Raiz is a micro-investing app to help you save very small amounts at a time. The logic behind it is that it rounds up your transactions to the closest dollar and then adds that amount to the app, investing it for you.
How does it work?
Raiz helps you proactively invest and the key feature is round-ups. This means they round up each of your transactions to the nearest dollar and invest the change into a diversified portfolio. As an example
$3.50 for a coffee
$0.50 towards Raiz
= $4.00 spent
Say you buy a coffee a day, after a month you’ll have about $10 towards your Raiz account. Now think about each transaction you make with your bank, including swiping your card. Maybe 100-150 transactions a month? Say each transaction equals a $0.50 towards Raiz – this will equal about $50-$60 per month invested > $600-720 per year!
You can also increase or decrease the amount you round up (to the closest $0.10 – $1.00) per transaction, so you can control the amount invested. Raiz offer different types of investing portfolios as well, so you can be very aggressive in your tactics or conservative.
To get started, download the Raiz app on Google Play or the iTunes store. Simply connect a credit card, debit card, or another funding source, then provide us with some basic information. They’ll give you the option of choosing a portfolio that is in line with your investment goals and the amount of risk you’re comfortable taking.
I came across Raiz in 2017 as a way to save some extra money without me ‘noticing’. The main goal was to start saving bits and pieces as a buffer for the items we’ll need to buy for my daughter. Babies are expensive – prams, cots, car seats etc all add up but having this rainy day fund would help. I found this app very useful as it takes only a small amount each time, that i barely notice it! We were able to put away about $2,100 in a year without too much hassle!
Where can I get it?
My personal invitation link is here
What do I need to get started?
After you’ve installed the free Raiz app, all you’ll need to start investing is:
- Your online banking login information (which generates the roundups)
- Your bank account and BSB number (where your money is pulled from)
Be sure to understand the fees and charges of micro investing apps. These may include a monthly or percentage fee, depending on your balance, plus fees charged by the ETF providers.
Benefits and risks of micro investing
Micro investing makes it quick and easy to start investing, but there are some things to consider before you sign up.
Benefits of micro investing
- You can start investing with a very small amount of money.
- You can start learning about investments without risking too much money.
- Micro investing apps generally do not charge brokerage fees (but make sure you know what other fees apply).
Risks of micro investing
- Micro-investments carry the same risks as similar investments. For example, if you are investing in growth assets, the value can still fluctuate with the market.
- Fees can be very high for small balances when compared to other investments.
- It will probably take you a long time to grow your investment.
- You will have to pay tax on capital gains.
Disclaimer – I’m not employed by Raiz in any way – I just use their product and really enjoy it!