Raiz and Spaceship are two popular micro-investing apps in Australia. I've been using both of these apps for the past few years to grow my wealth and I consider them to be some of the best investing apps available in 2021.
Wondering which app you should use? In this post I'm comparing Raiz vs Spaceship so you can make a more informed choice.
What makes both these Investing Apps Great
You no longer need thousands of dollars to start investing. In fact using these two micro-investing apps, you need just a few dollars. Here are some of the reasons why I think that both of these apps make great alternatives to traditional brokers like Selfwealth or Commsec.
Save on Brokerage Fees
Both Raiz and Spaceship have very competitive fee structures (more on that below). Traditional brokers can charge $9+ per trade. If you're investing small amounts at regular intervals then chances are you'll save money on fees by using these apps. Of course, it's important to work out how much you'll end up paying based on your own investing circumstances.
Easy to Use
What I love most about these apps is how easy they make investing in a solid portfolio. Investing used to seem really complicated. That benefited financial advisors who earned commissions on your investing. But it didn't benefit the investor. Things have changed! Anyone can use these apps. You don't need to know about stocks or ETFs.
Start with just $5
You don't need thousands of dollars to start investing. You can invest on both Raiz and Spaceship with as little as $5. This is known as micro-investing – i.e investing small amounts at regular intervals. You may have thought that investing in shares was out of your reach. Thankfully these apps are making investing more accessible to more people.
Set up Automated Recurring Investments
I have setup both Raiz and Spaceship to be automate my investing. All I had to do was choose an amount I want to invest on a weekly basis and the apps do the rest. These apps can be setup to be set and forget.
Build a Diversified Portfolio
Spaceship and Raiz have a variety of very different portfolio options. These portfolios are ready built by people who know what they're doing – you don't need to pick and choose on your own.
Raiz vs Spaceship
Here's an overview of how each app stacks up against the other:
|Fees||Free for balances under $5k. From 0.05% per annum for balances over $5k||From $3.50 per month for balances under $10k From 0.275% per annum for balances over $10k|
|Portfolios||3 Portfolio Options. 2 Active, 1 index portfolio.||7 Portfolio Options. 1 Bitcoin Option. Custom Portfolios|
|Best Feature||Fee free for small balances||Pre-Built Portfolios that are diversified|
|Considerations||Need to trust that the Spaceship investment team know what they're doing||Fees can eat into balances that are under $1000.|
Raiz was the first micro-investing app to launch in Australia. Originally it was called Acorns but it when it split from it's U.S parent company it became Raiz. Raiz is now listed on the ASX.
What is Raiz
Raiz is a micro investing app. You can invest small amounts as little as $5 at a time into a diversified portfolio. Raiz makes investing easy. You simply choose a portfolio that matches your goals and age (for example I'm still quite young, so I'm investing in an aggressive portfolio that aims for long term growth. If I was older I would look for a more conservative portfolio to grow slower but with less risk in the short term).
How to Invest Using Raiz
Investing using Raiz is as easy as hitting a button. The Raiz app is linked to your bank account. You don't need to worry about transferring funds manually, it all works automatically.
Here are the three ways to invest using the Raiz app:
- One off Deposit – Deposit money when you have it. You can deposit as little as $5 at a time.
- Recurring Deposit – My favourite way to invest. Setup daily, weekly, fortnightly or monthly deposits. Again you can choose to invest with as little as $5 at a time. You can change this deposit or stop it whenever you wish.
- Round Ups – Raiz has a unique feature called Round-ups. When you link the Raiz app to your bank account, you choose for the app to keep track of your purchases. Every time you make a purchase, Raiz will round up to the nearest dollar and transfer that small roundup amount into your investment account. This way, the more you spend the more you invest!
Raiz has put together 7 different portfolios that are based on what I believe are very solid investing fundamentals. They are diversified and well balanced. The portfolios range from conservative too aggressive.
