There are a number of different Investment platforms for Kiwis and today we are going to be looking at InvestNow. We are going to be looking at how the service compares against other platforms such as Sharesies and SmartShares later in this article, but for now we are going to be focusing on the InvestNow review.
Our InvestNow Review
In this review we are going to outline what InvestNow is, when it started, whether it is safe to use, what funds they offer and how it compares to other platforms. We are also going to be looking at the fees and costs associated with InvestNow.
Note: Reviews Boss is not a financial adviser and we will not be advising you on whether you should invest or not. We are simply going to explain the platform and talk about the pros and cons of InvestNow. We will not be telling you what funds you should or shouldn’t invest in.
When Did Invest Now Start?
InvestNow is a relatively new platform that was launched in 2017 with the goal of giving New Zealanders more options when it came to investing in managed funds. At launch, InvestNow offered 25 managed funds that covered most global and local asset classes. Since then, the service has grown to offer more than 90 managed funds along with a range of term deposit options.
Who Is Behind It?
InvestNow is brought to you by Implemented Investment Solutions (IIS), a Wellington-based investment management company that works with both global and local fund managers.
IIS was established in 2011 and manages over $3 billion in PIE funds, covering all major asset classes including, global and NZ bonds, NZ shares, global shares, cash and property. You can read more about InvestNow and IIS’s founder, Anthony Edmonds, and other members of their team here.
What is InvestNow?
InvestNow is a Wellington-based platform that offers investment opportunities into over 90 different managed funds. There are no annual fees to use the platform, but there are annual fund fees and performance fees that range from 0.20% to $2.72%.
There are a range of different index funds on offer and investments from $250 can be made into any fund on a single occasion. If you are looking to setup a regular investment plan, investments from $50 can be made into any of the funds.
Many funds in InvestNow’s portfolio are run by big names such as AMP, Fisher Funds, SmartShares and Vanguard.
Children can also join InvestNow, which makes it one of the few investment platforms to offer this.
What Is in Index Fund?
For those that know what an index fund (or “ETF”) is, feel free to skip ahead to the rest of the review. For those that don’t know what an index fund is, we have explained them below.
An index fund is a type of investment that is created to invest in or track the components of a market index. Think of things like the New Zealand NZX50 (New Zealand’s largest 50 companies) or the Standard & Poor’s 500 Index (S&P 500), which the is largest 500 companies in the United States.
An index fund operates no matter the state of the market, which means your investment is worth more when markets go up and less when they go down.
The Benefits of an Index Fund
Index funds provide broader market exposure and diversity in risk as your investment is spread across a range of different companies, rather than one. They are also better for an investor who is seeking a cheaper way to get exposure to the market.
Index funds have lower management fees and low operating expenses as the fund must invest in companies within the index. This means that there is no need for fund managers who constantly evaluate, research and make judgements on the investments.
The Disadvantages of Index Funds
While the diversity of index funds is great, there are some disadvantages. Index funds can have a relatively high commission cost associated with them when you buy through a typical brokerage.
Due to the nature of index funds they are expensive if you plan on trading them on a regular basis.
Signing Up for InvestNow
Signing up and making your first InvestNow is a very straightforward, easy process. You have the option of either setting up your account as an individual, Trust, Joint or Company.
The first thing you need to set up is your login details, using an email, name and password. After this you will need to complete the signup process by entering your personal details (bank account details, tax details, financial disclosures, and any other information they need).
Once your account has been set up and you have transferred some money to your account, you can start investing.
Investing with InvestNow
Setting up investments with InvestNow is a breeze and even the most inexperienced investor will be capable of doing it. Once your funds have cleared into your account, you can pick the funds you want and start investing.
You can select one fund or split your investment into multiple different funds. For those looking to make a single investment, you will need to invest $250 or more. If you commit to a regular investment plan, you can invest from $50 or more into one or multiple different funds.
Users can select how often they want to invest (monthly, weekly, etc.) and when they want to start the investment. If you do not have the required funds to make your investment, your regular investment plan will be on hold until you transfer funds into your account and start the investment plan again.
What About the Funds?
