I should introduce this post by saying I don’t have any connection to Sharesies beyond using their product, but the links I’ve included in this post are referral links so I will benefit if you sign up for their service.
Sharesies is a New Zealand company who have created an online platform to invest mostly in ETFs and managed funds (at this stage). They are popular for their simplicity, but the fees can be a drawback, which I’ll go into more detail about soon.
I first got into Sharesies because I was looking to invest in ETFs outside of KiwiSaver. My curiosity was based on the premise that it’s essential to put at least the minimum into KiwiSaver to get the employer contribution and government contribution (free money, hello!) but any further investments may be useful to be able to access before 65 if needed. Knowing what I know now about financial independence, I endorse this approach even more strongly.
When I signed up for Sharesies, they had a $15 credit they gave immediately which was definitely an incentive for me to at least try it out, though I don’t know if that’s a feature any more.
So what’s it all about?
I’m not going to go into great detail here about how to use Sharesies and why it’s so easy to use, as you can learn about that on their website. But suffice to say investing in funds via Sharesies is much the same as shopping on just about any website. You find the fund you want to invest in, put how much you want to invest (there is no minimum), add it to your cart (or trolley, if we’re being kiwi) then “checkout” when you’ve added all the funds you want to buy.
Finalising the orders takes a day or two, so it’s not instantaneous, but as an investment it’s a heck of a lot more liquid than Harmoney or a great deal of other products out there. We put that to the test shortly after Mrs. R2A’s dad passed last year and we had to make a sudden trip to the Philippines. We received our funds very promptly. As it turned out we didn’t need them, but it was nice to know we weren’t going to run out of money while overseas!
What are the downsides?
Fees are stepped rather than a percentage, which means they hurt more in the early stages. If you have less than $50 invested there are no fees, but once you cross that threshold you’re paying $1.50 a month up until your investments hit $3000 and then $3 a month after that. Alternatively you can choose to pay $30 a year no matter what amount you have invested, though I can’t see why anyone would do that if they had less than $3000 in the kitty.
Some quick maths shows you’d be paying fees of 35% on an investment of $51 (nasty), 3.6% on an investment of $500 and 0.6% on an investment of $3000 (starting to look alright). Crossing that $3k line and switching to the annual fee would cost you 0.75% on an investment of $4000 and 0.5% on $6000, which is where you’re really starting to get into very good territory fees-wise.
So what’s the verdict?
Essentially in the early stages you’re paying for the convenience of the service and in my opinion that’s brilliant for people dipping their toes into investing for the first time. Nothing about Sharesies is scary or intimidating and this is a major strength in a country where investment is more or less synonymous with rental property and a stock market crash that happened before most millennials were born still leads to all sorts of weird beliefs about shares.
But once you’re a more confident investor I’d recommend either switching to a platform with a lower fee schedule or – if you’re keen to stick with Sharesies for its ease and liquidity (like I am) – aim to ramp up your investments towards that $5k-$6k mark as fast as you can so you’re getting a reasonable deal on fees. I need to take my own advice on this as we haven’t been contributing much while Mrs. R2A is on maternity leave but she is back at work soon so that will be changing!
All up, if you need somewhere to play around with investing outside of your KiwiSaver or you need a product that is simple and friendly to use, it’s worth giving Sharesies a crack.
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