Comparing micro-investing platform returns
Today I will be comparing returns on investments over the past 10 months between micro-investment platforms I’ve experimented with. In a low-interest environment, cash is trash, as they say. Micro-investing creates opportunities to off-load disposable income into a variety of asset classes to grow at a faster rate than just cash sitting in the bank.
What is micro-investing?
My definition for micro-investing and micro-investing platforms may differ from others. In my view, 'micro-investing' platforms share most of these characteristics: they allow people to invest small amounts** - small enough so that you don't really notice the money coming out. Consequently if the investment did go down in value, it would not matter a great deal as it's money you can afford to lose.
- further to the first point, because they are small in nature and don't make much impact on the bottom line, they may be higher risk than larger investments. the investment could be automated in a dollar-cost-averaging* style.
- usually a fintech startup that disrupts old-world finance in some way.
- usually has a native mobile app with a slick UI (user interface).
- may offer access to 'fractional' amounts of shares or units.
My experiences with micro-investing platforms
Spaceship Voyager
Previously I reviewed Spaceship Voyager. I still use this platform and have had positive experiences thus far. My strategy for this platform is dollar-cost-averaging. I have it set up to automatically transfer a small amount every 14 days and that amount purchases units in their managed fund. The returns from the other platforms exceeds my Spaceship returns but this is to be expected since they are higher risk. I am happy with the market-beating returns from this platform. My plan is to withdraw funds from here when the amount gets to the threshold where they start charging fees (it's free to $5000 AUD) and invest this larger sum elsewhere.
Stake
I also use a platform called Stake to get direct access to individual US shares. In Australia it's always been costly and cumbersome to buy direct shares in markets outside AU and the best way to get exposure to other markets was via low-cost ETFs. This was OK but if I wanted direct access to a specific company I'd have to fill out annoying paper-work and pay unreasonable fees. This was until Stake entered the market. They have zero brokerage costs. They take a small cost on the FX side - that was their business model until now. They have recently announced new paid subscription models (they will still have a free option with less features) from July this year. I'm still undecided as to whether or not I will stay on after this time. They are finalising the terms of the different offerings based on feedback from the community (it's definitely a good thing that they are listening to feedback).
My strategy for this platform is that each quarter I will buy shares in a growth stock that I fancy (the same amount each time). I got lucky picking Tesla in April. Since then, at quarterly intervals, I've invested in Lululemon, Ark Invest's Innovation ETF and Mercado Libre. The cost for one share exceeds the amount I put in for most of these companies but Stake allows 'fractional' share ownership, which is super-cool. This is not possible for shares in Australia.
Fiat-crypto onramp
Lastly I have a fiat-crypto platform. I deposit money from my bank account into a cash account and then whenever I want I can transfer that to Bitcoin or Ethereum at their market rate. My current strategy is to buy the dip. On days when I see BTC or ETH drop 10% or more I just put in a very small amount to top-up my bags. Sometimes I buy a bit of both or if one drops significantly more than the other I will buy just that one. I am comfortable with both these assets being volatile and also that they can go on big runs in price. If these assets trade within a narrow-ish range for extended periods before going on a big run, I'm happy to let them go and not dollar-cost average in on the run up, and sit back and wait for -10%+ days - even if I have to pay a bit more.
ROI
Here's a table that shows the breakdown for my returns since April last year:
Amount weight means the proportion of my total investment and value weight means the proportion of its current value. With Tesla in my portfolio, US equities in Stake have been the big winner for this period. The Spaceship returns are close to S&P500 returns and the other asset classes obviously beat the market significantly.
With all these platforms I only put in a small amount. Whilst the ROIs look good as a percentage, the small amounts I invest mean that I'll never get rich from them alone. However, it's nice to have them ticking away in the background, little by little. I also enjoy learning new things by tinkering with different options.
A new entry - Republic Auto-Pilot
I have been a fan of Republic for a while now. I reviewed their Note airdrop in my free crypto post last year. Republic is a crowd-funding platform for startups. I have never invested in any of their startups but have kept a close eye on some of them over the years. Their new Auto-Pilot initiative is like a set-and-forget option that automatically invests in startups that fit specific criteria - those that have at least 100 investors and where the amount funded has exceeded their target. Users receive notifications when startups fit this criteria and are given the opportunity to opt-out if they aren’t interested in that startup. This gives me vc-like opportunities with seal of approval from the ‘wisdom of the crowd’. You also control the amount you want to invest in a year and the minimum investment in one company. I have the minimum amounts set for both.
Incidentally, just after signing up to Auto-Pilot, I was notified of a startup that fit this criteria - Soar Robotics - and I am really excited about this investment - drones and AI. BOOM! I’m in.
I'm am rebalancing amounts I invest with Spaceship Voyager and Stake as I need to cut back a bit to account for my Republic Auto-Pilot investments.
Final thoughts
I love that more of these platforms are coming online. It’s great that there are more and more asset classes available - traditional equities, crypto and now VC with Republic Auto-Pilot. I have looked at a couple of gold options but I’m comfortable getting gold exposure in my portfolio with other alternatives. There are also real estate options but I have plenty of exposure to real estate already!!
Thanks for reading. This is my first time directly posting in the #steemleo tribe. I’d love it if anyone reading this that uses any micro-investing platforms to share their experiences.
Posted via Steemleo
