Bitesize: All your micro-investing questions answered

Alec: [00:00:07] Welcome to Bitesize on Get Started Investing. In this series we feature some of our favourite lessons, quotes and moments from the podcast. If you'd like to listen to the full episode, we've included the link in the show notes. We've got a bunch of questions around micro investing apps. For people unfamiliar, they are sort of technology enabled investing platforms that allow people to invest quite small amounts of money. So traditionally you had to sort of invest in increments of at least 500 bucks. But with these micro investing apps, you can invest in a sense. And so the big names in Australia that people may be familiar with are CommSec's Pocket app, Spaceships voyager App, Rise, which was formerly known as Acorns, and the other big ones that I'm forgetting. 

Bryce: [00:00:58] Now, I think some banks now you can micro invest into your super through your banking app, through the round up principle where you tap your card and it'll take the sense to the nearest dollar and round that. But otherwise those three that the big hitters in Australia at the moment. 

Alec: [00:01:15] I think they're the ones we definitely get the most questions on. Yeah. So I guess I'll ask the question in two parts. To sort of sum up the majority of them, I guess the first one is how do you think about these micro investing apps in your overall, you know, wealth building strategy? And then the second one is how do you make a decision between them all? 

Bryce: [00:01:36] How do I personally think about them from a wealth building strategy? It is. I don't really consider them any more. I used to. I still have arrays taking over, so that is something that I've got going in the background. I think every time I hit a few grand there, I'll just move it straight into the stocks. But I do not use it anymore as a way of long term building wealth. To give you an example. Rise is an app that gives you exposure to the ASX international shares, bonds, cash, a varied portfolio or a diversified portfolio. You get to choose between sort of an aggressive growth or a balanced portfolio. So it's a good way to get started in the market and understand about, you know, diversification. Some of the asset classes you can invest in, you can have a look at how they structure their portfolios. It's a cheap way in terms of, I guess, the amount of money you have to put in. But in terms of building long term wealth, it's not something that I think about at the moment. I'm not using it as a tool to build long, long term wealth. 

Alec: [00:02:37] So you said there that you did have Rise. So I guess to that second question around for people that are interested in it, how do they go about choosing between them all? Maybe if we start with you personally, why did you choose Rise over the other ones? 

Bryce: [00:02:51] Because it was the first to market in Australia from memory. 

Alec: [00:02:54] Okay. And so you're just an early adopter. Absolutely right. 

Bryce: [00:03:01] Mr. Technology. So I started when it was called Acorns, and that was a number of years ago. And then Spaceship came on the market and they came on with their Voyager. And then Pocket casts Comcast. 

Alec: [00:03:16] No, no, no. Pocket Cast is that podcast out on CommSec Pocket. 

Bryce: [00:03:22] I'm not going to use CommSec's app. No need. So yeah, it was basically because they were first to market. But the way I would think about it, Reg, is firstly I'd be looking at their fees. So Rise have a monthly fee of $1.25 per month. So you need to think about that as almost your brokerage fee. If you're investing only, you know, ten bucks a month, you're paying $1.50 on top of that Voyager. They don't have any fees for accounts under $5,000 and then accounts over 5000. They have a 0.05% fee. And then the CommSec pocket app, they just charge two point brokerage per trade. So varying fees. You need to consider things like how often you would be investing in them, what amount of money you would be investing and work out really as a percentage what brokerage you'd be paying. Otherwise you'd be looking at what you can be investing in. I know CommSec Pocket is just about ETFs at this stage, whereas Voyager and Rays both give you access to international markets and as I said, a number of different asset classes. 

Alec: [00:04:28] Yeah. Yeah. So I like that. There's probably one more criteria I would add. So you started with the fees. The second is investment options. The third one is just around savings functionality. So I think if we think about what these apps are really great for, it's about automating saving habits. It's about for people who are pretty shocking savers like yourself. 

Bryce: [00:04:52] So I don't use it anymore. My savings is well under control. 

Alec: [00:04:55] No Bryce's spreadsheets on spreadsheets, on spreadsheets to manage is saving for people who aren't great savers. This is an unreal tool to just automate that process and to to make it something that you don't have to consciously do. And so for that, then it's about what works for your, you know, your savings habits. Is it you? I'm not too familiar with all the apps. I actually don't use any of them personally. But some might be, you know, they. Make a weekly amount direct debit from your bank account. That might work for some people. Rise' concept is about rounding up transactions, so that might work for some. So I think the third criteria is which app will best work with your money habits and how you can, you know, get that savings stuff down pat. Some people probably have balances of $1 million in these apps, but I think the majority of people would probably be in your boat price and get to a set amount and then decide to take it out of this platform and put it in something else, which is neither right or wrong. It's just I imagine that's what a lot of people do. If people have any other questions around micro investing, I know we've plugged the discussion group at the front of this episode, but I'm going to do it again here because there's plenty of people in the discussion group that have asked these questions and use those products. So if you want to, if you want more detail or if you want to ask people who've actually used the products to talk to it, the discussion groups where you want to go.

Bryce: [00:06:16] Nice.