FirstStep wants you to make micro-investments, at the touch of the phone

A new micro-savings app, FirstStep, has launched in the Australian market, offering investors the opportunity to tailor their contributions to a broad range of options, including an ethical option.

FirstStep is similar to Raiz Invest, in that it is a microsavings and investment app that is linked to a customer’s existing bank account. FirstStep automatically takes “roundups” from purchases on yhour linked bank account that are less than a whole dollar – FirstStep offers the example of buying a coffee for $3.74, with the app taking $0.25 and adding it to your FirstStep contributions. Customers can also schedule regular, recurring contributions and make one-off lump contributions as well.

“One of the things we do is we focus on helping people who have a goal for their savings,” says Shiraj De Silva, co-founder of FirstStep. “What we do find is that people are pursuing this for a savings purpose, and that reason to save can be a housing deposit or a holiday, and that may interest them in opening up a FirstStep account. Or they just want to have a portfolio that has better returns than having your money in a bank, for example.”

FirstStep uses exchange traded funds (ETFS) – is a type of investment fund that can be bought and sold on the stock market. They’re passive investments that track an asset or market index (for example, the ASX200 Australian share index).  In addition to offering access to a range of stocks in a single fund, ETFs tend to be lower cost in terms of management fees than other types of active funds.

FirstStep offers investors three core investment options – growth, balanced and defensive, with exposure to Australian shares, international shares and Australian bonds via Vanguard ETFs. Customers can then also add in themes – Technology, Ethical, Asia or Healthcare – provided via BetaShares and iShares ETFs. Customers can add as many themes as they like.

“We have three options for the core investment, and then we offer thematic investments to supplement your portfolio,” Shiraj says. “If you are interested in technology shares, we have a tech theme. lf you’re interested in ethical investment, we have a sustainably/ethical investment option. We also have an option that captures Asian growth and positioning, and the final one is healthcare.”

FirstStep charges a fee of $1.25/ month for investments up to $5,000, and a fee of 0.275% per annum thereafter.

FirstStep launched earlier this year, and currently has three to four thousand downloads and 2,000 users, Shiraj says.

“We wanted to bring an alternative to the market,” Shiraj says. “The idea of micro-investing is that it’s just the start of what’s possible. Round-ups are a saving tool, and customers can also set rules around those round-ups. Say, every time I buy Uber Eats, I invest $5 automatically, or every time I invest in McDonalds, invest $20. That’s the idea around savings rules – you can time contributions, you have the controls and the flexibility.”

FirstStep is also focusing on one to one customer engagement using chat functions as well as reminders that trigger when certain financial transactions occur.

“We use notifications,” Shiraj says. “When you’re $100 to your goal, we’ll send you a note of encouragement. If you deposit $500 after your paycheque, we send you a notification. We’re encouraging people to continue contributing because I think that’s the most important thing. Its’ a function of engagement, notification, customer support and an easy user experience. “