Today I’ll be comparing Australia’s two most popular micro-investment apps: Spaceship Voyager vs Raiz (formerly known as Acorns). I’ll be comparing them side by side on 5 different metrics to help you determine what the best micro-investing app is for helping you reach your investment goals.
Micro-investing apps are mobile and web applications that offer people the ability to invest small amounts of money regularly. Also known as loose-change investing, these apps streamline the investing process, by providing an easy, cost-efficient way of investing smaller sums of money into popular investment options.
These apps are great for beginners starting on their financial journeys, as they eliminate the hassle of having to set up a brokerage account, having to decide between thousands of investment options and allow users to invest with low amounts of capital. As such, micro-investing apps serve as a pivotal stepping stone for people who have just begun embarking on their investment journey.
Some investors may even use these apps long-term, due to their convenience and simplicity. In Australia, the two most popular investing apps are Spaceship Voyager and Raiz. I’ll be comparing them side by side against five metrics to provide a simplistic way of helping you decide on the best micro-investing app for your reaching financial goals.
The main appeal for micro-investing apps is their simplicity and ability to be used by people with limited or no investing experience. As such, having a slick design with an easy to navigate user interface is essential for providing an optimal investing environment.
Spaceship Voyager has a very easy to navigate user-interface, combined with a slick design. The home screen provides access to essential information such as your to-do list, account balance, portfolio performance, recent market movers and your transaction history.
There are also news articles located underneath from blogs, major financial institutions and Spaceship themselves, covering market performance and how-to guides that cover the basics of investing and saving. The side-tab also has access to the following features: Invest, Portfolio, Transactions and Refer.
Raiz Like Spaceship, also has a relatively easy to navigate user interface and a simple design. The home screen highlights your current account balance and the ability to review your past account balance and forecast your future account balance. The home screen also shows your portfolio’s performance over the last month. However, there are a lot more adverts on the Raiz screen redirecting you to other products offered by the Raiz platform, such as their Superannuation, Offsetters Membership and My Finance (budgeting) feature. The side-tab also has access to the following features: Invest, Rewards, Super, My Finance and Invite Your Friends.
I prefer the look and layout of Spaceship Voyager. It contains additional features that aren’t readily available on Raiz such as a useful to-do list, updates on holdings performance through market movers and access to your recent transaction history. Additionally, it contains fewer ads and provides more useful guides that are tailored to beginner investors. They also offer some articles that more seasoned investors may take interest in, such as market reports. For these reasons, Spaceship comes out on top in terms of app design and user interface.
Diversity is an incredibly important principle of investing, as it ensures a wider spread of investments. In line with the phrase “don’t put all your eggs in one basket”, having adequate diversification in your investment portfolio eliminates things such as concentration bias.
Concentration bias is when you have most or all of your investments allocated to the same asset or market. This increases volatility significantly and makes your portfolio reliant on the performance on one or two investments. Should these investments do poorly, your entire portfolio will suffer, which is why diversification is a very important and often necessary aspect of investing, particularly over the long term.
Spaceship Voyager currently offers three investment portfolios: Spaceship Origin, Spaceship Universe and Spaceship Earth. All of these portfolios are designed for investors with a high-risk tolerance and the Spaceship team recommends holding these portfolios for at least 7 years to experience optimal returns
Spaceship Origin is a passive index fund that tracks the top 100 Australian shares and the top 100 Global shares by market cap. This is currently the only passive fund offered by Spaceship Voyager, with the other two portfolios being managed. As such, this is a popular option for people who just want to have the convenience of tracking the top companies by market cap in Australia and the global market. It also contains the most diversity out of all three options, comprising of 200 companies, compared to Universe’s 100 and Earth’s 30-50.
Spaceship Universe is an actively managed portfolio consisting of 100 Australian and global securities that have been selected by the Spaceship Voyager investment team under their ‘Where the World is Going (WWG) criteria. The WWG criteria are used by the Spaceship team to determine what they view as high quality, differentiated and defensible companies. The theory behind this is that these companies are less susceptible to competition and technology disruption over time, meaning that they are theoretically more likely to prosper over long investment horizons. Subsequently, investors willing to take higher risks for the possibility of generating higher returns will likely be drawn to this portfolio.
Spaceship Earth is an active portfolio consisting of 30-50 Australian and global securities that have been selected by the Spaceship Voyager investment team under their WWG criteria. Spaceship Earth Portfolio also utilises a negative screening process to preclude companies that are involved with things such as fossil fuels, controversial weapons, gambling, nuclear power and animal cruelty among others. The fund is designed to provide capital growth by investing in companies that contribute to the advancement of the UN Sustainable Development Goals Agenda. As such, this may be a popular choice among ethical investors.