Currently, InvestNow offers over 90 funds from 17 different fund managers. The funds include index funds (investing in specific markets, such as the American S&P 500 or New Zealand’s NZX50). These funds also cover a range of specific markets such as commodities, property and more. In addition to this, the funds cover passive, cash-based investments (bonds, bank deposits and government debt).
The funds on offer give individual investors a wide range of options to choose from when looking to invest. However, the large amount of funds can be confusing and overwhelming for first time investors.
What About Term Deposits?
In addition to the diverse range of funds on offer, InvestNow also gives you the chance to put some money away in a term deposit. Currently, the service is still in beta but you have the option of investing in a term deposit with either BNZ or SBS Bank. InvestNow is working with other banks to add more options to their term deposit service.
For those looking to start a term deposit with InvestNow, you will need a minimum of $2,000 to put away.
Is Term Deposit Interest Compounded with InvestNow
InvestNow does not offer compounding interest payments for individual term deposits. The interest from you term deposit is paid back to your transaction account on InvestNow. However, you can select to automatically roll over a term deposit at maturity, including both the principal and interest in a new term deposit.
What is a Term Deposit and How Do They Work?
You may be wondering what a term deposit actually is and why you should use one. A term deposit is a deposit held at a financial institution such as a bank, credit union or building society for a fixed amount of time. This fixed amount of time is called a ‘term’ and when money is deposited into the account, it stays there for the pre-determined period. Terms usually range from 1 month, all the way to 5 years, and money can only be withdrawn at the end of the term.
If you want to end your term deposit early you will need to contact InvestNow. Depending on the bank you have your term deposit with, you may have to pay a penalty for getting your money out before the term has ended.
Term deposits are popular with those who prefer a safer, more stable investment plan without the fluctuations of something like the share market. They are often used in conjunction with other investment options such as funds or property.
What Are the Fees and Costs Associated with InvestNow?
- There are no annual fees or sign up costs associated with InvestNow. Additionally, there are no purchasing or selling fees as well.
- All the funds charge management fee, which range from 0.20% (Vanguard International Shares Select Exclusions Index Fund) to 2.72% (Fisher Funds Property & Infrastructure Fund).
- Some funds charge performance fees and some do not. Do not assume that a fund will charge the same performance fee every year, as future performance cannot be predicted.
- There is a minimum investment amount of $250, or $50 when you make regular repeating contributions.
What Investment Products are on Offer?
InvestNow offers the following investment opportunities:
- Term Deposits
- New Zealand Fixed Income (investments in company debt or government bonds
- New Zealand Shares
- Australian Shares
- International Shares
- International Fixed Income bonds and deposits
What Are the Risks with InvestNow?
As with all investments, there is an element of risk associated with them. Some of InvestNow’s funds are low risk, some are medium risk and some are high risk. The returns/profit you make don’t necessary depend on the level of risk you take on.
Additionally, not all funds are hedged to the New Zealand dollar. What this means for you is that if the NZD rises against any overseas currency and your fund is not hedged, the value of your investment will reduce in NZD. This applies the other way as well, if your fund is not hedged and the dollar drops, your investment will be worth more in NZD. Some funds on InvestNow are hedged and some are not, so we recommend you check before making an investment.
How Are Your Funds Protected?
You are probably wondering how your funds are protected with InvestNow and who holds them. InvestNow client funds are held in an independent custodial account which is run and operated by Adminis. This ensures that there is complete separation from client assets/funds from InvestNow as a business (means InvestNow can’t get hold of your funds or assets).
What & Who is Adminis?
Adminis provides investment accounting and administration services. The Adminis platform brings investment managers, investors, administrators and custodians together in one place.
What Is Good About InvestNow?
Investment from $250 or recurring investments from $50 is great for new investors looking to get some exposure.
No Annual, Signup or Administration Fees – This is a big plus of InvestNow and a major drawcard over its competition. Other investment platforms charge a signup or annual fee that can eat into your returns/profit. InvestNow does not charge any such fee, which can offer significant savings over time.
There are 90+ funds that provide plenty of diversity – It is great to have so many different funds to choose from and you will almost certainly be able to find one that is right for you. However, you need to check the fees associated with each funds as they do vary significantly.
