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How Raiz Actually Works (Tutorial)
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Dec 15, 2023
Are you curious about how Raiz works and how it can help you grow your wealth? Look no further than my guide to understanding how micro-investing app Raiz can be the way you start your investment portfolio.
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0:00
Hi, welcome
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Today I'm going to dive into how the investing app Raise actually works
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There's a bit of misconception of what it does, what it doesn't do, and how you actually
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set up your account and use it on a regular basis to invest money
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So let's begin. Personally, I've been using Raise since it started. It launches Acorns here in Australia back in 2016
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I jumped on it pretty quickly and decided to have a crack at it and years later it's
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something I still use. I've seen my balance go up and down and change portfolios and everything, so I thought I'd
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run through it and show you exactly the different ways you can use it because it's not necessarily
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a one-size-fits-all. There's a few different approaches you can make and they're the things I've changed over
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the years and I've changed the way I've used it. Now I'm not going to show you the signup process because I'm already signed up, but I will
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explain a few things about that. What you need to do when you sign up is provide a bit of information
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Now Raise has a guide on registration, which is what you do when you sign up
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There's a bit of detail in it, but basically you just need a lot of details as if you were
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signing up for a bank. Many of these details can be changed once you create an account, so don't be nervous
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about giving all your information about bank accounts or opting out or opting into things
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like that, picking portfolios, because as you sign up, once you've complete, you can
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immediately go in and make changes. I'll explain Raise a bit more in detail
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The way it works is that you essentially put money into Raise and that money is then invested
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in ETFs, which are on the stock market. You are investing in shares in a bit of a roundabout way
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What Raise does is it makes it easier, quicker for you to do that without as much money as
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you normally would, say if you were going through an online broker. You can do that in a number of ways
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You can do that through roundups, which is the way that they really try and promote the
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product, which is say you buy something for $4.50, it'll round that up to $5 and invest
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50 cents into your Raise account. I'll explain how that works with the connection of your accounts in a moment
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You can also do recurring investments where you just send the same amount of money into
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the app on a regular basis, like you would a savings account
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So $500 a month or $100 a week, you can just set that up through the app so you can just
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build and build and build. And that's one of the main ways I've used Raise over the years to grow a bit of a portfolio
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Then there's also the option of dumping in a lump sum of money and say you've got an inheritance or you've just got a tax return and you want to put that money to work beyond
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a savings account. You can put that money into Raise and walk away
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So there's not to say you have to do more than one of these options here
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Like I said, Raise really promote the roundup option, but I found that recurring investments
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is a great way to grow a portfolio because roundups, look, they're cents to a dollar
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So like I said, you're putting 50 cents in at a time. Recurring investments are really where it's at
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And if you have the opportunity to do lump sum, that's also going to boost your ability
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to grow a portfolio within Raise. Also with Raise, once you decide how you want to put money into it, you need to decide which
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portfolio you pick. Now I won't talk too much about it just because I've got a separate article and a video on
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how to pick a portfolio. You can chop and change as much as you like
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So you can sign up with one portfolio, immediately change to another
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And then as you go through over time, you can change back and forth. There's also a great option which I use, which is building a custom portfolio and you can
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build which, put which ETFs you specifically want into that portfolio. So it gives you a bit more control over what you're investing in
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So you can jump across to that video and look more as to what all the different portfolio
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options are. There are a few other features in Raise as well
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They're the two core components of it. Putting money into your account, deciding what your money is going to be invested in
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Very similar to a super fund, except you can access it obviously before you retire
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So I'll jump into the platform now. Now this is my dashboard
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This is my experience. So currently I've just got this balance and I've invested in a custom portfolio
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Now some certain features that I'll point out and like I was just talking about before
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the way you invest money. So this is the desktop experience. It's a bit different on the app, but for the sake of this video, I just wanted to run through
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the desktop experience. On the left-hand menu or in the app, just tap on invest
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You can decide how you want to add your money to this account. You can do one-off investments, which is any amount you like really
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Just type in whatever amount and you can click on invest and the money gets transferred for
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an account, which you'll set up. I'll show you how to set that up in a moment
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You can also withdraw money from here so I can take out all my balance
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You should note though that this is not as quick as a bank. So you cannot click withdraw and get your money as if it was just a bank transfer
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It's going to take a few days because they've got to sell the shares and they wait a couple
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of days for that to, that transaction to complete and then transfer the money out to it
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So I would say wait a week or expect a week for your money to appear in your bank account
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If you wanted to set up a recurring investment as in something, as in a way to send money
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to raise on a regular basis, you would go down here and you would set up a savings goal
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or actually no, you don't have to set up a savings goal. You can just put in the amount that you want to send on a regular basis and which day of
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the week you have the option there. And that is set up
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I have now got a weekly investment of a hundred dollars being sent into raise and that money
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all comes from your funding account. So money that gets added to your raise account comes from your funding account
