What Is InvestNow?

InvestNow is an online investment platform designed for Kiwis.

It allows you to invest in many different international managed funds and index funds, as well as term deposits, all within one platform.

InvestNow's selling point is that it does not charge any annual fees or brokerage fees, and instead makes their money from partnerships with the fund managers. This means the customer (you) doesn't have to pay any middleman fees to get access to the platform.

InvestNow was launched in 2017, and currently has over $1 billion NZD of assets under management.

Who Is InvestNow Suitable For?

InvestNow is perfect for investors who prefer index funds, and have a long-term buy-and-hold strategy.

Because the minimum investment is low, and there is no brokerage, InvestNow provides a great platform for Kiwis to invest in a range of funds and indexes over an extended time period.

It is not suitable for investors who wish to buy individual stocks, as this is not possible on the platform.

If you are someone who would like to start investing regularly, is risk-averse, and would like a passive "set and forget" approach, but would still like to keep full control of your assets and investments at all times, InvestNow could be a great option for you.

How To Open An InvestNow Account

Opening an InvestNow account is easy and should only take you a few minutes.

Simply head to the Join page on their website.

You will get taken to a screen like this where you can start the joining process:

You will need your drivers license or passport to verify your identity. This is for anti-money laundering reasons and is a legal requirement for investment platforms.

Once you've filled out the form, submit it and your account should be opened within 24 hours once they verify your info.

Now you can start investing!

How To Start Investing With InvestNow

Before you can start investing, you will obviously need to deposit some funds.

Simply head to the deposit page, and make bank transfer to the details they give you:

The minimum starting investment is $250, so you will need to deposit at least that much.

Once that arrives, you're ready to invest!

What Can You Invest In With InvestNow?

InvestNow currently offers two classes of investments: Funds and Term Deposits.

Funds

If you would like to invest in a fund, just head to the "Fund Selector" tab.

This will bring you to a listing of all the funds you can invest in.

I like to order the funds by which has the lowest fee.

As I discussed in this article, high fees can decimate your returns and in most cases, are not worth it. Low fees are a big factor in generating good returns over time.

In the screenshot above, you can see some funds you can invest in for as low as 0.03% per year, which is literally more than 20x cheaper than a fund that charges 1% per year.

To invest, simply click the fund you want, choose the amount and click Invest! 

As long as you have funds in your account, your order will be sent straight through.

Term Deposits

If you would like to invest in a term deposit, head to the term deposits tab.

There you will see a full spread all the banks InvestNow has partnered with and their available term deposits/rates.

This is cool because you can take advantage of the different term deposit rates at each bank without actually opening new accounts at every bank.

You can also quickly see all your options so you can choose the best rate and invest instantly.

I don't know of any other investment platform that offers this, so it's something that InvestNow has pioneered and in my opinion is very valuable.

This also allows you to keep a cash allocation and stocks allocation easily within one platform - for example, you could keep 40% of your assets in term deposits and 60% in index funds, to make the classic 60/40 portfolio, like I described in this article.

How To Track Your Investments

When you log in to InvestNow, you will be shown your portfolio on the main screen:

This will show you your portfolio allocations and portfolio value.

If you click on the Performance tab, you will see what your returns are broken down by various time frames:

Since my account is new you won't see much, but over a longer time frame this data will become more useful.

What Fees Do I Pay With InvestNow?

The only fees you will pay with Investnow are the management fees charged by each individual fund.

When you open the Fund Selector, you will see each fee listed beside each fund.

This is not a fee charged by InvestNow, but the annual fee charged by the individual fund manager.

For example, if you invest $1,000 in the first fund on the list (Antipodes Global Fund), you will see it has a fee of 1.21%, meaning you will pay $12.10 in fees for the year.

Also remember the fee is based on the market value of your investment, so if your investment grows to $1 million over time, your annual fee will be $12,100 (1.21% of $1 million).

As for brokerage fees, annual fees, joining fees, and deposit and withdrawal fees, they are all zero.

The only fee you pay on InvestNow is the fund management fees.

There is one exception, which is InvestNow's branded index funds, known as the Foundation Series. These have a brokerage fee of 0.5%:

Are My Investments Safe With InvestNow?