You can focus on specific areas and industries – Are you someone who wants to focus on property? Or do you want to focus on emerging markets and global shares? InvestNow’s range of diverse funds let you focus on a specific industry or area of the market.
You have access to Vanguard Funds – Vanguard is a big name in investment funds and InvestNow gives you the opportunity to invest in Vanguard’s International Shares Select Exclusions Index Fund (both hedged and un-hedged). This fund gives you exposure to many of the world’s largest companies. The fund offers access to a broadly diversified range of securities that excludes companies that are involved in tobacco, controversial weapons, nuclear weapons and more. This fund usually has a minimum investment of $10,000 if purchased outside of InvestNow.
Access to funds which typically have high initial investment – InvestNow gives you the opportunity to invest in funds that usually have a higher initial investment level, like the Vanguard fund we explained above.
Simple to use platform – InvestNow online platform is straightforward to use and makes it easy for even the most inexperienced investor. Being able to easily set and forget a regular investment plan is great for those who want to use a passive service.
This customer service seems top notch – Those who have had to deal with InvestNow’s customer service seem to be pretty happy with their experience. InvestNow has also got an excellent FAQs section on their website for all the questions you need answering.
Children can use the service – for those who want to start an investment for their children, InvestNow is a great platform to use. You will just need to provide some ID and proof of address (which can be in the parents or guardian’s name).
What We Don’t Like
- To learn more about a fund, you will need to download its investor prospectus. These can be up to 50 pages long and can take a while to read through. It would be nice if there was a shorter summary that explained the basics of the fund for newcomers.
- It can be difficult to compare the performance of each fund, especially when you include the management fees. We think it would be great to have some sort of service where you could select a number of funds and then compare them on a graph (past returns).
Things to Think About
- InvestNow does not pay tax on your behalf for Australian-domiciled managed funds which are not PIEs. You will need to report income from these funds on your tax return. InvestNow provides a Tax Summary Report that you can use to find out your taxable income.
- Some funds are not marked as “sustainable” and they may make investments in companies that trade/produce tobacco, weapons, nuclear and other “unethical” businesses.
- You can end a term deposit early, but you will have to pay any penalties set by the bank your term deposit is with.
- If you are a tax resident of another country as well as New Zealand, InvestNow may be legally obliged to pass on financial information about your accounts, to tax authorities in that jurisdiction. InvestNow will need to know your tax residence and the Taxpayer Identification Number (TIN) for the account holder.
- Large institutional brands like ANZ, AMP and Fisher Funds make up a large percentage of all funds on offer.
- The stock market can be volatile and you need to be prepared to see your funds go up and down in value. Past performance is not indicative of future performance.
How Does InvestNow Compare Against the Competition?
InvestNow is a great investment platform for Kiwis, but how does it stack up against the competition?
InvestNow vs Sharesies
Sharesies is another popular option for New Zealand investors and is aimed at young people. The great thing with sharesies is that it gives you access to buy investments from as little as $5 (compared with InvestNow’s $250 minimum, or $50 when recurring). There are also no brokerage fees and free withdrawals at any time, and any amount.
The catch with Sharesies is that it does cost. Depending on the size of your portfolio’s value, the monthly cost will change. If your portfolio’s value is $50 or under it is free to use the service, if it is valued at $50 to $3,000 the cost is $1.50/month, and over $3,000 is priced at $3/month. Alternatively, you can opt for an annual membership for $30/year for any portfolio value (which is what we would recommend).
So, how does Sharesies compare with InvestNow. Overall, we feel that InvestNow offers a lot more than Sharesies. This is because it offers a lot more investment opportunities than Sharesies (over 90 compared to 11 offered by Sharesies). The annual or monthly fee will also eat away at your profits/returns with Sharesies, so you need to take that into account.
InvestNow vs Simplicity
Simplicity is a non-profit, online investment manager that is owned by the Simplicity Charitable Trust. They offer five investment fund options outside of their KiwiSaver scheme. The funds include the following:
- New Zealand Share Fund
- NZ Bond Fund
The Conservative, Balanced and Growth funds are $30 a year in membership fees, plus a 0.30% investment fee. The investment fee for the other two funds is 0.10%.
