Raiz Review: Investment App (2021)

Summary: The Raiz Investment App is one of Australia's most popular micro-investment platforms that enables investors to automatically dollar cost average into their diversified "Smart Portfolios".

By
James Glennon
on
October 10, 2021
Raiz Invest Review
Raiz Review

Raiz Review

Raiz, formerly known as Acorns, launched in Australia in 2016. Its target market is investors in the millennial and Gen-Z generations. The Raiz platform opens access to ready-made ETF investment portfolios. 

Raiz's investment options are as easy to access as is hailing a cab via Uber. Raiz connects any investor with any amount of spare cash to a well thought out basket of securities. The Raiz ETFs track financial investment assets such as commodities, indices, stocks, or cryptocurrencies such as bitcoin.

Raiz Invest Review

How Does Raiz Work?

Raiz has a cash round up feature that collects its account holder's spare change and contributions then invests them in an ETF portfolio. Raiz's "round-up" technology first links your account to your credit or debit card. It will monitor your daily purchases and "round-up" your regular purchase costs to their nearest dollar value. 

As an illustration, should you spend $3.50 on a soft drink, Raiz's "round-up" technology will round up that figure to $4, and send the $0.50 to your Raiz account. It will allow these funds to accumulate to $5 then automatically invest them in your Raiz ETF portfolio of choice.  

Raiz round-up feature is a slow but sure way of increasing your investment holdings and generating passive income. On top of this, you can send recurring or one-off payments to your Raiz account. Raiz's recurring investment option is particularly user friendly and flexible. 

Raiz Fees

Raiz does not levy any charge on account set-up or portfolio switching. It, however, has a $3.50 monthly maintenance fee for accounts that hold a $15,000 portfolio value and below. Sapphire accounts have a $3.50 monthly fee, while custom portfolio accounts with holdings of up to $20000 have a $4.50 fee. 

Accounts that hold over $15,000 pay a 0.275% account fee. Some other costs that you will pay include issuer fees that range between 0.04% to 0.59% for ETF purchases.

Is Raiz Safe?

The Raiz platform uses bank level security and its remote servers have robust data encryption features. More so, Raiz is regulated by the Australian Securities Exchange Ltd. Its subsidiaries, on the other hand, are regulated by the Australian Securities & Investments Commission

Raiz does not hold any of its user's investment funds in its custody; it has partnered with the Perpetual Corporate Trust Limited for custodial services. To this end, should Raiz meet any financial challenges, Perpetual Corporate Trust Limited would have user assets safe in their custody.

Is Raiz Safe?

Raiz app 

The Raiz mobile phone app is easy to use. It has all your investment portfolio balances on the homepage for quick access. It also displays shopping rewards, performance charts and your finance tab on quick access for an easy rundown on your financial health. 

Raiz Smart Portfolios

Raiz has a variety of seven diversified ETF portfolios for their user's. Their website says that they designed these investment products with Dr Harry Markowitz's help. Dr Harry Markowitz is an American economist. He won the John von Neumann Theory Prize in 1989. In addition to this, he received an Economic Sciences Nobel Prize. 

His Modern Portfolio Theory (MPT) empowers investors to put together asset portfolios that balance risk appetites and expected returns. MPT works on the assumption that the ordinary investor is risk-averse. To this end, they will prioritize less risk in their portfolio as long as there is an unexpected return. 

Investors that want to maximize their returns must compensate for it with higher risk levels and vice versa. On top of this, MPT embraces portfolio diversification. Consequently, Raiz's portfolios have a mix of assets, each with its varying level of risk. 

As per MPT, a portfolio that has diverse asset classes is less risky than one that has uniform assets. 

Raiz classifies its Smart Portfolios as:

  • Conservative
  • Moderately conservative
  • Moderate
  • Moderately Aggressive
  • Aggressive
  • Emerald
  • Sapphire 

You have the freedom to choose your Raiz Smart Portfolio of choice. These portfolios have a variety of Australian Securities Exchange Ltd (ASX) ETFs in pre-weighed portions. These ETFs will expose your holdings to Australian small and large-cap stocks. 

Moderately aggressive portfolios have exposure to volatile international and Australian equities. It is a medium to long term (3-5 years) investment option that has a risk of negative returns. The aggressive portfolios carry exposure to Asian, European and US large-cap stocks. The Sapphire portfolio has 5% BTC exposure and a variety of ETFs. 

There is also the ethical Emerald fund, which has two ethical ETFs and is currently Raiz's best performing portfolio with a 10.1% yield. This is in comparison to the average 6.9% return for the conservative funds and an average of 8% for the aggressive ETF portfolios.

That said, investors can create custom portfolios by mixing and matching their exposure to a variety of ETFs. Custom portfolios have a 5% bitcoin target weight.

Raiz has just announced a $5.7 million dividend package for their ETF investors in October 2021. Over and above this, they have reinvested close to reinvested over $14.27 million in dividends to Raiz user accounts in the 2020/21 financial year.

Other Features

  • Raiz Rewards incentivize users that purchase goods and services via the Raiz platform.
  • Raiz Kids helps parents invest in their kids. They can turn over these accounts to them when they are 18.
  • Their new Self-Managed Super Funds feature is a perfect diversification tool for investors.
  • The Raiz customer support is active on Twitter and email support has a 2-day turnaround time.

Raiz pros

  • It is perfect for beginner investors since you can invest minute amounts in their ETF products
  • Exposure to the world's best ETFs at a low fee.
  • Enhances regular investment behaviour for financial success
  • Choice of seven ETF portfolios as per your risk appetite
  • No limits to withdrawals or deposits

Raiz cons

  • Their account fees could easily gobble returns on low account holdings.
  • Slow to the average return on investment
  • Limited ETF choices

Conclusion

Raiz is an all-in-one wealth management service that offers an excellent start to a saving and investment culture. It is perfect for beginner investors and will open doors to diversified high-end investment products at marginal costs. Its automated “round-up” technology and investment feature enhance investing discipline.

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James Glennon

I spent 5 years as a Commercial Lawyer in Australia before stumbling across the innovations behind Bitcoin and the cryptocurrency space. Ever since, I have been committed to learning more and educating the broader Australian community about Bitcoin, hard money, investing and decentralized finance.

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