Raiz currently offers seven investment portfolios: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive, Emerald and Sapphire. These portfolios contain similar assets to Spaceship Voyager such as the US market, the Australian market and ethical companies. However, they do have a much higher allocation of defensive assets such as cash, corporate bonds and government bonds.
They also have exposure to the Asian market and the cryptocurrency Bitcoin, depending on which profile you select. These portfolios cater for risk averse people who prefer higher allocations of defensive assets, in addition to growth investors with higher risk tolerances. To save time, I have made a table that breaks down the portfolio, its main holdings, the risk levels and predicted returns.
Raiz offers more portfolios than Spaceship and these portfolios also contain additional asset types such as Cash, Government Bonds, Corporate Bonds, Asia Large Cap Stocks and Bitcoin. As such, Raiz caters for a wider demographic of customers, due to offering low, moderate and high-risk investments. Alternatively, Spaceship is currently only orientated towards growth investors with a high-risk tolerance.
As such, if you are a high-risk investor with an investment horizon beyond 7 years, you will most likely prefer the Spaceship portfolios. If you aren’t, you will most likely prefer one of the low-moderate risk portfolios offered by Raiz.
Performance is arguably the most important aspect of any investment. With the goal of investments being to generate wealth, it makes sense to choose the best performing asset or in this case, app. A common saying in the investment world is that past performance is not indicative of future returns and this certainly rings true, as last year’s performance can differ significantly from this year or the next. However, it is still worth noting the prior performance of certain portfolios to determine whether they have underperformed or overperformed similar portfolios in recent years.
Spaceship Voyager received well above average returns during 2019, with the Spaceship Origin Portfolio and Spaceship Universe Portfolio yielding yearly returns of 25.99% and 35.07% respectively. These are significantly higher than most competitors and alternative ETFs/managed funds. These returns are attributed to these funds’ large allocations to the US market and the tech-sector.
The US market traditionally been one of the best performing markets. In recent years, the US market has done particularly well due to it containing a large allocation of technology stocks such as Tesla, Google, Apple and Microsoft among others. Spaceship Voyager portfolios which contain large allocations of these stocks have subsequently performed very well as of recent. It is also worth noting that as these portfolios are almost entirely growth oriented (equities), they are more likely to result in higher returns on years where the markets excel and lower returns when the markets experience corrections.
Raiz returned respectable returns during the 2019 financial year, with the worst performing fund yielding a 6.88% yearly return and the best performing fund yielding a 10.92% yearly return. These returns align with similar ETFs and managed funds that contain the same underlying assets. However, they are significantly lower than Spaceship Voyager’s returns during the same year.
The main reason for this, is that Raiz portfolios have significantly lower allocations of the US market and subsequently, their underlying tech stocks. Additionally, Raiz contains defensive asset allocations through cash, government and corporate bonds. Subsequently, these more stable yet lower yielding assets are reflected in the lower overall returns.
Evidently, Spaceship Voyager portfolios significantly outperformed Raiz’s portfolios, with yearly returns for 2019 ranging from 25.99% to 34.07% for Spaceship Voyager. This can be largely attributed to Spaceship Voyager consisting of pure equities allocations (growth assets), having a much higher concentration of US stocks and a greater exposure to the tech-sector.
Conversely, Raiz had much lower overall returns which is attributed to these portfolios consisting of cash, government bonds and corporate bonds (defensive assets). Furthermore, these portfolios have much lower allocations to the US market and the underlying technology stocks contained within it. While this can provide more stability to yearly returns through stability to defensive assets and less concentration bias to the US market, these portfolios have had poorer returns since their inceptions.
With all this being said, past performance is not indicative of future returns. However, prior performance is worth noting when making investment decisions.
Fees are another important thing to consider when utilising micro-investment apps. Due to these apps not charging brokerage fees when buying units, they typically come with higher management fees in order to remain profitable. As such, it is important to pay attention to these fees as they can add up over time.
Spaceship Voyager offers a unique fee structure, where investors aren’t charged any fees or management expenses on balances below $5,000. Once investors accumulate a balance greater than $5000, they are charged 0.05% p.a. for the Spaceship Origin Portfolio and 0.10% p.a. for the Spaceship Universe and Spaceship Earth Portfolios.
Raiz comes with fees for its services and compared to other competitors (particularly Spaceship Voyager), they are substantially high. Raiz charges $3.50 – $4.50 per month for balances under $15,000 – $20,000. For balances above $15,000 – $20,000, they charge 0.275% per year, charged monthly and computed daily.
In this instant, Spaceship Voyager is the clear winner. With no fees for balances under $5,000 and a flat rate of 0.05% and 0.10% p.a. depending on your portfolio holding. This is significantly different from Raiz’s $2.50 monthly fees for balances under $10,000 and their 0.275% p.a. fees for balances over $10,000.
