Microsaving apps like Digit, Dobot, and others have become increasingly popular recently.
One of the newest entrants to the fray is Rize.
Rize is different than the others for a variety of reasons… and we're going to learn about those reasons today.
How It Works
Rize helps you save by automatically moving money from your checking account, which you link online, to their accounts. Rize Money is run by Rize Advisors, LLC, and they are an SEC Registered Investment Advisor. This means your account is technically an investment account, rather than a deposit account, and covered by SIPC insurance. (more on that later)
You set up an unlimited number of individual savings goals as well as savings amounts and frequency:
For my “Fun!” goal, I set it at $1 a month with a target of $1,000 – I will complete my goal on January 2101. 🙂
For a more realistic goal, let's say you wanted to save $2000 in the next year towards an emergency fund. For that, you'd probably have a goal that looked more like this:
That might be a stretch, since the contribution amount is $400 a month, but you can play with it on each goal so it's more reasonable.
Power Ups are optional and elective, so you choose to turn them on and off whenever you want. The two they've created so far are Accelerate and Boost. I've been told more are on the way.
Accelerate will increase your monthly savings by 1% each month. If you save $100 each month, next month it'll bump you to $101. It's similar to the idea of a transition budget and how little increases in savings, which you won't “feel” as acutely, can have powerful results.
Boost monitors your checking account ad pulls out “spare change.” If you've heard of Digit, it's similar to what they do. It's transfer of up to $5, or 5% of your monthly savings goal, once a twice a week.
Lastly, but very importantly, they have overdraft protection in place so they won't make any transfers if your bank account balance is under $50. You can change the $50 amount but they won't overdraw your account.
Open a Rize account today
(and get $5 to start!)
About Rize Advisors
Rize Advisors is an SEC Registered Investment Advisor, rather than a bank, and they're headquartered in Washington, D.C. The funds you put into a Rize account are not invested, it's left as cash, so you can withdraw it whenever you want. This also means it's covered by SIPC insurance instead of FDIC.
The brokerage services are provided by Apex Clearing Corporation, a Texas based company that has a long history of brokerage services. They are the clearing house for a lot of brokerages (Ally Invest) and startups (Acorns, Betterment, Robinhood, Wealthfront, WiseBanyan).
SIPC is similar to FDIC insurance in that it protects your money but since investments can go up and down in value, it only covers the assets and not the value of them. In this case, it's a distinction without a difference. You are covered up to $500,000 in total but a $250,000 limit on cash.
Rize Advisors is CRD#281185 and you can use FINRA's BrokerCheck to confirm.
What I Love
I like that you can easily set multiple goals. One of the big appeals of Capital One 360, formerly ING Direct, was that you could easily open multiple bank accounts for different savings goals. Rize lets you set multiple savings goals, each with their own savings amount and frequency, and it's all easy to manage.
I really like that they pay interest (0.91% APY as of 9/6/2017). Many, if not all, of the microsavings apps pay 0% interest. Or they have some weird equation… Digit pays out a “savings bonus” every 3 months based on your average daily balance and you have to be active for the entire period. Uh… just tell me a number. Why the games?
I also like that the automated savings isn't some mysterious equation designed by someone else. I set how much to save but then I can turn on Boost or Accelerate (or others as they release them) to do a little bit more. A lot of these apps are designed to be “found money” like coins in your pocket, but how often does loose change turn into massive savings? Rarely. And you can't rely on luck and a mysterious equation to do your savings.
Lastly, I like that you can set your own fee. It can be as low as $0, so technically free, but you can pay whatever you feel is fair for the service you are getting. Try it for a month or two at $0, then bump it up once you see the utility and value.
What Could Be Improved
There are text message notifications for activities (which is good) but there isn't an app (slated to come out in the Fall of 2017). The text message interface is fairly simple, you can get current balance and the next transfer information, but an app would be nice and it appears to be on its way.
In lieu of an app, their site is designed to be mobile responsive and works quite well.
The Big Difference
The big difference, and why I'm reviewing Rize and haven't done a review of Dobot, Qapital, or some of the other microsaving apps (Digit is the exception and that was when they were free), is that they're about investing. They pay interest, when others don't, to get you in the mindset that these types of saving tools should be growing as well as accumulating.
When you're saving for a goal in 6 months, the interest doesn't matter. Some interest is nicer than zero but it won't make a difference.
When you're saving for something big, for like 10+ years, the savings interest rate is a pittance.
BUT! … if your savings tool is also an investment account, now you're talking about getting 8-10% gains over 10+ years. You don't want to save for a house in 10 years with a microsavings app, but you will if those features are part of a roboadvisor-type account giving you 8-10%.
That's why it's a compelling idea. I hope it comes to fruition.
And according to a little birdy, that investment functionality will be released this year.
Plus, they give you five bucks to start.