Beginner's guide to a portfolio - Raiz Invest

The word “portfolio” is used regularly by financial media. But financial media has a way of making things sound more complicated than they are 😕 If you haven’t had a financial portfolio, or don’t yet know much about them, there is no need to be intimidated by them! A portfolio is just a term used to describe a collection of items or works. If it was an artist, a portfolio would be a collection of the artist’s work.

In financial terms, a portfolio is a range of investments held by one person. Let us guide you in easy-to-understand terms so that you understand how a portfolio at Raiz can help you reach your investment goals.

 

What is a portfolio at Raiz?

A portfolio at Raiz is made up of one or more ETFs (Exchange Traded Funds) and in a couple of Raiz portfolios there is even the possibility of holding Bitcoin as well as ETFs.

 

What is an ETF?

An ETF is a Fund that is traded on an exchange – an Exchange Traded Fund (ETF). At Raiz we invest in ETFs quoted on the ASX, the biggest stock exchange in Australia.

Some ETFs are made up of stocks, some are made up of bonds, and some are a combination of the two. You can think of an ETF as its own portfolio!

ETFs are usually setup with the aim to track a clearly defined objective, which means an investor who buys an ETF can aim for a similar financial returns (and risks) as an index or some other clearly defined benchmark.

For example, the STW is an ASX quoted ETF that aims to track the returns (and risks) of the S&P/ASX200 Index, which includes many of the top 200 stocks in Australia like Afterpay, BHP, Commonwealth Bank, Woolworths, and many others.  The performance of S&P/ASX200 is often mentioned on TV in the financial section of the news.

By investing in STW, if the S&P/ASX200 Index goes up 1%, the STW will go up by a very similar amount 💡 – same logic if the S&P/ASX200 falls

 

How do I know what is in each ETF?

Sometimes the code of the ETF is an indication of the type of stocks that the ETF Fund is invested in. For example, ETHI is a Global Sustainability Leaders Fund issued by BetaShares and invests in stocks that meet the threshold for a certain criterion of ethical standards. ETHI is part of the Raiz Emerald Portfolio and can also be included in the Raiz Custom portfolio.

The name of an ETF is also a good indicator of what it is tracking. For example, IVV is the iShares Core S&P500 ETF, with the aim to match the performance of the S&P500 Index in the USA, which includes many of America’s Top 500 stocks. This ETF is included in many of Raiz Portfolios. You can visit the website of each ETF issuer to find out the exact components of each ETF if you want to know the specific holdings in each. In our PDS there are the links to the websites for each ETF, or you can google “IVV ASX”, for example, and one of the top results should be the ETF’s website.

 

Do I need to choose which ETFs are in my portfolio?

The benefit of the approach at Raiz is that for all our portfolios except Custom, you do not need to pick which ETFs to include. Rather, the Portfolios have already been built by our team for you, and show you the approximate percentage that will be invested in each of their selected ETFs. If the percentage of an ETF is 10%, then that means 10% of your total portfolio value is held in that ETF.

 

How can I tell what the level of risk is?

Raiz has portfolio names ranging from Conservative to Aggressive, which gives an indication of the risk profile of that portfolio.

If you use our Custom Portfolio option it comes with an inbuilt risk scale feature, giving an illustration of how risky a particular Custom portfolio is. Although this is only available for Custom Portfolios, we think it’s a useful way to show you what the risk scale looks like for each of the seven standard Raiz portfolios.

 

Does it affect the performance of my portfolio if people join or leave Raiz?

Not at all! The beauty of ETFs is that they are abundant in liquidity, which is also supported by market makers who ensure that liquidity is available.

 

How can I see the performance of my Raiz portfolio?

This is where Raiz makes it easy for you to see how much you have invested, what your account balance is, and what your financial returns are over different time periods, all at the click of a button 😊

 

Can I change my portfolio?

You can change your portfolio at any time for no additional cost. There is no brokerage on any Raiz trade, so you can make investments from as little as $5 as often as you like, and you will not be penalised for it with additional brokerage costs 👍

To see our fees, click here.  Please also read our PDS.

 

Do you feel more confident about what a portfolio is?

We certainly hope that you do! We have many blogs to help you feel financially confident, and we hope that whatever your investment goal is that there is a Raiz Portfolio to help you reach it!

 

 


 

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Download it for free in the App store or the Webapp below:

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Important Information

If you have read all or any part of our email, website, or communication then you need to know that this is factual information and general advice only. This means it does not consider any person’s particular financial objectives, financial situation, or financial needs. If you are an investor, you should consult a licensed adviser before acting on any information to fully understand the benefits and risk associated with the product. This is your call but that is what you should do.

You may be surprised to learn that RAIZ Invest Australia Limited (ABN 26 604 402 815) (Raiz), an authorised representative AFSL 434776 prepared this information.

We are not allowed, and have not prepared this information to offer financial product advice or a recommendation in relation to any investments or securities. If we did give you personal advice, which we did not, then the use of the Raiz App would be a lot more expensive than the current pricing – sorry but true. You therefore should not rely on this information to make investment decisions, because it was not about you for once, and unfortunately, we cannot advise you on who or what you can rely on – again sorry.

A Product Disclosure Statement (PDS) for Raiz Invest and/or Raiz Invest Super is available on the Raiz Invest website and App. A person must read and consider the PDS before deciding whether, or not, to acquire and/or continue to hold interests in the financial product. We know and ASIC research shows that you probably won’t, but we want you to, and we encourage you to read the PDS so you know exactly what the product does, its risks and costs. If you don’t read the PDS, it’s a bit like flying blind. Probably not a good idea.

The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes  not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.

Any returns shown or implied are not forecasts and are not reliable guides or predictors of future performance. Those of you who cannot afford financial advice may be considering ignoring this statement, but please don’t, it is so true.

Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

This information may be based on assumptions or market conditions which change without notice and have not been independently verified. Basically, this says nothing stays the same for long in financial markets (or even in life for that matter) and we are sorry. We try, but we can’t promise that the information is accurate, or stays accurate.

Any opinions or information expressed are subject to change without notice; that’s just the way we roll.

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