For Australian beginners, the choice often comes down to: micro-investing apps (Raiz, Spaceship) or buying ETFs directly through a brokerage account (SelfWealth, Pearler, CommSec). Both achieve diversified investment exposure — the key differences are cost, control, complexity, and minimum investment.
The Core Difference
Micro-investing apps: Invest for you in pre-built portfolios. Very simple; low barrier; higher relative fees at small balances.
ETFs via brokerage: You buy named ETFs (VAS, VGS) directly on the ASX. More control; lower relative fees at medium–large balances; slightly more complexity.
Head-to-Head Comparison
| Feature | Micro-investing (Raiz/Spaceship) | ETFs via brokerage |
|---|---|---|
| Minimum to start | $1–$5 | $500–$2,000 (typical) |
| Ongoing fees | $36–$42/year flat (small balances) | ETF MER only (e.g., 0.07% for VAS) |
| Transaction fee | None | $9.50–$19.95 per trade |
| Automation | High (round-ups, auto deposits) | Manual (or auto via Pearler) |
| Portfolio control | Pre-built only | Full ASX ETF universe |
| Transparency | Low–medium | High (you own the ETF) |
| Complexity | Very low | Low |
| Best balance for | <$10,000 | $2,000+ |
Fees: When Does Brokerage Beat Micro-Investing?
This is the key calculation. Micro-investing charges a flat monthly fee; brokerage charges per trade.
Raiz ($42/year) vs SelfWealth ($9.50/trade):
- Investing monthly via SelfWealth: $9.50 × 12 = $114/year — MORE expensive than Raiz
- Investing quarterly via SelfWealth: $9.50 × 4 = $38/year — CHEAPER than Raiz
- Investing bi-annually: $9.50 × 2 = $19/year — significantly cheaper
Conclusion: ETFs via brokerage are cheaper if you invest quarterly or less frequently — but require discipline to save and invest a larger lump sum less often, rather than small amounts frequently.
ETF MER vs Micro-Investing Fee at Scale
| Balance | Raiz annual cost | VAS ETF annual MER (0.07%) | Saving from VAS |
|---|---|---|---|
| $10,000 | $42 (0.42%) | $7 | $35/year |
| $20,000 | $55 (0.275%) | $14 | $41/year |
| $50,000 | $137.50 (0.275%) | $35 | $102/year |
| $100,000 | $275 (0.275%) | $70 | $205/year |
At scale, the fee gap widens significantly. A $100,000 portfolio costs $275/year in Raiz vs $70 in VAS MER — a $205/year difference (before brokerage transaction costs).
The Automation Advantage of Micro-Investing
The real value of micro-investing over direct ETF investing is behavioural:
- Round-ups invest money you wouldn’t consciously save
- Automatic weekly deposits require zero discipline
- No decision fatigue — the platform handles allocation
For many beginners, this automation advantage is worth the extra fee at small balances. Starting with $20/week automatically via Raiz is better than never getting around to buying an ETF via brokerage.
The Transition Strategy
A common approach for Australian investors:
- Start with Raiz or Spaceship: Build the habit, accumulate to $5,000–$10,000
- Open a brokerage account (SelfWealth, Pearler): When ready to invest larger amounts
- Transition: Stop micro-investing (or leave it running for round-ups); invest new money via brokerage in VAS/VGS
- Scale: As your brokerage portfolio grows, the fixed ETF MER (0.07–0.20%) becomes a tiny fraction of the balance
Which Platform Is Best for Each Balance?
| Portfolio size | Recommended approach |
|---|---|
| $0–$2,000 | Micro-investing (Raiz round-ups + scheduled deposits) |
| $2,000–$10,000 | Either — micro-investing for automation; brokerage if investing $500+ at a time |
| $10,000–$20,000 | Consider switching to brokerage for quarterly lump sums |
| $20,000+ | Brokerage (SelfWealth, Pearler) — ETFs are significantly cheaper |
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Frequently Asked Questions
Is Raiz better than buying ETFs directly? At very small balances (under $5,000), Raiz’s automation and low minimum make it the more practical starting point for many beginners. At larger balances ($20,000+), direct ETF investing via a low-cost broker is generally more cost-effective. Many Australians use both simultaneously.
Can micro-investing returns match ETF returns? Micro-investing platforms invest in ETF portfolios — so underlying exposure is similar. The main drag is fees: Raiz’s 0.275% annual fee (above $20K) + the MER of underlying ETFs vs the MER-only cost of holding ETFs directly. The lower the fees, the better the net return for equivalent gross market exposure.
What is the minimum to buy an ETF in Australia? There is no legal minimum to buy ETFs on the ASX, but brokerages typically have a minimum trade size of $500 (SelfWealth) or require enough shares to be purchased at the current price. As ETF unit prices range from $10 to $150+, you can often start with $500–$1,000 via a brokerage account.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.