The most conservative portfolio is mainly made up of bonds with just 22% stocks. Where as the most aggressive portfolio is made up of 90% stocks. The price of stocks will move around much more than the price of bonds. But hopefully over the long term, stocks will grow more.
Raiz also has a portfolio (Sapphire) that includes an allocation of 5% Bitcoin. In my opinion this is one of the easiest (and safest) ways to invest in cryptocurrency.
You're not locked into a portfolio. You can change whenever you want (although it wouldn't be smart to keep changing. Investing through Raiz works best over a long time period).
Raiz also offers the option to build your own custom portfolio made up of ETFs. Should you use a custom portfolio on Raiz? If you're asking that question then I think the answer is no. The portfolios that Raiz has put together are really good. In fact they were originally put together with the help of a Nobel Prize Winning Economist. The random guy from Reddit is probably not going to be able better portfolio advice.
I am a little hypocritical as I invest using a custom portfolio. But I did this because I had a clear investing goal in mind (adding a 1% Bitcoin allocation to my aggressive portfolio) and not just because I could. While lots of people on Reddit will give advice (I've seen so many “what custom portfolio should I build” threads), if you're new to investing stick to one of the ready made portfolios. They worked for me (I invested in the Aggressive portfolio for many years) and I was able to save my house deposit through investing.
For balances under $15k, Raiz charges $3.50 per month.
If you're investing the Sapphire portfolio (which includes Bitcoin) you're charged $3.50 per month plus 0.275% per year.
If you've built a custom portfolio you're charged $4.50 a month when your balance is under $20k and then 0.275% per year when its over $20k.
So how do these fees stack up against a traditional broker. If you were to invest $1000 a month in an ETF on Selfwealth you'd be charged $9.95. And then if you wanted to sell that investment you'd also pay $9.95. On Raiz you'd be charged just $3.50. So Raiz works really well if you're making regular investments. Which just happens to be a great way to invest!
Key Features on Raiz
- Invest in 1 of 7 Different Pre Build Investment Portfolios
- Monthly Fees – Don't pay a fee every time you deposit. Instead you pay a monthly fee. It's like subscribing to Netflix but for money.
- Round Ups – You can choose to invest when you spend money. A great way to invest small amounts without even noticing.
- Recurring Investments – Setup a recurring investment that you can set and forget.
- Withdraw Anytime – You can withdraw your funds from Raiz at anytime. You aren't locked in. In my experience withdraws take around 3-5 business days.
Spaceship is similar to Raiz. But instead of investing into a portfolio of ETFs, your money gets invested into a fund that is made up of stocks.
What is Spaceship
Spaceship is a micro-investing app. You can invest in one (or a mix) of three different portfolios. The portfolios are unique (more on that below) and are clearly aimed at younger more tech savvy investors.
How to Invest in Spaceship
Investing in Spaceship is easy. You don't need to pick individual stocks or ETFs to invest in. You just choose a ready made portfolio and then deposit money.
Spaceship offers three different portfolios to invest in. You can choose to invest in just one or a mix of multiple portfolios. I'm currently investing in the Universe portfolio. Here are three different portfolios:
- Universe – Invest in where the world is going, not where it's been! Invest in companies like Apple, Tesla, Spotify, Microsoft etc.
- Earth – Invest in sustainable companies. You don't need to worry about your money getting invested in coal companies (like your super does). The companies in this portfolio have a positive impact on the world.
- Origin – This is an index portfolio. It is made up of 200 of the worlds largest companies.
What I love about Spaceship is that I can invest in the companies that I love and use on a daily basis. I don't want to invest in coal companies or outdated retailers. I want to invest in companies that I believe have an important role in the future. Spaceship has done what I believe is a really good job of choosing companies and they are constantly making adjustments.
For balances under $5k Spaceship charges no fees! Yes thats right, you can invest in a diversified portfolio of shares and you won't pay any fees. This is a really good deal. If you're just starting out investing, this is a great way to build your nest egg without fees eating into your growth.
