New ways for seniors to save and grow money
For decades, Australia’s financial services industry has been dominated by the four major banks and their traditional and relatively unexciting savings and investment options. In times of low interest rates, these options are not really providing any great value to the over 50s generation. However, there’s some new kids on the block. Smaller and nimble financial technology (fintech) companies are starting to challenge the banks and in doing so provide interesting new ways to grow and save money. Fintech is regarded as the innovation arm of the Australian financial services industry. There’s already about 400 fintech firms in Australia and the Australian Government has indicated it is very keen to increase this number, as part of its moves to increase competition in the banking industry. Below are some of the companies that are relatively new on the scene and well worth a look, if you are trying to save and grow your pennies.
Acorns (micro-savings tool)
Acorns is a smart phone tool which allows people to round up their daily purchases to the nearest dollar and automatically invest their virtual spare change into an investment portfolio. Investors can choose the risk profile applied to their savings, from conservative to aggressive. Acorns has been in the Australian market for just over a year and in that time has attracted more than 275,000 sign ups. The Acorns app is free to download and has an annual fee of $15 a year for balances under $5000 – which is less than a one trade cost for many brokers. There is also no minimum investment, allowing first time investors to get involved with little outlay. In the year since its launch, Acorns has expanded into superannuation, enabling users to make voluntary contributions into qualifying superannuation funds directly from their Acorns account. Recently, long-time investment writer Noel Whittaker said that Acorns was the type of investment product that was extremely well-suited for over 50s. Whittaker test-drove the Acorns account and was amazed at how quickly his savings grew.
“I see it as a major tool for retirees who are risk adverse,” Whittaker wrote. “I regularly receive emails from retirees with more than $400,000 in the bank who are too scared to move it into shares in case the market falls. They could get invaluable experience by moving, say, just $30,000 into Acorns and watching how it performs.”
With interest rates at record lows and the property market fast becoming an unattainable dream, Acorns offers Aussies a way to break into investment markets while at the same time learning how to save.
Pocketbook is a Sydney-based company which first launched in its budgeting tool to the market in October 2012. The tool can be easily downloaded as an app on a smart phone or accessed via a website on a traditional computer. Pocketbook allows users to easily see the categories in which they are spending the most money. The tool links to your accounts and automatically allocates most of your spending to set categories - such as groceries or utility costs - however also allows you to set up new categories. By tracking regular expenditure (including upcoming bills) and income, the tool also gives advice to users on how much they can ‘safely spend’ in coming days or weeks. During tax season, Pocketbook also has a web feature which helps customers automatically detect deductions for tax time – a previously tedious manual and paper-based process. Separately, Pocketbook also offers a tax return service where you can do your tax return via a mobile app. All the above helps people get faster and clearer insights into where their money is going and therefore an opportunity to regulate their behaviour to save money. It also helps people spend money at the right time and therefore not be caught short. Pocketbook has experienced incredibly rapid growth, gaining 300,000 users, winning a number of major awards and receiving the highest rank for a downloadable smart phone app which doesn’t come from a large bank or multinational. Pocketbook is currently free to use, and is part of ASX listed consumer finance company ZipMoney Limited.
Stockspot (digital advice)
Stockspot is Australia's first digital investment adviser and fund manager. A Sydney-based company, it was founded by Chris Brycki whose lifetime passion (even as a teenager) has been in investing in the share market. Stockspot’s advice service is completely online and automated. You are asked to fill out a personal profile and then Stockspot’s software provides you with a ‘statement of advice’ and recommends the best portfolio for you. If you invest Stockspot manages the portfolio for you including all rebalancing and top-ups. Digital advisors such as Stockspot are taking on the traditional face-to-face investment advice industry. Digital advisors promote themselves as removing human error (along with fraud) from the investment advice equation along with providing a cheaper, faster and more transparent service. Some digital advisors offer a blend of completely online and personalised advice, while others like Stockspot provide only online investment advice and portfolio management (it is sometimes also called ‘robo’ advice). As Stockspot claims in its marketing blurb: “Traditional advisers and active fund managers will claim that their unique skill allows them to beat the market. In reality, 70% of Australian general equity fund managers underperform the market return after you include their fees.” Stockspot currently has more than 25,000 registered users. About 20 percent of its clients are aged 45 years and over, the majority of these clients are investing via a self-managed super fund.