Aussie investors looking for decent returns on their money are looking for alternatives to simply putting their money in the bank and letting it build up over time through interest.
Interest rates on term deposits and online savings accounts stay at around 1-2%, which it has been around for quite some time now. Meanwhile, the Aussie sharemarket has gone up by 9% over the past 12 months, hence why seeking financial help online has become more commonplace. Shares have also paid healthy dividends, with an average return of 4%.
Accountant Guy Bane, aged 29, is one of the many Aussies who have turned to robo-advisers to get great returns. In his case, he turned to Stockspot. Bane says that he’s trying to build up wealth so he can get property when real estate prices go down.
Investing parcels of $5,000 to $10,000, he has enjoyed an average of 8% in his annual returns for the past two years.
Stockspot is one of the many robo-advisers that have popped up in recent months. These robo-advisers offer financial help online or via phone, but instead of a professional financial adviser, a computer is the one that offers returns via investments in exchange-traded funds (ETF), using Aussies’ submitted information.
An ETF is a simple and low-cost way to get returns on share indexes or underlying assets. At the end of August 2018, the ASX had 178 ETFs listed, which included 23 new additions that came in within the past 12 months. Overall, the ETF market grew by 70% within the past 2 years from $23b to $39b.
According to Stockspot Foudner, Chris Brycki, said that many of their investors turned to their platform for financial help online if they didn’t or couldn’t keep close track of financial markets. He describes ETFs as a way to invest into different investments at once rather than just buying a single share.
About 70% of Stockspot’s ETF money is put into growth assets, with the remaining amount put into defensive investments.
Financial adviser James Trethewie says that using robo-advice was a cheap, easy way to access the sharemarket, great for people who can’t really afford to go for financial help online or from advisors.
Trethewie considers robo-advisers are great for people who are starting out and aren’t going to be investing a lot of money.