invest your money
When you invest using Raiz, your buying into ETFs. An ETF (exchange traded fund) is made of stocks and bonds and is built to track an index (like the Australian stock market) or a specific sector (such as tech stocks). For example one ETF that your Raiz balance is invested in is called ETHI. This fund is made of stocks such as Apple, Tesla and Netflix. Basically an ETF lets you invest in a diversified bunch of stocks in one investment.
Raiz has automatically built 7 different portfolios that are made up of different ETFs. So when you invest in Raiz your actually investing in hundreds (potentially thousands) of different individual stocks and bonds.
My Raiz Performance
Since I’ve started investing in Raiz my portfolio has grown over 6%. I’m writing this post after one of the biggest stock crashes. So that number isn’t a good representation. Before the crash my portfolio had grown more than 30%+. I’m pretty impressed that even with the crash, Raiz has still delivered a positive return.
My portfolio also took a massive dip when I withdrew the majority because I bought a house! While using Raiz to save a home loan deposit won’t be for everyone, it actually worked out really well for me. The growth on raiz really made a difference to my overall deposit amount and I wouldn’t of had the same results if I had just saved using a savings account. Obviously there was more risk involved saving this way. I’m now using Raiz to once again grow my wealth so I can pay off my home loan down the track.
Remember that my experience will be different to yours. And remember that past performance doesn’t indicate future results.
What Portfolio do I invest in
I’m currently investing in the Raiz Emerald Portfolio. This is Raiz’s socially responsibly portfolio made up of companies leading the world in terms of sustainability. If you’ve been looking to ditch coal, fossil fuels and other irresponsible investments, then this could be a good option for you.
I used to invest in the aggressive portfolio. That portfolio performed well, I just wanted a more socially responsible investment.
So how do you choose a portfolio on Raiz? Well I can’t give you investment advice, but generally the younger you are, the more aggressive you want to be. As you build up wealth you might want to switch to a more conservative portfolio.
Raiz Fees – How do they compare?
Raiz charges a flat monthly fee of $2.50 for balances under $10k. For balances over $10k they charge a fee of 0.275% per year.
So are the fees worth it? I think they are. If you want to invest small amounts of money at regular intervals then Raiz will end up being much cheaper than trying to invest through a broker. Remember, your money is invested in lots of different ETFs. If you were to make these trades through a broker you would need at least $500 per ETF and you would be charged $9+ per trade.
So Raiz is a great deal for dollar cost averaging with small amounts of cash. If you have less than $100 in your Raiz account, the fees will eat into your balance. But once you grow past that amount the growth will offset any fees. Over the past few years the growth in my account $1k+ has been much greater than the fees ($30 a year).
I’ve heard some financial commentators (aka Barefoot investor) comment on the fees. But these guys are investing with $10k+ at a time (plus they make money when you buy their books instead of automating your investing through an app like Raiz). Raiz isn’t designed for those people. It’s designed for regular people who want to invest $5-$100 a week. If you’re that person the fees on Raiz will end up being MUCH less than the fees you pay using a broker like Commsec.
But how does Raiz compare to other micro-investing apps? Well the closest app is Spaceship Voyager, which is completely free to use for balances up to $5k. Spaceship has a slightly different investing strategy and doesn’t offer a “conservative” portfolio option. I would take a look to see which portfolios you prefer.
Is Raiz a Robo-Advisor?
Sort of. Raiz is more of a passive investment service. Raiz has minimal human intervention. The portfolios have been put together by experts (they were originally constructed by a Nobel winning economist) but they run automatically. This means there isn’t a human actively picking stocks or managing the fund. And this is great news! These type of funds tend to outperform traditional funds and have far cheaper fees.
The Raiz App
The Raiz apps is one of the best designed financial apps in Australia. The mobile app is easy to use and you don’t need to know anything about investing to get started.
I’ve used a few investing apps that tend to be quite buggy. Raiz is a very reliable platform and I haven’t run into any problems.
How to have success with Raiz:
- Setup recurring investments – Raiz’s biggest advantage over traditional apps is you don’t pay brokerage fees every time you invest. So you can invest small amounts at regular intervals. This is known as dollar cost averaging and is one of the most powerful investing strategies. You can setup automated recurring investments through the Raiz app. This will ensure your investment is always growing.
- Look to invest for the long term – Raiz isn’t about making money in the short term. Your Raiz investment will move about with the market. Sometimes it can move a lot! Think of Raiz as a way to build your nest egg for the future. It’s not great for saving cash for a holiday or for use as an emergency fund. People lose money investing when they panic. If the stock market has a downturn, don’t sell! You’ll just lose money. The stock market has always corrected and gone on to grow more. So look to the long term!
- Take advantage of Raiz Rewards – Raiz has a cashback feature. When you shop online you’ll earn cashback that gets invested into your Raiz account. This is a great way to give your Raiz account a little boost.
- Use Roundups – When you turn on Round ups, Raiz will monitor your spending account (debit card). When you make a purchase Raiz will round that purchase up to the dollar and transfer the small amount to your investment account. A lot of people don’t like using this feature because they feel like it will be too much! But trust me, you won’t even notice the round-ups. You’ll invest money while you spend and you won’t even notice. You can always turn it off with just a click.
My Raiz Review….
I wouldn’t use Raiz if I didn’t think it was a good app. In my opinion Raiz is a good option for new investors and even experienced investors who want to take advantage of dollar cost averaging. If you invest small amounts (~$5-$100) a week through Raiz, you’ll end up outperforming the investor who just buys $1000k worth of stock in a one off purchase.
As with all investments, do your own research!
P.S – Before signing up, make sure you take advantage of this Raiz invite code. You’ll get $5 free!
Got any questions about Raiz? Just leave a comment: