Investing for a home deposit

InvestSMART is a digital wealth platform and despite being digital its success lies in its human touch. Your relationship with money is deeply personal, from how we earn it to how we spend, save and invest it. And so, with the individual in mind, we designed our service. 

Support: When you need to speak to a person you can

We are a digital wealth platform that uses the "digital" aspect to enhance our human support. There is always a knowledgeable real person to help you when you need, through our content, help centre, webinars, on-site chat, dedicated client only inbox and old-fashioned phone calls. It's not by accident our support is mentioned more than anything else in our reviews.  

Fees: Your money is working for you not anyone else

It is unusual for a financial service provider to make a song and dance about its fees. But when you are the first provider to introduce a capped fee, instead of being a negative, it becomes a positive. 0.55%pa is a low management fee compared to the average and we take that a step further and cap it at $550pa. What this boils down to is more of your money generating growth and income for you.  

Returns: Your returns fund your lifestyle, make sure they're working efficiently

You'll notice the InvestSMART portfolios are all compared to peers. This means the average return of all other funds that are aligned to the same industry standard benchmark as our portfolios. Why? Because these are viable alternatives that you could invest in. We aim to outperform the average of our peers by the differential in our fees. You'll notice the gap to peers at the start is small, but if you compound that difference year after year, you will notice that gap grows significantly. We keep our costs low, keeping more in your account compounding for you.    

Independence & Trust: The best investment options for you, regardless of the ETF provider 

Our Investment Committee is 100% independent of product issuers and have built careers in markets over decades and they distill that experience into our service. Their independence sees our portfolios hold the best ETFs to meet our clients' needs, regardless of who issues the ETF. 

Security: Peace of mind that your assets are securely held 

You are the legal owner of your investments with InvestSMART. All accounts have their own HIN in the client's name. Additionally, two-factor authentication is used for any portfolio changes. 

The core investment philosophy at InvestSMART focuses on the principles of diversification, low fees and investing for the long term. Exchange Traded Funds (ETFs), in comparison to unlisted managed funds, provide a cost-effective method to ascertain these goals. They also have liquidity benefits, being easier to buy and sell at short notice.

ETFs provide broad diversification by only needing to purchase a small number of securities. In contrast, when buying and holding hundreds of individual securities to achieve a similar level of diversification, greater costs are incurred in brokerage and fees – imagine the brokerage to buy 200 individual stocks!  

ETFs are also great for managing risk. When you invest in an ETF, you lessen individual company risk and sector risk. By holding a basket of individual stocks, you are not limiting your exposure to individual sectors of the market. 

In using ETFs, InvestSMART has the capacity to pass on these lower costs to the investor in the form of capped fees and low-cost investing. As fees compound over time, even a slight increase in fees can result in substantial differences to your return. 

You can read more on ETFs here.

This is the most common question we get from experienced and inexperienced investors alike. 

No matter when you are looking to invest, there will always be something in the news that will have you asking this question. Whether it is a commentary on our local housing market, geopolitical uncertainty, or fears of a global pandemic. Uncertainty is constant, yet history shows us investment markets and asset classes continue to grow over the long term.

Having an investment plan and sticking to it is far more important than picking the exact day or week to invest. Developing good investment habits by investing for the long-term, in the right mix of asset classes, adding to your investment over time and rebalancing in a systematic fashion will see you reach your goal. In addition, chopping and changing your portfolio will chew up returns with transactions costs and potentially reduce your invested capital by paying additional taxes. 

InvestSMART can help you select and stick to a plan: 

• Provides simple contribution and income reinvestment options 

• Transparent online monitoring through your 'My Account' 

• Consolidated annual tax reporting direct to your inbox 

• CHESS sponsored ownership of your portfolio holdings 

• Our famous low fees starting at just over $1 a week, capped* at $550 per year. 

InvestSMART aims to make building and maintaining your wealth easy. The best investing is done slowly, almost forgotten about in the background and a great way to ensure you continue to grow your wealth is to use the InvestSMART automated account settings.

Growing your wealth

• Regular contribution plan: Turn on a regular contribution plan to have a minimum of $100 per month direct debited from your bank account into your InvestSMART account.
• Automatic dividend reinvstment: The default setting for your InvestSMART account is to automatically reinvest the distributions. Instead of just going straight back into the ETF they came from, they are reinvested across your portfolio to maintain balance.

Maintaining your wealth

• Automated income settings:
  • Income sweep: Every month we scan your account to see what dividends have been paid. They are bundled up and transferred out to your bank account. Clients living off the proceeds of their portfolio make use of this setting.
  • Regular withdrawal plan: Have a preset amount withdrawn from your portfolio each month. The InvestSMART team will ensure your portfolio maintains the right balance whilst providing you with regular funds.
  • Adhoc withdrawals: Withdraw funds as and when you need to fund your lifestyle or take advantage of market highs.

We can't tell you what portfolio to choose as we can provide general financial product advice only about the products that InvestSMART offers.

