In this Goodments Investing review I will cover all things relating to the Goodments app and whether it is a worthy platform for Australian investors. I will do a deep dive into the Goodments fees, Academy, investment options and the philosophy behind the Goodments ethical investing platform. I hope you enjoy this Goodments review.
What is Goodments?
Goodments is an investing app that was founded in Australia in 2017 to highlight ethical investing for Australians. It was acquired by Douugh in 2021 which injected much needed capital to the platform to increase its growth.
Goodments is a certified BCorp business. This means it meets the highest standard of social and environmental impact as an operating business. Therefore practicing what it provides for its users, ethically aware corporate responsibility.
The Goodments investing app highlights ethical, social and corporate governance responsibility investing (ESG). It was initially founded to help users highlight companies that might fit their specific ESG screening criteria.
The Goodments app still lets users search via specific ESG criteria, such as renewable energy or electric vehicles. However, since the investment from Douugh it has become more focussed on creating an investing platform.
How Does Goodments Work?
The Goodments app provides its users the ability to invest in US listed companies and ETFs. Such as Facebook and Netflix with zero brokerage fees.
Goodments enables fractional investing to make investing in companies like Tesla much more accessible at a fraction of the cost. Fractional investing means that you can buy a fraction of a share in a company like Tesla.
If you invested $50 (USD) into Tesla you would own 0.07 shares. This fractional amount of shares you own will still be subject to the usual volatility of the stock market. If Tesla increased by 50% over a couple of years, so would the value of your fractional investment.
Goodments facilitates non-US residents investing in US listed companies and ETFs through one of their partner platforms Drivewealth. Drivewealth is a US based company that provides execution and clearing services to Goodments users.
As is very common among American brokerage companies, Goodments operates via a custodian structure. That means Goodments users’ investments are held in custody by the appointed Custodian, which is Citibank.
This custodian structure is what enables Goodments to offer fractional shares. This is because it pools investors money together to buy multiple shares. Unlike other Australian brokers they are not CHESS sponsored, which enables costs to be kept low.
CHESS Sponsorship does provide greater security over the ownership of the shares. However, it also comes with greater costs involved, and the inability to provide fractional share ownership. It is certainly worth weighing up whether you are happy with the custodian structure or not.
Goodments and the academy are completely free to use and currently there is no premium level within the app. There are some fees to be aware of and I will go into further detail on those later in this Goodments review.
Is Goodments Safe?
It is important to note that investing in any equity or ETF carries the risk that the value of your investment may decrease. This has nothing to do with the platform you use and everything to do with how and what you invest in.
That being said, we will look into the security and safety of the Goodments app and see whether Goodments is a safe investing app dfor Australians to use.
Goodments has partnered up with a few companies to help facilitate Australians investing in US companies and ETFS. They have partnered up with Drivewealth as their US broker, while using Velox Clearing Llc and Citibank as their clearing house and Custodian.
Goodments partner Drivewealth is a member of the SIPC (Security Investor Protection Corporation), as such it protects customers’ investments for up to $500,000 from financial failure of a US broker.
In the unlikely event of Goodments no longer existing in its current capacity, investors would still have access to their equities and cash. This is due to the custodian partnership with DriveWealth and Citibank, investors would obtain access to their assets via the custodian.
Goodments has made sure that all data and information is encrypted and securely stored with Amazon Web services. It also has the ability for two-factor authentication via the app and web based platform, as well as normal face-id via your mobile device.
Fees should always be considered when trying to select the appropriate investing platform, whether you are looking to invest in stocks or crypto, fees always add up. Let’s review how Goodments fees stack up and whether they are competitive with other platforms like Stake and Superhero.
In order for any Australian to invest in American shares they must have a W8-BEN form completed, this is simply a tax treaty form between Australia and America. Goodments will complete this W8-BEN form on your behalf, at the cost of $5USD.
As with any other broker allowing trading of shares in America there are small regulatory fees charged by the SEC (Securities Exchange Commission) and a TAF (Trading Activity Fee). Both of these fees are small, as they are significantly less than $0.01 and you would get these on all platforms.
You will need to convert your money from Australian dollars into American dollars. This is where the bulk of the fees come from the Goodments app. The currency conversion fee is 0.99% when converting Australian dollars into American dollars.
It is important to note that there is also a 0.05% additional charge on currency withdrawals. So this would make the fee 1.04% when switching from USD to AUD.
One of the cool features of Goodments is that it enables you to set up an automated investment option. It does this via a direct debit to your bank account. There is however a $15 Direct Debit Failure Fee, if you have insufficient funds on the debit date. This is common with most direct debit arrangements, so make sure you are on top of this.
Another fee to be aware of is an account inactivity fee. This is charged If your account has been inactive for 12months (no trading at all). Goodments will charge an inactivity fee of $12USD and a $1USD for every month it remains inactive.
I am not a big fan of inactivity fees, as they usually entice people to trade a minimum amount of times per month. However this is not encouraging trading and so shouldn’t be an issue if you invest regularly. Just something to be aware of.
How Does Goodments Make Money?
