Raiz announced that the fees on seven of its eight portfolios will be increasing from 1 April, 2021. Investors with smaller balances will be most affected by the hike.
On most of its portfolios Raiz currently charges a monthly fee of $2.50 on balances below $10,000, or 0.275% annually on balances over $10,000. From 1 April, the monthly fee will increase to $3.50 for active account balances of less than $15,000. For accounts with balances equal to or greater than $15,000, the account fee will be 0.275% a year.
The monthly fee on the Sapphire portfolio, which has a different fee structure to the other portfolios, will also increase from $2.50 to $3.50. The additional account fee of 0.275% a year will remain the same. There is no fee change for the Custom portfolio.
How much more will it cost you?
If you want to get an idea of what the fee increase may mean for you Canstar has crunched the numbers based on a range of balances. Keep in mind this doesn’t take into consideration the underlying issuer fees charged by the ETFs. The table also shows how much the fees amount to as a percentage of your balance.
On balances up to $10,000 a year investors will be paying $12 a year more in fees after 1 April and fees will range from 0.336% to 42% of your balance, depending on how much you have invested.
How the fees will change
|Account balance||What you’re paying now||Current fees as a percentage of your balance||What you’ll be paying from 1 April||New fees as a percentage of your balance|
This is based on Raiz monthly maintenance fees on its standard portfolios. Different fees apply on the Sapphire and Custom portfolios. Underlying ETF issuer fees have not been included.
How Raiz fees compare to its competitors
A big part of the appeal of micro-investing platforms is that you don’t need a lot of money to get started. The fee hike on smaller balances resulted on some people in various Facebook groups questioning whether Raiz is still worth it.
This is something you’ll need to work out for yourself. You may choose to explore alternatives to work out how much they will cost you. Spaceship Voyager, FirstStep and CommSec Pocket are Raiz’s main competitors in Australia.
Spaceship Voyager does not charge any fees for balances below $5,000. The monthly fee on the balance over $5,000, however, will be 0.05% or 0.10%, depending on the investment portfolio you select.
As for First Step, expect to pay $1.25 per month ($15 annually) for accounts under $5,500, or $1.95 per month if you set up a regular direct debit from your everyday account into FirstStep. Once your account balance tops $5,500, the fee rises to 0.275% annually.
CommSec Pocket does not charge a monthly fee – you only pay when you trade. Trades up to $1,000 cost $2 and trades over $1,000 attract brokerage of 0.20% of the trade value.
The table below provides an estimate of the fees for Raiz, Spaceship and FirstStep based on various balances. CommSec Pocket has not been included as its fees are based on the value of the trade rather than the account balance.
How Raiz compares
|Account balance||Raiz standard portfolios from 1 April||Spaceship Voyager Universe and Earth portfolios||FirstStep|
Underlying ETF issuer fees have not been included.
Keep in mind that fees are not the only factor to consider when weighing up your options. It’s a good idea to take a closer look at the available investment options and how they have performed over the long term.
The added extras may also be important to you. Raiz, for example, has a loyalty program. When you shop with a partner brand the retailer will invest a dollar amount or percentage of your purchase price into your Raiz account.
Cover image source: Roman Samborskyi (Shutterstock.com)
About Effie Zahos
Canstar’s Editor-at-Large, Effie Zahos, has more than two decades of experience helping Aussies make the most of their money. Prior to joining Canstar, Effie was the editor of Money Magazine, having helped establish it in 1999. She is an author and one of Australia’s leading personal finance commentators, appearing regularly on TV and radio.