Kylie Purcell - Micro-Investing
How can you start investing with only a few dollars? In this episode we welcome Kylie Purcell, the investment editor from comparison site Finder to compare micro-investing platforms.
Kylie has a background in business and finance news with previous roles at SBS, Your Money, TVNZ, Switzer Group and The Adviser magazine. She has a Masters in International Journalism and a Graduate Diploma in Economics.
We talk about micro-investing platforms:
- Commsec Pocket
- Vanguard Investor
We started by defining a few terms that will help you to understand what is going on under the hood of these platforms.
- What is the difference between an ETF, a passive fund, an index fund and a managed fund?
- How are fees charged?
- What's a round-up?
RAIZ: A micro-investing application that invests through collecting your spare change as you spend. It collects it to the dollar and the extra amount of money collected from rounding up the dollar would be spent and invested in the portfolio you have chosen. RAIZ offers 7 portfolios according to your risk profile, from conservative to very aggressive portfolios. Initially, you have to start with $5 and every $5 it collects, it invests on your behalf. The fees for the application are $2.50 per month, and when your bank account reaches over $10000, it charges 0.275% per annum. There is a rewards system where you can shop through the app on over 200 mainstream shops, which invests around 1-2% of what you spend. All the money collected on Raiz is invested in ETFs.
Spaceship: The simplest micro-investing application in comparison to its competitors. There are only two different funds to choose from; the Spaceship Origin Portfolio and the Spaceship Universe Portfolio which is the riskier of the two. The application only invests in U.S. stocks and Australian stocks and you can start investing for as little as $1. The fees are 0.05% (Origin) or 0.10% (Universe). There are no bonds in the portfolios, and its strictly Australian and American shares which is pretty aggressive compared to RAIZ.
Commsec Pocket: A micro-investing application, but instead of investing into a fund or a portfolio of ETFs, it allows you to purchase and sell ETF units directly and hence it resembles a share-trading application. However, you can invest in as little as $50 minimum with Commsec Pocket which is comparatively cheaper than the $500 minimum you would incur with normal share-trading applications. and the platform only offers 6 ETFs but however, they have gotten the basic ETFs down such as a US stocks ETF, a health sector ETF, an Australian Shares ETF, and a sustainability ETF. These ETFs are reasonably low risk. The brokerage fee for each investment is $2.
Vanguard Investor: It is a micro-investing platform that acts as a mini version of a share-trading application. Vanguard Investors offers Vanguard ETFs for 0 brokerage fees and it is the only company Kylie knows of which offers 0 brokerage fees for Australia companies. Otherwise, it charges you $19.95 or 0.15% for other stocks. The downside to 0 brokerage fees is that there is a $500 investment minimum, and there is an account fee of 0.22% which is capped at $600 per annum.
Thanks to Lucas Chan for researching this post.
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