Both CommSec Pocket and Raiz are micro investing apps that offer you a cheap and easy way to start investing.
The two apps claim to fame is they allow users to invest small amounts into pre-set funds containing hundreds of listed companies.
But both of these apps have a few key differences. Here is how they both work and which one might be right for you.
The essentials
CommSec Pocket is the latest investment app to hit the Australian market, launching at the end of July by the CBA's investment arm, CommSec. It caused a stir thanks to its low brokerage fees of $2 and low minimum investment requirement of just $50.
Raiz Invest (previously Acorns) launched in 2016 in Australia and quickly became popular for its round-up feature which invests spare change from daily purchases into an investment portfolio of your choosing. Today more than 3 million customer sign ups and over $1 billion in total funds under management across its Australian, Indonesian and Malaysian customer base.
Both apps work by investing funds into exchange traded funds (ETFs). When you invest in an ETF, you're buying units in a listed fund that holds multiple stocks (and sometimes other securities). So instead of investing in one company as you might when you buy stocks, you can invest in many companies through a single trade.
Watch: CommSec Pocket vs Raiz
The comparison
CommSec Pocket
Raiz Invest
Minimum investment amount
CommSec Pocket has a minimum investment requirement of $50.
There's no minimum balance requirement, and you only need $5 or more to start investing.
Aussie Dividends ( SYI SPDR MSCI Australia Select High Dividend Yield Fund)
Tech Savvy (NDQ BetaShares NASDAQ 100 ETF),
Sustainability Leaders (ETHI BetaShares Global Sustainability Leaders ETF)
Health Wise (IXJ iShares Global Healthcare ETF)
Raiz offers eight investment portfolios, ranging from low risk to high risk plus a customisable option. These are:
Conservative
Moderately Conservative
Moderate
Moderately Aggressive
Aggressive
Emerald (ethical)
Sapphire (includes Bitcoin)
Custom (Build your own portfolio)
Investment strategy
You select which ETF you'd like to invest in. When you invest in one, you're buying individual units in that fund.
Your funds go into a portfolio of ETFs that vary in risk level. Raiz selects these ETFs based on the level of risk and aggressiveness each portfolio is targeting. You choose which portfolio to invest in.
Fees
CommSec Pocket has no monthly fees, but it does charge $2 brokerage for each trade of up to $1,000 and 0.2% on amounts over $1,000.
So, if you invest $50 twice a month for a year, you’d be charged $48 per year on a total investment of $1,200. If you invested one lump sum of $1,200 annually, you’d be charged $2.40 (0.2% of $1,200) in annual fees.
Raiz charges no brokerage fee but it does have a monthly fee. If your account holds $15,000 or less you'll be charged $3.50 a month in fees while balances above $15,000 are charged 0.275% a year.
So if your balance was $1,200, you'd be charged $30 a year, regardless of how many investments you make. If you had $15,000 invested for the year, you'd be charged $41.25 in fees.
If you select the customisable account, you pay $4.50 per month for balances up to $20,000 and 0.275% p.a. for higher balances.
Risk level
Each of the ETFs offered vary in terms of risk. However, there is no risk categorisation. You’re encouraged to do your own research about the risks involved with each ETF.
Each of the portfolios offers a different risk level, starting from "low risk" to aggressive. This means you can select the appropriate portfolio based on how much risk you're comfortable taking on.
International investing
Of the seven ETFs offered, five of them offer globally listed companies.
The investment portfolios include a mix of Australian companies listed on the ASX and global companies listed on international exchanges.
Ethical investing
The Sustainability Leaders ETF (ETHI) provides exposure to 100 global leading sustainable and ethical companies.
The Emerald portfolio invests your money into socially responsible companies in Australia and international markets.
Payment options
You can make one-off lump sum investments into your ETF of choice or you can set up recurring fortnightly or monthly investments.
Raiz rounds up your daily transactions to the nearest $1. The spare change is then added to your investment portfolio of choice once it reaches $5. You can also set up recurring daily, weekly or monthly investments and additional one-off investments. There's also a percentage of shopping purchases at select retailers that will be added to your Raiz account.
Do you earn dividends?
Not all companies pay dividends. However, if any companies within your selected ETF do, the funds are automatically paid back into your settlement account.
Any dividends will be automatically reinvested into your portfolio, rather than sent to your bank account. There's a section in the app that allows you to see any past dividend payments.
Withdrawal options
You can sell your units and withdraw your funds at any time. However, your brokerage fees for selling are the same as buying. Each time you sell units in an ETF, you're charged $2 or 0.2% on transactions over $1,000.
You can withdraw money from your investment account at any time without any additional fees.
How to download
CommSec Pocket is free to download from the App Store and Google Play store.
The Raiz Invest app is free to download from the App Store and Google Play store.
Fund comparison
It's important to note that while CommSec Pocket lets you purchase units in seven individual ETFs, Raiz puts your money into a portfolio made up of several ETFs. The ETFs used by Raiz can be found on its website but the more important consideration is how these funds have been allocated into the portfolios.
The below tables show how Raiz's funds have performed in the last financial year compared to the ETFs selected by CommSec Pocket. It's important to remember that past performance isn’t always an indicator of how a fund will perform moving forward.
Raiz Invest portfolio performance
Raiz portfolio
Performance FY 2020-2021
Conservative
6.57%
Moderately Conservative
10.20%
Moderate
15.01%
Moderately Aggressive
20.76%
Aggressive
24.69%
Emerald
22.86%
Source: Raiz Invest. Australian financial year: July 1, 2020 to June 30, 2021.
ETFs featured in CommSec Pocket
CommSec Pocket's select ETFs
Performance FY 2020-2021
iShares Core S&P/ASX 200 ETF (IOZ)
24.17%
iShares S&P Global 100 ETF (IOO)
25.13%
SPDR MSCI Australia Select High Dividend Yield Fund (SYI)
21.40%
BetaShares NASDAQ 100 ETF (NDQ)
32.08%
BetaShares Global Sustainability Leaders ETF (ETHI)
30.08%
iShares S&P Global Healthcare ETF (IXJ)
16.80%
Source: ASX. Australian financial year: July 1, 2020 to June 30, 2021.
The lowdown
Both CommSec Pocket and Raiz have their pros and cons. Ultimately, it comes down to personal preference – do you prefer to know that your money is being invested into a "conservative" fund or an "aggressive" fund managed by the experts? Or do you prefer to invest in an ETF theme, such as the healthcare sector or global tech sectors?
How the apps invest your money will also suit different people. Raiz charges a monthly fee of $2.50 ($30 p.a.) for users with less than $10,000 sitting in their portfolio, and you can invest additional amounts as often as you like with no extra broker fees. On the other hand, CommSec Pocket has no monthly fee but it charges $2 per trade for amounts less than $1,000, so if you set up a recurring trade of say $50 a month, your total annual fee will be $24 per year.
If you're someone that prefers to invest small amounts very regularly, Raiz's fee structure may be a better deal. On the other hand, if you intend to make fewer transactions or even one big investment over the year into an ETF of choice, CommSec Pocket could be the smarter choice.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
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