Commonwealth Bank has launched a new micro-investing app called CommSec Pocket which turns saving into investing. And InfoChoice has downloaded it, opened an account, set up an investing plan and written the first full review of CommSec Pocket! What is CommSec Pocket? CommSec Pocket is a micro-investing phone app that enables users to invest as little as $50 directly in the sharemarket via Exchange Traded Funds (ETFs). You can’t buy company shares directly with CommSec Pocket, only shares in one of seven selected ETFs. What is micro-investing? Micro-investing was pioneered by Acorns (now called Raiz) and FirstStep. Like other micro-investing apps, CommSec Pocket is aimed at savers who have not yet made the leap into investing. ETFs are funds that are listed on the sharemarket (so you can buy and sell shares easily). ETFs (usually) invest directly in other companies that are listed on the share market, allowing small investors to diversify and avoid putting “all their eggs into one basket.” If you want to know about ETFs and investing, CommSec Pocket has articles and guides to help you get informed. What is the minimum I can invest with Pocket? CommSec Pocket has been granted a waiver by the Australian Securities and Investments Commission to offer investment transactions below the usual $500 minimum, a Commonwealth Bank spokesperson told InfoChoice. You can invest as little as $50 with CommSec Pocket. Other online brokers (like CommSec) have a minimum first investment of $500. The big highlight of Pocket is automated regular investing, which is like regular direct deposits into a savings account. How much does CommSec Pocket cost? CommSec Pocket charges $2 each time you invest or sell up to $1,000. For trades over $1,000, Pocket charges 0.20 per cent of the trade value ($1,100 trade will cost you $2.20 ($1,100 x 0.20%). There are no ongoing or account keeping fees. Other online brokers, such as CommSec, charge around $20 per trade. CommSec Pocket in action I downloaded the Pocket app, dug out my Netbank client number and password, signed up and used Pocket to invest. So far no problems. Now CommSec Pocket is telling me it has two ways of investing: Making a one-off trade and setting up a regular purchase. I’ve now used CommSec Pocket to do both of these things and it’s disconcertingly easy. First you need to choose one of seven investment options. CommSec Pocket’s seven ETF investment options are: 1) Aussie Top 200 – The 200 big Aussie companies 2) Global 100 – Global blue-chips 3) Emerging Markets – Top companies in China, Taiwan, Korea and more 4) Aussie Dividends – Big Australian companies that pay dividends 5) Tech Savvy – 100 top tech and NASDAQ companies 6) Sustainability Leaders – Ethical investing with global climate change leaders 7) Health Wise – Healthcare, biotech, pharmaceuticals How do you choose? Get advice, be cautious and do some research are the correct answers to that question. For this review, I didn’t do any of that, which is not advisable. I chose to invest $100 in “Tech Savvy.” And I set up a regular $50 per fortnight plan investing in “Sustainability Leaders.” And this is how I did both of those things: Making a trade with CommSec Pocket CommSec Pocket displayed a message that units (shares) in Tech Savvy are currently worth $19.66 each and the fee is $2. 4 x $19.66 = $79.84. $79.84 + $2 = $81.84 $100 – $81.84 = $18.16 So, my hard earned $100 would only cover four units with $18.16 left over. So what happened to the rest of my $100? My $18.16? I asked Commonwealth Bank for an answer – before clicking on “BUY” “We will only debit your bank account the amount invested plus brokerage – so the leftover funds will remain in your bank account,” said a friendly spokesman for Commonwealth Bank. Okay, no worries. I clicked on “NEXT,” confirmed and made the trade. I now own four shares worth $80.64. Warren Buffet look out. Now CommSec Pocket tells me how much my four units are worth – every time I open the app. Setting up a regular investment with CommSec Pocket This is the real CommSec Pocket selling point. Making investing look and feel a lot like saving. Commonwealth Bank says CommSec Pocket is for simple investing with trades starting at $50. We tested that by setting up a fortnightly $50 investment plan. First, I chose the ‘Sustainability Leaders’ ETF and set up a regular trade to start after my next fortnightly payday. Now my new investment plan of buying (up to) $50 worth of units in the Sustainability Leaders ETF each fortnight is up and running. Pros and Cons of CommSec Pocket CommSec Pocket makes investing in shares easy. With Pocket, investing looks and feels a lot like setting up a direct deposit to a savings account. However, each fortnight, I collect a trade confirmation letter from the mailbox reminding me I’m buying shares, not depositing funds into a bank account. The app has simple options and a clean look and feel. Pocket’s ETF investment options are provided by iShares and are all respectable funds. But CommSec Pocket is not a realistic long-term way to build a share portfolio. Over time the fees can’t be justified. For example, I can use CommSec to buy 1,000 units (shares) in an ETF for $19.95. Using Pocket to buy two units at a time for $2 each trade could conceivably cost me up to $1,000 for the same result – 1,000 shares. The spokesman from Commonwealth Bank confirmed that yes, we could pay more in brokerage fees in the long run using Pocket when compared with CommSec. “CommSec Pocket is an investing app for people who are new to the sharemarket and want a simpler investing experience,” said the spokesman. “CommSec’s full platform services hundreds of thousands of self-directed investors with access to all ASX-listed securities, international securities, research and a wide range of trading tools such as conditional orders and alerts. “You can purchase the same ETFs on the full CommSec platform.” CommSec Pocket can be downloaded from the iOS App Store and Google Play Store. To use CommSec Pocket, customers must have a CommBank Transaction account and a CommSec ID or NetBank ID. The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.