I’m going to share a little secret with you. It’s a bleedin’ obvious secret but most of us blindly ignore it….
… Are You Ready To Transform Your Life…
No matter how much you earn today…. if you spend it all you have nothing left to save for tomorrowdoh!
This is something we can very easily overlook in this age of easy-credit, consumerism and instant gratification, BUT it’s now time to make changes and to control our spending and to start saving for our tomorrow!
It applies equally to the richest family in the street and to the poorest family in the street… if either of them spend all the money they earn there’s no way they will ever save anything.
How two apps can help you start saving without any real effort
Before telling you about the two apps I want to mention one more thing. You may or may not have heard of the term ‘Micro-Investing’ – it’s the thing that WILL help you to start making changes and will help you to start saving for the future.
Micro-investing is the term given to investing small amounts of money on a regular basis.
Over time the small amount you save becomes a HUGE pile of wonga, which is due to your regular savings building up week by week, month by month and year by year. There is also something else rather amazing that also helps your savings become HUGE!
This something has been described by Einstein as the Eighth Wonder of the World. It is called ‘Compound Interest‘. This incredible phenomena makes your savings grow… and Grow… AND GROW! All you need is time, patience and the willpower to leave your savings alone (and you also need a sensible place to invest your savings as well).
It’s now time to tell you about the apps….
First app: Raiz Invest – This app is like an equivalent to a digital coin jar.
Using the Raiz app you can automatically invest your small change. You invest small amounts on a regular basis into a diversified portfolio of Exchange Traded Funds (ETF’s). You accumulate wealth over time without having a huge impact on your lifestyle.
There are two main things I like about Raiz Invest:
- Round-Ups – You link your Raiz app to your bank account(s) and Raiz looks at each transaction, rounds the value of each transaction up to the nearest dollar, and then transfers the value of the ’round-ups’ out of your bank account and invests them for you automatically.
- For example, you buy a takeaway coffee for $4.20. Raiz will calculate the ’round up’ to $5 and invest the $0.80.
- I tell Raiz to transfer the money from my bank account every time the round-ups reach $5 in total, so I don’t even notice the money has gone. Even though I don’t notice the money leaving my bank account I have made small investments on a regular basis without any effort or timewasting.
- Before you know it you will have saved $100… then $200… and over time you should see the savings pot grow (however, see notes below).
- Raiz Rewards – they have partnered with hundreds and hundreds of retailers who will pay a small amount of money every time you make a purchase from their online store via the Raiz app. This is a great way to boost your savings whilst buying things that you need (no impulse spending though! Don’t forget you want to make sure your expenses are less than your earnings!!!)
- For example: you want to buy a Book. You go to the Raiz Rewards section of the Raiz app and select Booktopia. You access their online store via the link in the Raiz app and a little while after your purchase Booktopia boost your investment by paying a small % of the cost of your order into your Raiz account. Simple and no hassle. Small amounts, but over time if done regularly these rewards can boost your savings nicely!
- Round-Ups and Rewards are the two great things about Raiz. Here are the not-so-great things:
- Investments can go down as well as up! You will be investing in funds that fluctuate in value. When the economy is strong and/or the fund you are investing in is performing well you will see your fund increase in value. When the fund performs badly it can drop in value dramatically. This is the same as any investments in stocks and shares, property, barrels of oil, gold ingots or even rare Pokemon cards.
- Raiz charge a monthly fee. As at December 2019 the monthly fee is $2.50 per month for fund values under $10k and 0.275% per year for fund values above $10k. Their fees have DOUBLED since me initially writing this article so it is only worthwhile opening a Raiz account if you intend to make regular use of their Rewards scheme and the Round-Ups functionality which will help boost your savings to offset the monthly fees. If you don’t intend to use the Rewards scheme or the Round-Ups then I don’t think Raiz is a cost effective option and I would suggest considering Spaceship as an alternative because they have NO FEES on balances below $5k (see below).
- Keep Records for The ATO – When you prepare your annual tax return you will have to provide your tax adviser or accountant with information about your investments and withdrawals from your Raiz Invest account. Some information may have to be disclosed and there may be some tax to pay.
Second app: Spaceship Voyager – This app helps you to monitor performance of your regular investments in either an indexed fund or a portfolio of securities that uses a ‘Where the World is Going’ methodology.
What’s great about the Spaceship app:
- You decide how much you want to invest and when you want to make the investment. For example you could simply invest $5 a week to get you started… or you could invest $200 a month, or more. It’s up to you.
- There are NO FEES at all on the first $5,000 invested and low % fees on any balances above $5,000.
- You can decide between a ‘safer’ indexed fund portfolio or a more punchy portfolio of 100 companies that Spaceship believe are where the world is going and believe are less likely to be disrupted.
- To get you started Spaceship will add a bonus to your investment if you open an account with them using my friend link.
Raiz vs Spaceship ?
Well, it wasn’t a difficult decision for me to make… I went for both!
In my opinion Raiz is superb for passive, hassle-free micro-investing by using RoundUps and using the Raiz Reward scheme. Slowly but surely over time you’ll have a nice size stash of cash to do something with in the future that you hardly noticed leaving your bank account. The downside is they will charge you a monthly fee whether you have $10 invested or $10,000 invested. The monthly fee will eat into your savings and will be very noticeable to start with because any performance growth initially is likely to be less than the fees! However, my view is that I would have just blown the lot on takeaway coffee if it had stayed in my bank account so I’m better off micro-investing through Raiz!
In my opinion Spaceship is better for regular saving. Start with $5 every time you receive your wages and then when you’ve worked out how you can control your Uber Eats addiction you can consider increasing your regular savings to an amount that will help you achieve your goal(s). For example, if you want to build up a $2k ‘Emergency Fund’ you’ll achieve your goal within 2 years if you invest $25 every week. If you want to put down a $50k deposit on a house… you’ll have to invest alot more for alot longer. With patience and commitment you’ll reach your goal(s) eventually!
- I’m not a financial advisor and it is not my intention to be providing any financial advice. My interest is in helping people to improve their financial wellbeing through regular savings and therefore I see this blog and website as a way to share my views.
- If you start investing with either Raiz or Spaceship and open accounts via the links in this blog, I will receive a small boost to my own fund values as both companies will give me the same bonus that they will give to you if you tell your friends.
- The values of funds provided by both companies can go down as well as up. If you are unsure or uncertain about anything you must make your own enquiries and you must seek your own financial advice from an appropriate individual or organisation.