Wanted to see what this sub's thoughts are on using Raiz's custom portfolio to get you access to some of the basic etfs out there.
The 14 etfs available through the Raiz custom portfolio are actually pretty good and would cover the core ETF needs of most retail investors. Moreover, the potential to DCA in Raiz is crazy powerful. You can pretty much contribute daily with no minimum amount and have the round-ups also add up in the background and these amounts will be allocated across your WHOLE portfolio. This pretty much saves the problem I used to have where I would rotate my contributes to each of my ETFs every fortnight in $1000 parcels to make the brokerage worth it. It also completely takes out any emotion from the habit of investing and makes it as automatic and out of sight as possible.
Did I also mention that theres NO brokerage, deposit or withdrawal fee? There is however a $4.50 a month maintenance fee up to account balances of $20,000 (and then $0.00 a month maintenance but 0.275% p.a. account fee thereafter). Some people say the fees are too high and I truly don't understand what they mean. Assuming you invest $1000 every fortnight's paycheck and pay $10 brokerage each investment, you've just spent $260 a year on brokerage alone to get $26,000 into the market. That's already 1% in returns before you account for the management fees of your etfs. By comparison, you're only paying around 0.51% (0.275% + the average management fee of the etfs in your portfolio) in fees total in Raiz to get $26,000 into the market.
Now what etfs are actually available in Raiz?
Like I said, they're pretty good and from what I gather from this sub and other finance subs, most people would already own at least 1 or 2 of the above as a main holding. After reviewing what I really want from a 'core' etf portfolio that I can DCA into each week consistently, cheaply, with no minimal amount and all at once, I've made my own portfolio from 6 of the above etfs that I will direct all future contributions too. I'll still keep my brokerage account to add the occasional thematic buy or high-conviction stock pick but I only expect to buy anything a couple times a year at most.
Now there is one major con of the custom portfolio and that is the automatic re-balancing. If one of your holdings deviates more than 5% from the target allocation you've set it then Raiz will automatically sell off the excess and re-allocate evenly to other holdings. This will obviously incur a CGT event and isn't ideal but isn't a huge deal breaking issue unless you allocate to bitcoin or some major macro-economic event (*ahem pandemic ahem china ahem*) sets off crazy returns/losses in an ETF.
Another deal-breaker for some people may be the lack of CHESS-sponsorship since Raiz purchases fractional interest shares for you that are held under a custodian account. I've sent their team a clarifying question on what happens to your investment exactly if Raiz were to go under but for now, this isn't a huge concern for me personally.
Also whilst I'm here, I may as well chuck in a completely shameless plug to use my referral link if my post has somehow convinced you to give Raiz a try (we'll both get $5!)
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