We cannot provide any personal financial advice and you should consider your own financial objectives, financial situation and needs before making an investment decision and submitting an application.

We have a number of tools you can use at InvestSMART including the Portfolio Manager and online calculators.

You will notice a common thread throughout the guides, the investment time-frame. We recommend investors look at the suggested time-frame associated with each portfolio to see if it aligns with their investment goal.

Here is a list of tools and guides to help select the right portfolio:

• InvestSMART's statement of advice
• InvestSMART's guide to growing your wealth
• InvestSMART's guide to investing in retirement
• InvestSMART's investor pack
• Wealth savings calculator
• Saving to buy a property calculator
• Saving for kids education calculator
• Saving for retirement calculator
• Target Market Determination for the InvestSMART Professionally Managed Accounts

Additionally, we have InvestSMART Bootcamp which is a comprehenisve investment course designed to get you started on the right foot. Click here for further details.

Investing involves the risk of your assets declining in value, so when your savings goal is in sight the last thing you want is your investments to suddenly dip and you find yourself $20K short of your deposit. The investment term for this risk is sequencing risk. Sequencing risk refers to the sequence in which returns (both positive and negative) happen.

We advocate for investors with a specific goal in mind to keep note of where they are on the path to that goal and to pay attention to that timeframe. All of the InvestSMART portfolios have a minimum recommended investment timeframe. These timeframes relate directly to the split between risky/growth assets and defensive assets in the portfolio. The longer the timeframe the higher the exposure to growth assets. These growth assets tend to be the most volatile.

So, as your investment timeframe shrinks because your balance is growing, investors may wish to rebalance their portfolio to a lower risk profile. With InvestSMART you can do this easily online. Our cash securities portfolio has the shortest timeframe of 1+ years. 

If you are within 12 months of buying a house, that deposit should not be exposed to financial markets.

With an InvestSMART Professionally Managed Account (PMA) it takes five business days from when you submit a withdrawal request and verify it until the cash lands in your bank account.

Please note, the shortest recommended timeframe for an InvestSMART portfolio is 1+ years (this is the InvestSMART Cash Portfolio). If adherring to the recommended timeframes when settlement comes your funds will already be in cash. The last thing you would want is to have your money invested in a portfolio that has exposure to investments that can fluctuate in value when you are ready to purchase your property.

When clients ask if their investment is safe with InvestSMART there are two main categories they are referring to; investment risk and the security of their investment.

Investment risk:

When you invest in anything other than a term deposit, you are taking risk. Investing is not about avoiding risk; it is about balancing risk with return and having an understanding of the risks associated with each asset class.

The InvestSMART team build investment portfolios designed around different risk profiles from conservative through to high growth. These portfolios hold the same asset classes and ETFs, but the weighting allocated to each asset class varies depending on the risk profile. The portfolios are designed to wear the bumps of the market.

Additionally, we recommend this article on how ETFs can help you manage risk.

Security of your investments:

We take the security of our investors accounts seriously and have built our service around this:

• All client's investments are CHESS sponsored. They are held on a HIN in the client's name. This means the client is the legal owner of the shares and not a beneficial owner.
• Clients are able to transfer out their holdings.
• Investors can enable two-factor authentication for account login.
• Two-factor authentication is required for all account changes.
• Bank level web security keeps client information safe and secure (that's our 256-bit SSL/TLS certificate).

What can investors do?

Investors can give their investments the best possible chance by selecting a portfolio in line with the same timeframe as their goal and risk appetite. Additionally, the best defense against volatility is time. Sit tight and allow your portfolio to recover. All investing comes with volatility and occasional uncertainty but, as the famous investor Charlie Munger says, never interrupt your compounding unnecessarily. 

Yes, the InvestSMART team are able to provide you with statements for any given date indicating your portfolio value. We do recommend reviewing the timeframes of the investment portfolios with InvestSMART and also refer to the FAQ "I do not want to risk my deposit in the markets, when should I withdraw my funds?".

The calculators are to be used as a guide to see if your goal is realistic and can be achieved in the timeframe you'd like.

Enter the details of your starting amount (current savings or investments), any contributions you can make per month, your end goal and the timeframe you need to achieve this. The results will indicate if the timeframe, risk profile and contributions will be sufficient to achieve your investment goal.

If the calculator indicates you will fall short of your goal, look at the inputs that are realistic for you to alter:

Starting amount:

You most likely cannot change the amount of savings you currently have

Monthly contribution:

Can you save more without putting your lifestyle under pressure? Or are you happy to make further lifestyle changes if you need to reach this goal if your timeframe cannot be altered?

Risk profile:

Do you need to move to a higher risk profile? Consider how comfortable with this you will be.

Timeframe: 

In most cases of missing your investment goal it is the timeframe that will need to be altered. Starting amounts and contributions often cannot be changed unless you are able to get a higher starting balance due to recieving a lump sum or are willing to make further lifestyle changes to increase your savings.