I’ve been a very big fan of applications that squirrel away small bits of money a few times a month. Why? It builds an emergency fund without me thinking about it. It is out-of-sight, out-of-mind when I look at most of our other money (at USAA). However, I still know in the back of my mind that I have this cash available.
Also, it really is the “Lazy” way… and I mean that in the best possible sense of the word (a great thing!)
If this sounds familiar to you, it might be because you are regular reader. I’ve written about a few of these companies over the years. You might remember me mentioning Dobot and Digit. Those are two companies that work the same as Rize.
So why did I kick Dobot and Digit to the curb? They used to be free, but now they are not. Dobot charges $1.99 a month. Digit is $2.99 a month. That means you can expect to pay around $24-$36 a year. I didn’t see Dobot paying any interest. Dobot seems to give a 1% “savings bonus” every 3 months that worked out to a small amount of interest in my experience.
I think a lot of people can find some value with those services, but some of my readers have said, “But I can set up an account at another bank and do an automatic withdrawal of $25-50 and simulate the same thing with no fees.” That’s mostly true, but Dobot has some nice categorization features and they both do a good job of taking variable amounts out of your account. This means that if you are a little low on funds, they might not move much, but if you have a good month, they’ll move more.
At the end of the day, I have to concede that you can set up something reasonably close for free. That’s why I’d look for more value than what Digit and Dobot were offering.
For me Rize provides enough of that extra value.
Here are two quick differences that change the math:
- Rize pays a good interest rate. Currently, it is 1.43% interest, which I think is very competitive.
- Rize lets you choose what you pay. You can give them whatever you think is fair.
So rather than losing $25-30 a year like Digit and Dobot, I donate $1/mo. and get a little more than that back in interest. I understand that these companies need to make money, but at the same time, this gives me some value for something that I could otherwise do for free.
It’s not a lot of value, but I set it up in about 3-5 minutes. It is extremely easy with only a couple of things to set. I set my “Boost” to put aside $50 a week. That’s how I build my emergency fund.
I should also add that if you sign up for Rize from any of the links here, they should start you off with $5. They’ll give me $5 for referring you. You can refer your own friends get $5 for each one yourself.
Rize Invest: Investing Made Easy
Rize created something called Rize Invest. Rather than putting money in a savings account and earning that competitive interest rate, you can earn something closer to the markets. They’ll invest money in an ETF mix of stocks and bonds. It works like many of the robo-advisors that have become popular. It costs a minimum monthly donation of $2 (at the time of this writing), plus 0.25% annually on the assets. They mention investing in Vanguard ETFs, so I imagine that’s 0.25% on top of Vanguard’s low fees. From the image below, it seems like it might be a 20% cash, 50% bonds, and 30% stocks. I’m guessing those would be Vanguard’s BND and VTI ETFs respectively:
For many people, this is probably a very good deal. The ability to automate savings and investing should be very tempting for a lot of people who to avoid actively managing their money. That’s not my typical audience, but there’s a lot more of those kinds of people out there than my kind of readers.
I didn’t choose to have my money invested in this way, so I can’t give you any first-hand experience how it works. I immediately was curious about the tax treatment of if getting my money back counts as “selling stock.” I imagine it would, but I couldn’t find anything in Rize’s documentation to explain how that works. I’m reaching out to their customer support for more information. I’ll update this article if/when they get back to me.
The other thing is that this works less and less as an emergency fund if it is invested in a way that does risk losing money (which is my understanding).
For these reasons, I think of Rize Invest as a nice extra option to an automatic saving service. Some of you might think of Rize Saving as a nice option to robo-advisor. Finally, others will think, “I’ve got both of these tools under one roof almost completely automated for me at a very low fee.”
If all of this sounds good to you at a price of zero (or above), you can get Rize here.