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So when you sign up to raise, you get asked for a funding account and you can put those bank details in through that process there
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What that means is when you invest in raise, when you click on the investment button and
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set up a recurring investment or you do a one-off investment, that money would come
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from what's called the funding account. So whatever you set up here is where the money comes from
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Your fees will also be taken out of this funding account as well. Raise is $3.50 to $4.50 a month
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Depending on your balance, it can increase if you have a balance of over $15,000
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So that money all comes from your funding account. That is different though, to your spending account
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So if you were setting up raise roundups, as in money is rounded up based on how you spend
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So again, the coffee example, if you spend $4.50 on a coffee, your roundup feature will
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determine that and 50 cents should be taken from that purchase. So it rounds it up to $5
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That's the concept of the roundups. So what you're spending, so raise will track your spending account
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So every time you make purchases like that, it will note what you've been spending and
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what that roundup amount is. So it doesn't actually take money from your spending account
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It'll take money from your funding account. You can determine how roundups work
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So if you buy something that's $5, you can actually need to determine how much extra
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whether you want to round that up to a certain amount or not
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Automatically round up money as you spend it. Okay, so this is the one that is worth noting, smart roundup
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So say you round up a coffee from $4.55, that's only 50 cents that's put aside for your money
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That money won't be immediately taken from your account. Raise will wait until that money is accumulated to a certain balance
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And you can see what that balance is now. So for example, $5, $10, $20
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So if you set it as $20, which I think was the default, what that means is you will have
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to accumulate a total of $20 before raise will take money out of your funding account
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to put towards its investment. So it's not to say every time you make a purchase, money will keep going to raise
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It's over time. You can determine the amount here and it's set up as $20 is a good amount
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So it's a good sort of set of training wheels for you to begin about, to think about the
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process of investing. And that's what I do where I initially started. I did use the roundup feature
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I did find it a bit too erratic in terms of when money would come out. So then I just moved to a more recurring basis where I just put a regular amount into the
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account there. What you can also look at is your past and your future
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Like I said, here's my dashboard. But if you go back to the past, you'll be able to see all investments and the history of
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money coming in. You do get dividends from raise, they get reinvested into your account
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So as you see here, I received a few dividends recently. If I click on that, you can see where they get reinvested to
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So the way raise works is that it spreads your money across a multiple, a multitude of
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ETFs, whether that's through a portfolio that they prebuilt or a custom portfolio
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Every time you put money into your account, it'll get spread across those ETFs
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So I've got a better example. Here we go. So $10 came in earlier in the year, and you can see that $2 went to this ETF, $3.30 went
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to this ETF, 70 cents went to another one and $4 went to this cash ETF
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So you can see how much of that share you bought just by transferring that money
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0.08% of it, sorry, 0.08 of a share was invested in. And that's the beauty of raise
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One of the fantastic features of it is that you do not need to buy the full share to invest
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So previously, or if you'd have invest directly in the ASX or an online broker, you would
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need to own the full amount of that stock before you can invest in it
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So for example, IRO costs over a hundred dollars a share. So you would need a hundred dollars at least to be able to invest in that through a
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traditional means. But through raise, put $2 in, actually I think the minimum's $5, but you put that $5 in
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and you can then invest a series of ETFs. That is really the core aspect of raise
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One of the great way to use raise that I've been doing for a number of years is really
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just setting up your investing means, whether that be roundups or recurring investments
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and then just leaving it. You don't even need the app on your phone. You can just have this set up like a transfer and just let it set and forget and then check
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in every month or every now and then and see how it goes. There are some additional features
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I do not use them because I don't find them that valuable. There's raise rewards where you get some cash back invested into your account if you
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spend through these partners that they have. I've maybe done this once
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There's surveys and things you can do. So I guess if you're buying things through these companies anyway, it might be useful
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AIMR, yeah, buy a gift card and 4.5% of that purchase goes back into your account. Great
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If that's your thing. Raise has super. I've never been keen on their super option
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The product disclosure is all here. It's essentially super. Your superannuation invested in the same raise products that you use through the app
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This ability to put in your financials. I don't use this either
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I don't think it's of that value, that valuable to me. You can invite your friends
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If you look in the future tab, that is where you determine what your money's invested in
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and you can go to a portfolios, to your portfolios there and the different ones
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Again, I've got a video and article on that. So that is the deep dive for this area
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Apart from that, that is really it. It's all about how for me and for someone who's actually growing a bit, a fair bit of
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money through raise, the key components are how are you going to add money to this and
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how often are you going to do it? So think about whether you want to use roundups, whether you want to use these recurring investments
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or whether you want to do lump sums every tax time or when money comes in, if you do
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receive it irregularly. That's it for today. I hope that's of help because I find Raise is an amazing tool, especially if you want
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to start investing with little money and learn how investing in the stock market works
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So happy investing
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