For balances over $5k Spaceship charges just 0.10% per annum for the Universe or Earth portfolio. And just 0.05% per annum for the origin index portfolio. I'm investing in the Universe portfolio. If my balance was $10k I would be charged just $5! That's a crazy good deal.
Raiz vs Spaceship Performance (My Results)
I've written a complete post on my Spaceship and Raiz performance results. But I'll include a quick summary here.
Over the last few years both apps have performed well for me. But remember that past performance doesn't mean they will perform well in the future.
Spaceship has by far been my number 1 investment. Since the Universe portfolio launched is has averaged a return of 30.39% (as of June 30 2021). What's incredible about that result is during that period there was a market crash due to coronavirus and then a tech sell off. The portfolio still did well through those challenges and outperformed the index.
Raiz has also performed well for me. As of writing my portfolio is up around 10%. The big caveat on that number is I did withdraw my entire balance when I bought my house. And I did so at a less than ideal time. But I still withdrew a good profit. Raiz, like all the best investments, works best over the long term.
So Which is Better – Raiz or Spaceship?
Here are some points to help you make up your mind.
- Spaceship is Best for Small Balances – You can't beat Spaceship if you're just starting out investing. You're charged no fees until your balance hits $5k. Even after $5k its still the cheapest way to invest in stocks in Australia.
- Spaceship might be Best for Long Term Growth – The universe portfolio on Spaceship is designed for aggressive growth. So far that has worked out really well. I don't know how it will perform over the long term. No one does. But if you believe in this type of investing philosophy (investing in the future) and can tolerate risk, I think it's worth a look.
- Raiz is Best for Custom Portfolios – If you want to setup a portfolio of ETFs on your own than Raiz is best. Spaceship offers no custom portfolios.
- Raiz is Best for Diversification – Spaceship offers an index portfolio (Origin). However that portfolio is still just made of shares. If you want to diversify into bonds and different markets around the world, the Raiz is best for that.
Both of these apps are great. I encourage you to read through the websites and make sure you read the PDS before investing. It will lay out the potential risks and clearly explain what you're investing in.
Common Questions about Investing Apps
Is Spaceship the same as Raiz?
Both of these apps are micro investing apps. But the portfolios you are investing in are quite different. Two of Spaceship's portfolios are active investments. This means that there is a team who is picking what goes in the portfolio. Raiz's portfolios are made up of ETFs that aren't actively managed. They are automated without much human involvement.
One big difference between the two are the fee structures. Spaceship is much cheaper.
Is Spaceship a Good Investment
I can't give you investment advice. Although it has been my number 1 performing investment over the past few years, that is guaranteed for the future. In terms of how Spaceship is managed, I believe they have put together a really good product. For me it's a great investment as it suits my investing goals (future focused) and risk tolerance (I'm ok with higher risk aggressive investments).
Can you lose money with Spaceship and Raiz?
Stocks do go up, but they can also go down. So if you invest money in these apps, the market could go down and yes your portfolio could lose money. The best thing you can do to counter this is invest smaller amounts at regular intervals and avoid panic selling.
Over the long term the stock market has always recovered and posted higher highs. Investing in Spaceship or Raiz is about long term goals not getting rich overnight.
What is the best Investing app of Beginners?
I like Spaceship as it charges no fees for balances under $5k. If you're just starting out investing, you don't need to worry about fees eating away any growth.
Both apps can be used by beginner investors. They both do a great job of simplifying investing and educating users.
What happens if Spaceship or Raiz goes bust?
Money invested through Spaceship and Raiz is held in a trust that is seperate to the companies. In the even of these companies going under, your capital would be redistributed back to you.
Is Raiz and Spaceship Cheaper than traditional brokers?
If you're investing small amounts (~$100) a week, then both of these apps will work out to be much cheaper than using a broker like Selfwealth or Commsec. Those apps only work out cheaper if you're investing large lump sums (thousands of dollars at once).