Everything you need to know about Spaceship: a review
Is Spaceship a good investment? I have been using Spaceship for a few months now. I love their newsletters - they provide a lot of insight on smart ways to manage your money. But how does their app measure up? Today I'll be having a look at all the questions you have about Spaceship, plus one more for good luck!
What is Spaceship?
Spaceship (or Spaceship Voyager) is a microinvesting app. It is designed for people who want to get started in the stock market with a small amount of money. With traditional stockbrokers, you have to invest a minimum of $500 or more, whereas with Spaceship you can start with as little as a dollar. The app invests your money in a portfolio of shares chosen by their brokers, meaning that you don't have to do tons of research on shares you want to buy.
How does Spaceship work?
Spaceship is a microinvesting app, meaning you invest small amounts of money that are used to purchase shares in an managed fund. For more info on ETF's head to this informative article. But essentially, you invest money with Spaceship, and they decide where to invest it. You can choose from their 3 portfolios - Origin, Universe and Earth. Each of these portfolios invests in a range of companies, meaning that when you invest money in Spaceship, you are buying small portions of companies of their choice. More on these different portfolio types later.
Who owns Spaceship?
Spaceship was founded by 4 Australian entrepreneurs - Paul Bennetts, Andrew Sellen, Dave Kuhn and Kaushik Sen. None of them have remained at the company. Andrew Sellen has gone on to found Future Super, a fintech super fund that is aimed at younger people. Although the company has the financial backing of numerous private investors, it still remains Australian owned.
How to use Spaceship
When you sign up for a Spaceship account you first enter some personal details, choose a portfolio, then link a payment method. Once you are set up you choose a weekly amount to start investing. It is debited from your payment method weekly, meaning this is an easy investment to set and forget.
Is Spaceship safe?
That depends on what you consider safe. Spaceship has a super fund, meaning a lot of people have their retirement funds tied up with Spaceship. You'd want to hope then that Spaceship is a pretty safe investment. However, if you are talking about cyber security, then yes, Spaceship is a safe app to use. It just depends on whether you are willing to take the risk of investing your money in shares.
Is Spaceship a good investment?
Spaceship is a good investment if you are looking to grow your savings faster than they would in a savings account. However, investing in shares can be risky, so be prepared for your investment to fluctuate. There is a saying when it comes to investing - never invest more than you are willing to afford. My suggestion would be to invest a small amount each week and watch your investment grow incrementally, rather than investing your life savings from the get go.
Does Spaceship pay dividends?
Companies in your Spaceship portfolio may pay dividends, however you will not receive them directly. They will be added to your portfolio balance. So while you may receive dividends, they will not be paid into your bank account like dividends from other investment funds. Spaceship does not tell you when you have received dividends, unlike Raiz, which clearly shows when a dividend has been paid into your account.
Does Spaceship charge fees?
Spaceship does not charge fees on balances below $5000. After that you are charged 0.10%pa on amounts over $5000. So if you have a balance of $6000, you only pay 0.10% on $1000, or $1 per year. These fees are much lower than Raiz, who charge $3.50 per month on balances under $15000.
Universe Portfolio fees - 0.10%pa on balances over $5000
Earth Portfolio fees - 0.10%pa on balances over $5000
Origin Portfolio fees - 0.05%pa on balances over $5000
Do I have to pay tax on the money I make through Spaceship?
Yes, but not straight away. You only have to pay tax on your earnings through Spaceship if you make a withdrawal - which is essentially selling your shares.
Are Spaceship fees tax deductible?
They certainly are! Any fees that are associated with managing your investments can be claimed on tax. For more info on how your investments are taxed, head to our article on Capital Gains tax. It makes things nice and simple to understand, I promise.
How will using Spaceship affect my tax return?
When submitting your tax return, you must report any profits made from investments - or capital gains. However, as capital gains are only realised when you sell shares, you will not need to report any growth that your Spaceship investment has made throughout the financial year - unless you have withdrawn money. You can however, claim any fees you have been charged. Click here to read more about capital gains and how they affect your tax return.
What does Spaceship invest in?
Spaceship has a range of portfolios that invest in different companies, depending on your investment preferences. Here is a list of the companies that the universe portfolio currently invests in:
Spaceship Universe investments
Alphabet (Google) Class C
And that's just the companies that start with A! For a complete list of companies that each portfolio invests in head here.
What Spaceship portfolio should I choose?
There are 3 portfolios available on Spaceship; Earth, Origin and Universe. Each of these invests in a different range of companies, so it's important to choose wisely when you start your investing journey.
Earth invests in companies that have a positive impact on people and the planet. This is great if you want to invest in ethical companies that are making a difference in the world.
Origin invests in the world's largest 200 companies. This makes it good for steady growth. Choose this one of you want a piece of the world's leading companies.
The universe portfolio invests in world changing companies and is future focused. IT is mostly focused around tech and online business.
How do I change portfolios on Spaceship?
Unlike Raiz, which makes it relatively easy to change between portfolios, Spaceship makes you choose an investment portfolio when you set up and makes it difficult to switch between them. There is currently no way to have more than 1 Spaceship portfolio. That means when you choose your portfolio, do it wisely!
How does Spaceship make money?
Spaceship charges fees on portfolios over $5000. These fees are quite small in comparison to Raiz and other investment apps. For example, Raiz charges $3.50 per month for all users, whereas Raiz only charges 0.10% on balances over $5000. So a Raiz user with a balance of $10,000 would pay $42 in annual fees, whereas a Spaceship user would only pay $5. Furthermore, Spaceship has about 175000 customers, and Raiz has almost double, at 298000, so not only are Spaceship fees lower but they have less customers to charge. So how does Spaceship make up for this difference? I went digging for their profit reports but the answer still remains unclear.
How long does it take to withdraw money from Spaceship?
Withdrawals will usually be paid into your account within 2 to 3 business days. This is because when you are withdrawing money from Spaceship, you are essentially selling off shares, which takes longer than if you were simply withdrawing cash from the bank.
Spaceship vs Raiz
Spaceship has lower fees, but in my experience, Raiz has more steady returns. That's the comparison in a nutshell. I have invested in both, and have found Spaceship to be more volatile and susceptible to market fluctuations. This is because Spaceship investments are hand picked, whereas Raiz tends to invest in ETFs.
One feature that I do like about Spaceship is that you can see what companies your money is invested in, as well as how each company is performing. Here is an example:
I find that being able to see what companies comprise the portfolio, as well as how they are performing, is a great learning tool. That is another strength of Spaceship. Their learning centre and newsletters contain some great education about personal finance topics and how investing works. Unfortunately, their funds just don't stack up compared to Raiz.
Sign up to Spaceship
If you are thinking about signing up to Spaceship and trying your hand at investing, use this referral code and you will receive $5 in credit once you have made your first investment. In the interests of transparency, I'll receive $5 too.
Sign Up - Code S8D5C8PGZC
The Bottom Line
Diversifying your investments is hardly ever a bad idea. If you want to dip your toe in the water and see how investing in shares works for you, then Spaceship is a good option. However, if you are looking for slower, steadier growth, or a reliable place to park your savings, I'd be more inclined to recommend Raiz. Read my article on Raiz here.