I
t’sa goodquestionandoneforwhichI haveno
answer,forthesimplereasonthatmicro-invest-
ingstillmeansinvestingin thesharemarket,
a ndnooneca ntel luswhatit w i l ldotomor row,let
alonenextmonthoryear.Thatsaid,I cansaywhy
it’ssmartforinvestors,especiallyyounginvestors,
toput$1000ina micro-investingaccount.
A bigbenefitof micro-investing– whichinvolves
makingsmallinvestmentsfromeverydaytrans-
actions– is thatyoucanhavea fullydiversified
portfoliothemomentyoustart,evenif it’sonly$5.
I knowpeoplesayit’sonlya smallamountbut,as
the6thcenturyBCChinesephilosopherLaoTzu
said,“Everyjourneybeginswitha singlestep”.
Whatit meansis thatyoungpeoplewhomicro-
investarenotonlyacquiringa savingshabitbut
alsogettinganinexpensiveentreeto theworldof
investment.Formanyofthem,investingdirectly
inanETFora managedfundis notanoption–
thefeesandminimumamountsareprohibitive.
Perhapsmoreimportantly,it’sthesimplefact
theyareinthemarket– nottheamounttheyare
investing– that’scritical.It helpsthembuildan
appreciationofwhatinvestingentails– therisks,
therewards– thatcanonlybenefitthemlongterm.Buttherearealsoshort-termbenefitsthatmicro
i nvesti ngoffersto a ssistpeopleto savea ndi nvest.
There’sa $5bonusforeverynewclientintro-
ducedtotheapp.There’salsoa rewardsscheme
whereinsteadof receivingloyaltypointsyougeta
ca shbonust hatis i nvestedbacki ntoyou raccou nt.
ThiscanhappenbothinsideandoutsideRaiz’s
superannuationproduct.Andin micro-investing,
thesesmallamountsquicklymakea differenceas
theyaddto theloosechangethatRaizautomatically
investsaftereverypurchase.
A Raizinvestorhas,onaverage,enjoyeda 12%-
plusreturneachyearsinceinception.That’s
obviouslyfarbetterthanthereturnfroma term
depositina bank,wheresaversarelikelytobe
goingbackwardsafterinflation.
Butit comeswithgreaterrisk,asthereare
noguaranteesthistypeofreturnwillcontinue.
Andthat’sexactlywhatyoungpeoplewhomicro
investlearn.Whenweconsiderthefalloutfrom
thefinancialroyalcommission,andhowsomany
peopleweredupedby“reputable”institutions,
if theseyoungpeopleacquiresomeknowledge
aboutinvestmentviathesemicroapps,thatcan
onlybea goodthing.▲GEORGE LUCAS^ MICRO-INVESTING
WHERE I WOULD
INVEST $10kIt’s an old saying – “put your
money where your mouth is”
- and in this situation it's very
apt. So if I had a spare $10,000
then I would invest with Raiz
and would opt for the exchange
traded fund (ETF) offering,
the Emerald portfolio.
My reasoning is based on
three grounds:
-^ By investing in Raiz I am
imposing a savings habit on
myself. For young people,
developing a savings habit – no
matter how small – is to acquire
a vital life skill. Research shows
that even big changes such as
wage rises, paying off the mort-
gage and children leaving home
don't help people to save. Only
by starting young does a sav-
ings habit become ingrained.
-^ As my savings grow, invest-
ing in the Emerald ETF will be far
cheaper than managing my own
ETF portfolio via a stockbroker,
where there will be charges for
every trade exceeding $10 (and
possibly higher). In addition,
I will still have to pay the under-
lying management fee for the
ETF I buy. By contrast, at Raiz
my investment fees will be
about $30 a year, so clearly I am
ahead by investing this way.
-^ The Emerald ETF invests in
a socially responsible way, so
for most young people this is
an added incentive. For some
people, investing this way has
become a religion. I must con-
fess to not being that idealistic.
But if I can earn a return and still
invest in companies that care
more about the planet than
others in the market, then
I see no reason not to do so.
GEORGE LUCAS
FOUNDER AND CEO, RAIZ INVEST
What growth can I expect
from, say, $1000, in a micro-
investing account?
EXPERT PICKS • WHERE TO INVEST $10k