While the low fees investment fees for Simplicity are a big bonus, the minimum investment amount is $5,000. This is significantly higher than InvestNow and you are limited to only five different funds.
InvestNow vs SmartShares
SmartShares offers access to a range of different global and domestic ETFs across the main investment asset classes of Cash, Bond, Shares and Property. InvestNow offers some SmartShares funds on their service, which we recommend you check out.
SmartShares accepts direct investments from new investors from $500 per fund and $50 per month for recurring investments. There is a $30 establishment fee, but this does not apply to subsequent contributions.
The service offers 20+ different funds to choose from and the management fees are relatively low (0.33% to 0.75%). We do feel that InvestNow offers investors more with its 90+ funds and no annual or establishment fees.
The Key Points
- The investment funds offer diversity in the share market, with varying levels of risk.
- We like that InvestNow offers the Vanguard fund with its low 0.20% annual fee. This is usually an expensive fund to buy into, so this is a big win for InvestNow.
- Signing up is easy and straightforward. Even the most inexperienced investor could set up an account and get investing.
- There are over 90+ different funds available and there are no set up or annual fees to use the service.
- Gives both new and old investors access to local and global share markets at an affordable price.
- Offers secure password protection to make log in secure.
- Investments can be made from $250 for a one off investment, or $50 when they are recurring.
- Children can use the service and it can be set up for individuals, trusts and more.
- InvestNow may not be the best for everyone. New investors will love its simplicity, but may be overwhelmed by the number of funds on offer. We would love to see a quick-guide on each fund and maybe a risk level as well. This way, new investors can quickly look to see what they are getting into. We would also love to see a tool that can pick a number of funds and compare performance.
What You Need to Remember
The funds InvestNow offers are not some get rich quick scheme. Like most managed funds, they are long term investments rather than short term. The longer you leave your money in these funds, the faster and larger they will grow.
Other Things to Know About InvestNow
You can have more than one account – InvestNow lets you operate multiple accounts, and multiple types of accounts. However, you will need different email addresses for each one.
No cheques – InvestNow only allows online deposits into your InvestNow Transaction Account.
InvestNow is not a KiwiSaver scheme – If you are searching for a KiwiSaver scheme you will be disappointed to find that KiwiSaver is not one. Simplicity offers a KiwiSaver scheme and InvestNow’s SmartShares funds are also used by SuperLife, a KiwiSaver provider.
Dividends you receive can be reinvested easily – Many of the shares your fund invests in will pay out dividends. These dividends represent profits the company has made. When a company declares a dividend, the fund you are invested in will receive money. You can have your account setup so that the dividends get automatically reinvested, or you can select to have them paid to your transaction account. Reinvesting your dividends is a good way of building your portfolio long-term.
Fund performance is updated daily – When you log into your account, you will be greeted by the performance of your portfolio. This is updated daily and you will be given a total valuation of your portfolio, as well as individual performance of each fund. You can see details like increases or decreases in value from the previous day, monthly and yearly returns.
The transaction account does not accrue interest – The transaction account is intended to be used to make investments into managed funds, make withdrawals following fund sales and for any other payments. InvestNow receives the interest on any money held within the Transaction Account, which helps to pay costs associated with offering and operating InvestNow.
InvestNow does not provide financial advice – InvestNow simply provides the service to invest with and any material that goes along with the fund. If you need any investment advice, it is best practice to find an independent financial advisor.
You can cancel orders – InvestNow lets you cancel a buy or sell order up until 12pm of the business day in which you placed the order. If you have placed an order on a non-business day, you can cancel the order up until 12pm of the next business day. You cannot amend an order, so you will need to cancel a pending one and create a new one.
After signing up, you will need to wait a couple of days before you make your first investment – Signing up for InvestNow is easy, even for the most inexperienced investor. You will need to set up your login details first and then complete your registration by entering your personal details. InvestNow will have to verify your ID and other details. Once your account is open you will be able to transfer money into your transaction account and start investing.