As such, if you were to have balances above $10,000 in both portfolios, it would cost you 2.75x more to hold a Raiz portfolio than it would to hold a Spaceship Universe or Spaceship Earth portfolio. If you held a Spaceship Origin Portfolio in this instance, it would cost you 5.5x as much to run a Raiz portfolio.
Unique features are niche items offered by the apps that give them a competitive edge over their competition. As micro-investing apps are tailored to beginner investors, these features are typically added to make the investing journey easier. While these fees serve more as bonus perks than anything, they can in some instances be the deciding factor between which app you choose.
Spaceship Voyager offers the ability to invest through an investment plan or via a one-off. Investors who choose to use an investment plan can invest recurring amounts of money on a weekly, fortnightly or monthly basis. This automates the investing process, provides an easy way to dollar-cost average (DCA) and can be aligned with your paycheck to ensure that you only invest when you have the funds. One-off provides the ability to make singular investments.
This can be useful for people who want to deposit large sums on an infrequent basis or people who would like to invest a lot starting off before adopting an investment plan. Spaceship also provides lots of useful articles that are tailored to investors to cover topics such as how to save, how to budget and the basics of market analysis.
Raiz offers investment plans and one-time investments like Spaceship. However, they also have an additional round-up feature. This feature works by automatically rounding up all your purchases to the nearest dollar. Raiz then sets aside this money and invests it for you into your chosen profile. You can increase this limit to round up to the $5, $10, $20 or $40.
This method can be useful for people who struggle with setting aside money to invest or people who want an automated way of investing while making their everyday purchases. However, for people who have issues with budgeting or people who tend to splurge, this can be a very financially draining method and should be pursued with caution.
My Finance is another feature offered by Raiz that can be used to track your spending habits. This can be a useful tool for determining how you spend your money and what you are spending it on. For investors who do not track their spending habits or those looking to gain a greater insight into their budgets, this is an attractive feature.
Another feature that separates Raiz from other micro-investing platforms is that it offers a rewards program. By utilising the Raiz app to buy from popular brands such as Bonds, eBay and Ray-Ban among others, you the companies will invest a % of the purchase price to your Raiz profile. This can be a useful tool for investing without ‘investing’ assuming that you were going to purchase these items anyway.
Raiz is the clear winner in this case, with more investment options, the ability to track your spending habits and the addition of a rewards program that invests a certain allocation of specific purchases for you. These features are unique and can be a great way to expand your investment capital. However, they should be approached with care, as these features can result in overspending if used incorrectly.
Based on the above metrics, Spaceship Voyager is the best micro-investing app, as it has an easier to navigate user-interface, higher portfolio performances due to their US market and tech-sector allocations and significantly cheaper fees. For people with high-risk tolerances who are looking to maximise their investment growth over a long horizon, Spaceship is a clear choice. As such, Raiz’s significantly higher fees and lower past performances make it a more costly, less growth-oriented investing platform.
However, what Raiz lacks in these traits, it makes up for in providing unique features and greater portfolio diversity, making it potentially more useful for particular groups of investors. If you are someone who frequently makes purchases on brands offered through the Raiz rewards program, the additional account fees may be offset in some part by the Raiz Rewards you receive.
Additionally, if you are a risk averse investor who wants to have a higher allocation of defensive assets such as cash and bonds, Raiz Is your only option out of the two investment apps. Alternatively, investors with an even higher risk-tolerance that would like exposure to Bitcoin and the cryptocurrency market might lean towards Raiz due to its 5% allocation in the Sapphire portfolio.
For these reasons, there is no clear-cut winner regarding which platform is the best overall. However, it is apparent which investors will gravitate towards which micro-investing app. If you are a growth-orientated investor, looking to invest over 7+ years, Spaceship is your best bet. This is due to its higher portfolio performances, higher equities allocation and lower management fees. Alternatively, if you are a risk-averse investor and want portfolios containing more defensive assets such as bonds or want specific exposure to Bitcoin, Raiz is more suited to your investment style.
As a growth-orientated investor, I prefer Spaceship and personally use it to this day. I find the app easier to navigate and use, their past portfolio performances are significantly higher than Raiz’s and their lack of fees under $5,000 and overall lower management fees for higher investments make them second to none in these regards.
If you would like to read more information on Spaceship Voyager vs Raiz, I have attached links to my more thorough reviews on them below. In these reviews, I cover the pros and cons of investing with both platforms and take a more in-depth look at the portfolios and features that they offer.
If you would like to join either platform, you can use the following referral codes to get a $5 deposit bonus when you sign up and deposit $5 or more.