Who will make your money grow better?
Comparing new-age investment products Spaceship and Raiz
Disclaimer: This post elucidates my personal experience with 2 micro-investing platforms. It is not sponsored by either of the organizations. The article does not intend on providing financial advice in any way.
Millennial income, especially in the early years can be described as unstable and scarce. That results in low savings and even lower investment if any. Despite that, the hustle to the first million is real. After juggling work, side hustles, mental health, and social life, we are not left with much time to educate ourselves about the crazy thing called the stock markets (EBITDA What??). Financial services firms, dressed in the trappings of a Tech Startup to the rescue.
Two such companies in the market are Spaceship and Raiz. Both companies offer low-cost investing, minimal jargony talk, sugar-coated bohemian names for their portfolios, and fractional investing. I have been contributing equal sums of money weekly for a year to both (So you don't have to). Let’s see which one deserves your money (Definitely not your bank either way).
(1) Returns
Let’s get the obvious one out of the way at the start. Which one will make you the most money is the big question.
Spaceship
Keeping in mind, past performance is not indicative of future returns.
Well, it isn’t quite that black and white actually, while Raiz does give healthy returns and regular dividends, their focus self admittingly is on enabling the customer to save more rather than aggressive returns. Spaceship on the contrary flashes their returns card (frequently) claiming north of 35% returns (at the time of writing).
🏆: Spaceship
(2) Portfolio Options
Raiz plays this one nicely, offering 5 choices based on the risk profiles, from conservative all the way to aggressive, and then some. Special mention to Emerald for socially responsible, Sapphire for crypto junkies, and a custom option that doesn’t hurt.
Spaceship on the other hand doesn’t bog you down with a bunch of choices, rather a more conservative option pool with 3 simple choices (all high risk), based on the fund manager's feeling of where the world is and its future lies. Special mention to socially responsible portfolios and the ability to have multiple portfolios in one app (which I am already utilizing).
🏆: Raiz
(3) Stock/Industry Exposure
Interestingly enough, Raiz does not hold any companies directly and instead holds a bunch of ETFs (Exchange Traded Funds). It's like renting out a timeshare.
Over at Spaceship, you become the proud (partial) owners of Apple Inc. right off the bat. It’s more transparent, flashy, tech-heavy, and extensive.
🏆: Spaceship
(4) User Experience and Features
This category is very close to a millennial's heart. It’s not merely the color palette or the style of the button that makes for the experience, but also what an app makes us feel (talk about EQ). Apart from the identical interfaces and features like regular investment plans, fancy charts, etc. Both companies have 1 unique feature to set them apart.
Raiz aims at enticing you with the proposition of automated round-up investing, essentially sneaking spare change from each transaction you make throughout the day and investing it. This can get up to be a bit of a pain in the bank statements, with little benefit!
Spaceship recently came out with a feature to be able to invest in multiple portfolios using the same account, and merge them into one as well. A truly utilitarian feature if there ever was one.
🏆: Spaceship
It is worth noting that both companies are the pallbearers of democratizing micro-investing and lowering the barrier to entry in wealth building. Their efforts in building reliable, secure, and efficient finance tech products are commendable. Although in my opinion Spaceship(3/4) fairs better between the two, it simply means my investing needs are better served by Spaceship, while Raiz may be better for a different set of individuals. The important thing is to invest, so we can all retire by 40 and grow avocados.
Fin.
