I’ve been a user of the Sharesies app for a little while now, so it’s about time I did a bit of an updated review for you guys.
Here are my thoughts – what I like and what I think could be improved. In the future, I’ll have some analysis of the fees that Sharesies charges, which should further help you to figure out whether they’re the right fit for the kind of investor you are.
They’ve changed a few things about the app since it first came out and I still really like how streamlined and easy to use the whole app is. It looks great (not cluttered with random finance things) and is generally pretty intuitive.
There are a few external links they’ve included in the app for extra information, which is something I think they could do a bit more of.
For example, when you have a closer look at each fund available, they include a link to a Sorted.org tool for calculating your risk profile. Really helpful if you’re not sure your own risk profile would match up to the funds.
Next, I’m going to take you section by section through their app.
Buying units of funds
Let’s start by looking at the Buy tab. It’s where you can see the funds that are available through the Sharesies platform. Currently, there are six Smartshares funds available, a good amount of funds given the fact that they’re targeting people that have never invested before.
If they had all 23 Smartshares funds available through the platform it’d be pretty overwhelming if you were new to investing. It’s hard enough to pick just one or two!
When you click on each fund, it brings up some information about it. This includes the current price of the fund and a little blurb about it.
I think it would be useful if they provided a link to a list of the 50 companies in the NZX50 fund (and similarly for all the other funds with lots of companies). This would help new investors understand what they’re investing in.
Ways of making money – Dividends and Price Increases
Dividends are given as one of the ways you can make money from investing, but to the first-time investor, it’s not necessarily that clear what a dividend is and how they work.
An external link or little blurb like “Companies decide what % of their profits will be paid to Shareholders in the form of dividends, and what % will be invested back into the company” could help clarify without people having to stop what they’re doing and google definitions of things. Just last week they posted a great article to their blog explaining how dividends work in more depth, which is good to see.
You might think that everyone knows how share prices work, but a lot of people have pretty murky knowledge about the whole thing. It’s just not something you really learn about.
The value of a share relates to a value of the company as a whole. Think of a company as a pizza: if the pizza gets bigger but the number of slices remains the same, the size of the slices gets bigger too. If a company grows in value, the value of the shares of that company goes up also. How a company is valued is a whole nother topic which I won’t go into today!
If the shares you own are worth more than what you originally paid for them, you’ll make money when you sell them. This works the same way for a fund (which is a collection of companies).
Similarly to the “Dividends” section, I think there could be a little more information on how and why share prices increase. Even if it’s just a link to one of their blog posts.
What’re bonds again?
On their page for the NZ Bond Fund (NZB), I think it would be very helpful to have a little more explaining how bonds are different from shares.
They’re kind of confusing as to how you end up making money from them, and lots of people don’t know what they even are.
Bonds don’t pay dividends per se, more accurately they pay interest. This video has a really cool explanation of the difference.
Imagine your uncle has a business. You think that business is going well, so you decide to invest in his business. You now own a small % of his business. Your success is tied to his success if he does great you’ll do great too; if his business goes bust, your shares will be worthless.
Instead, you might decide to give him a loan. He pledges to pay you back the loan along with interest over a period of time. This is the difference between stocks and bonds. For more on bonds, have a quick read of this article
You fill up your Sharesies wallet with money via a direct deposit from your bank.
I’d really like to option to purchase a number of units of a fund rather than a dollar amount of them.
Leftover money that isn’t used to purchase shares doesn’t earn you any returns, and therefore eats into the overall returns that you receive. It does get refunded back into your wallet, but it then just sits there. The less you are investing, the bigger this issue is.
Say you decide you want to invest $20 a week into the US500 fund.
Currently, shares are worth $6.227 each. This means every week you’d get 3 units of the fund and have $1.30 ish left over. Every 4-5 weeks or so you’d have enough to buy an additional unit.
I’d really like to see the option to purchase a set number of units a week via automatic payment. It’d have to be made obvious that this is going to mean the investor is investing a variable amount each week, but it would make a positive difference to their returns as all the money they put into the app would instantly be used to purchase units of a fund. An automatic payment also helps users set up a “set and forget” investment strategy. An ideal way to invest!
‘My Portfolio’ + Performance Graphs
Once you click on the tab showing your investments and chose a fund you’re invested in, you can see both the share price history of each particular fund and your investing history with it.
In particular, I think the graph showing your investment history is really cool. This graph shows how the value of what you’ve invested in a fund has changed over time. Once you start to get into the groove of investing regularly this graph will be very useful.
I really like the idea of seeing a long term graph of how each fund has performed. Like I’m always going on about, investing is a long-term game – it’d be cool to see the time range extend back beyond one year in this section.
Overall, I really like it. I think it could do with a bit more explaining in some places, but obviously, the purpose of the app is not to provide a crash-course in investing (That’s what ya boy Ryan from MFYK is for) but a little extra info for first-timers could be helpful.
Because of who their customer base is (young first-time investors) it’s really key to be with them every step of the way. They’re doing an awesome job educating people through their blog and social media pages but I think it’s a really good idea to add some external links in the app to provide more information.