This is a commonly asked question when companies aren’t charging fees for trades or inactivity fees etc. This is a good point to review and understand how Goodments makes money. Goodments makes money in two simple ways;
- Revenue share of the 0.99% FX conversion fee
- Goodments earns affiliate commissions from referral programs
The FX conversion fee that Goodments earns is a revenue share agreement with their currency partner OFX. Goodments will receive a 40% revenue share of an FX rate of 0.99% or over. Or they will receive a 30% revenue share of an FX rate of 0.98% or under.
The other way Goodments makes money is from receiving affiliate commissions. Affiliate commissions are payments made to the “affiliate” in this case Goodments, when a user clicks on a link of theirs and signs up to a product or service. It costs no extra to the person signing up, but the company will pay the affiliate as a thank you for referring the new user.
It looks like Goodments will use affiliate links in their educational content in the academy or future emails. Potentially receiving commissions from Superannuation providers or insurance providers. This is a good way for them to make money and keep costs down for Goodment users.
It also looks like Goodments plans to release functionality for Financial Advisers to use the platform in order to help screen ethical investments for their clients. This will also generate a revenue stream, although I am unsure about the exact details of this. I will update this Goodments review once they release this functionality and I can report back with my experience.
What Can I Invest In?
One of Goodments core beliefs and differentiating factors from other investing platforms is their ESG screening process. The Goodments curated investment options exclude companies involved in Mining, Tobacco, Fur and Military.
Although it is important to note, you can still invest in these companies on the platform, they just are harder to find. As such, you have the option to invest in over 4,500 US listed companies and ETFs.
Goodments only enables users to invest in US listed companies and ETFs, so you won’t be able to invest in any of your favourite Australian companies yet. With the surge of investing platforms offering up both ASX and US listed investments like Stake, Superhero & Pearler we may see this functionality in the future.
For those of you that have read some of my other investing platform reviews you will know how highly I rate in platform educational content. I feel it is the platform’s responsibility to ensure their users are well informed of how their platform works but also understand investing too.
So any platform that has great educational content is a big positive. Platforms like Pearler, Stake and Spaceship all have great educational content. Now I can add Goodments to that list too.
Goodments actually has their own educational platform called Goodments Academy, so I love the fact that this exists to educate their users. The Goodments academy has a lot of short educational content pieces answering some of the commonly asked questions in investing.
Given the Goodments Academy is easy to read and explains concepts very simply it gets a massive tick of approval from me.
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Fractional share ownership still means you have the right to receive dividends. The only difference is that you will receive the relative fractional portion of dividends paid. If the dividend per share is $1 and you own 0.5 shares, then you will only receive $0.50 in dividends.
Another point to note is that given you can only invest in US listed companies there is no franking credit received for these dividends. This is due to how the US tax system works and the difference between our Australian system.
Your dividends received will be taxed at 15% due to the Tax treaty between America and Australia. You will need to report these dividends on your tax return and if you are on a higher tax rate will likely have to pay some more tax on this income. It is always a good idea to consult professional help with your tax.
I love seeing how different investing platforms try to differentiate themselves from their competitors or address a slightly different niche. This often leads to some pretty cool features being released for their users.
Aside from the Goodments Academy, there are another two cool features, their automatic invest feature and their financial adviser integration.
Goodments provides users the option to set up an automatic invest feature which is great if you want to create a set and forget investing plan. This is a feature I would love to see rolled out with other platforms too.
This auto invest feature makes Dollar Cost Averaging such an easy option for their users to use. It helps take out any emotion in the process too, which often leads to greater returns.
The other cool feature, which I am yet to try out but am very curious about is their financial adviser integration. If it works how I think it might, it seems like they will allow a professional integration for financial advisers.
This should allow financial advisers an easy platform to use when discussing ethical investment options with their clients. Ethical and sustainable investing is only going to continue increasing and I see this as almost a necessity for the financial services industry moving forward.
Pros & Cons
Goodments has positioned itself as the go to Ethical investing platform and have created a great product for their users.
- Ethical Investment Screener
- Goodments Academy
- Auto Invest Feature
- Fractional Investing
- No Brokerage
- Some “hidden” fees
- 0.99% FX Fee
- Only US Investment Options
Who Is Goodments For?
Goodments has created a simple and easy to use investing platform that has a focus on ethical and sustainable investing. Upon review, Goodments will be a great option for anyone that holds those values as important ones too.
The auto-invest feature makes the platform a great option for anyone wanting to create a set & forget investing strategy. It is important to note though that if you are looking to invest small sums of money that other platforms like Spaceship or Raiz would be better options.
The Goodments App doesn’t provide users the option to invest in ASX listed companies or Cryptocurrency. So if you are wanting this functionality you should look into other platforms, like Stake & Pearler for ASX investing and Celsius & Bamboo for Crypto.
- Swyftx – Most Trusted Australian Crypto Exchange
- Digital Surge – Buy, Sell & Trade Crypto in Australia
I hope you enjoyed this Goodments review and found it interesting. If you want to create an automatic investment option that allows you to invest directly in US equities, then this platform is one of the best available.
It also has a strong focus on ethical and sustainable investing as well as being a BCorp company, basically walking the walk themselves. This investing platform is a great way to use your money as a way to invest in your future and the future of the planet too.
Sign Up Bonus
If you enjoyed this Goodments review and think it is going to be a great investing platform to suit your investing strategy, then you can sign up on their website.