Micro-investing app Raiz – how it works

Micro-investing app Raiz – how it works

Raiz, which until recently was known as Acorns, is a micro-investing platform aimed at Australians aged 18 to 35.

Raiz allows people to invest small amounts in the stock market using a smartphone app.

Over 500,000 people have signed up to Raiz since it launched in February 2016, though only 164,000 of those are active users.

Raiz now has $214 million under management and the average customer has a balance of $1234.

Raiz Managing Director George Lucas says Raiz is a user-friendly, automated savings and investment tool which doesn’t seek to generate market-leading returns, though “the average Raiz customer has made 11% per annum since launch and 10.1% per annum in the last 12 months”.

Raiz is following in the footsteps of ‘platform’ businesses such as Uber and Airbnb.

Just as Uber is a platform that connects drivers with people who need a ride, Raiz connects those with some spare cash with an Exchange Traded Fund (ETF). ETFs invest in a range of shares – and sometimes other assets – and aim to neither underperform nor outperform the market.

Historically, two things have worked against young people investing in the stock market. First, a lack of knowledge about how to start investing.

Second, not having enough money available to be of interest to the businesses that facilitate such investments.

For example, if you chose to cut out the middleman and invest directly in the same ETFs as Raiz you would need hundreds of dollars to buy a single ‘unit’ in one of these funds.

Likewise, investment funds, financial advisers and stockbrokers are typically only interested in clients who have a substantial sum to invest.


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Source: Micro-investing app Raiz – how it works