InvestNow uses what is known as a custodial system, which is similar to most online platforms in New Zealand.

This means they hold your assets but do not own your assets, which are held in custody on your behalf, and can only be used in the manner you direct them to.

These assets are ring-fenced so if InvestNow ever went bankrupt, they cannot use your funds for business purposes. 

The custodian is audited annually and InvestNow is a registered financial services provider with the NZ FMA. 

As for a definitive answer on whether you funds are "safe", nobody can give you that, just like nobody can tell you whether your money in the bank is "safe". You are responsible for your own financial decisions and which third parties you're comfortable investing in.

However, in terms of all the legal frameworks and regulations to keep your money safe, InvestNow appears to be in compliance with them all.

InvestNow Kiwisaver Scheme

InvestNow now has a Kiwisaver scheme, which allows you to build your own Kiwisaver portfolio from a selection of 30+ different funds.

The deal with fees is the same - there are no administration or annual fees for the Kiwisaver scheme itself. The only fees you will pay are the annual fees of the fund managers you select.

However, the funds currently available do not have many low-fee options.

As you can see, most funds have fees well above 0.5%, except for the two lowest fee funds - the InvestNow's own Foundation Series index funds, which have fees as low as 0.03% p.a.

However, those do come with brokerage fees of 0.5%.

Since those fees are one-off, they probably won't set you back too much compared to other Kiwisaver funds though.

If you are planning on investing in those two low-cost funds, then the InvestNow Kiwisaver might be a good option from a fees perspective.

Otherwise, the other funds look a little too expensive for my liking, and you would be better of with another low cost provider like Kernel or Simplicity (for Kiwisaver specifically).

InvestNow Vs Smartshares

Smartshares is a New Zealand based index fund provider owned by NZX.

Smartshares offers around 30+ different index funds, both locally, in Australia and internationally. 

Smartshares does not charge your brokerage to invest in their index funds, but it does charge your brokerage if you wish to sell them.

InvestNow actually gives you access to all of Smartshares funds, and does not charge any brokerage on buying or selling, while also giving you access to over a hundred other funds as well.

Therefore, in terms of cost and flexibility, InvestNow is a superior choice.

However, the one advantage Smartshares has is your investments are not held with any custodian or third party. They are held in your own personal name in the share registry. While this means you have to set up a CSN number with the stock market (it's free), this means you 100% outright own the units in the fund, which is technically a safer way to hold your investments versus a third party platform like InvestNow or Sharesies.

InvestNow Vs Simplicity

Simplicity is a third party investment platform that has five different low cost funds.

Simplicity charges between 0.1% and 0.29% annual fee on all its funds, with no membership or joining fees.

This compares to 0.03% on InvestNow's lowest index fund, but with 0.5% brokerage.

One thing to note is - Simplicity doesn't actually invest in pure indexes. They select/deselect stocks they don't deem "ethical" such as tobacco, weapons etc.

Some people prefer this, however some people don't like it as it is technically not "indexing" and no longer passive. Whether it matters is up to you.

Comparison - InvestNow vs Smartshares vs Simplicity vs Kernel

All that matters in the end is the numbers, so let's crunch them.

We'll assume we are going to invest $1,000 a year into an S&P 500 fund, and on average will return 10% per year.

Which platform will leave us with the most money at the end?

Even though InvestNow is the only platform with a brokerage fee, over time the low annual fee of 0.03% is just too good.

After twenty years, you will be left with around 1.6% more than the next best platform (Kernel).

It might not sound like much, but if you're investing big amounts, your portfolio might end up being worth $1 or $2 million.

In that case, 1.6% is a lot!

Verdict

InvestNow is a comprehensive online investing platform for New Zealanders with no annual or brokerage fees.

The interface is easy to use, and setting up an account is easy.

There is a large selection of funds, however, most of them I would not recommend due to their high fees.

They do however, offer some low fee funds which have annual fees of 0.2% or less, including their Foundation S&P 500 fund which is an excellent 0.03% per year. 

Compared to Kernel, Simplicity, or Smartshares, this fund will give you the best result over time.

Overall, I think InvestNow is a fine choice as an investment platform and if you have a long-term passive indexing strategy, you should find it suitable.