Spaceship adds account fee for small investors: Is it still worth it?

Spaceship customers with small account balances are no longer getting a free pass. This is what you'll now pay.

One of Australia's cheapest investment apps is about to become a little less cheap.

Micro-investment app Spaceship is introducing a new $2.50 per month flat account fee across all portfolios of more than $100. The changes come into effect from 1 November 2021.

Since its launch in 2018, Spaceship hasn't charged fees on accounts holding less than $5,000. Accounts of over $5,000 were charged 0.05% for the Origin portfolio and 0.1% for the Earth and Universe portfolios.

The new flat fee will replace all previous account fees on larger balances. If you hold more than one Spaceship portfolio, you still only pay the single monthly fee.

Here's how much more you'll pay for your Spaceship account*

_{*Percentages will change depending on the balance amount.}

The change means customers with big accounts pay less, while smaller accounts pay more.

Is it worth it?

Spaceship's zero fee offering for small balances has been a popular feature of the app since it launched. While the new monthly fee isn't huge by investment product standards, it'll force some customers to reassess their account plan.

The app works by automatically investing an amount of your choosing on a weekly, fortnightly or monthly basis. As there's no minimum investment, you can invest from just a few dollars a month if you choose.

For example, if you were topping your account up with $10 per month, a quarter of your deposit will now go towards fees.

Another way to look at it is the overall percentage of your account taken in fees. A fee of 1% on your balance is often used as a benchmark limit for how much you should be paying into an investment fund (such as superannuation or ETFs) to maximise your return.

Using this rule, you'll need at least $3,000 in your account before Spaceship's fees reached that 1% mark.

What are your other options?

Despite the new fees, Spaceship is still one of the cheapest options out there.

By comparison, micro-investment competitor Raiz Invest charges $4.50 per month on balances of up to $15,000 and 0.275% on higher balances.

While ETF platform CommSec Pocket has no account fee, it charges $2 per trade on every transaction.

_{*From 1 November 2021}

Low fee share trading apps are another option if you're looking to invest small amounts into stocks or ETFs on a regular basis.

For example, Stake, Interactive Brokers and Sharesies let you invest just a few dollars at a time into stocks and ETFs. Typically, there's a brokerage fee per transaction or a currency conversion fee.

Meanwhile, Superhero lets you invest from $100 per transaction into exchange traded funds for free on the buy order, while Pearler offers a select range of free to transact ETFs.

Among online brokers that offer fractional share trading are eToro (minimum $200), Stake (minimum $10), InteractiveBrokers (no minimum) and Sharesies (no minimum).