Liberty launches new savings app

Poor or first time savers should consider investing through Liberty’s new app, which allows them to invest small change in stocks and shares simply, says Angelique Ruzicka.

Have you ever felt intimidated by investing large sums of money on the stock exchange or put off opening an investment product simply because the paperwork has appeared too onerous? Well financial services group, Liberty, hope to address this savings inertia through the launch of their new app called ‘Stash’.  They hope it will address the complexity and fear associated with investing.

Stash is an investment app designed to break through all the complicated investment jargon, processes, tedious forms, cashing out difficulties and reduces the amount of time it takes to meet with a financial adviser. It’s not the first time a financial services firm has created such an app – FNB customers can invest their change through the ‘Bank your change‘ offering. However, Liberty’s Stash is available to all customers that bank with the big four (Standard Bank, Absa, FNB and Nedbank), while things are still being ironed out with Capitec.

Downloading Stash is quick, convenient and simple. The average user takes 49 seconds to set up their Stash – from start to finish. As an added incentive, when you download Stash from the Play Store, you get R50 upfront to kick start your investment journey. Every time you refer a friend, you are rewarded with R10 added to your Stash account. It’s all free from signing up to getting the R50 and R10 incentives.

How does it work?

You decide how much you want to stash. The app rounds up the amount of every transaction. If you decide on rounding the limit per transaction to the nearest R10 for example, and you buy something for R45, this would be rounded up to R50. The R5 in change is stashed.

What’s more, the app will never bankrupt you. “All this spare change accumulates without interfering with your day-to-day life. Stash checks your daily bank balance and never transfers more than you can afford, so you don’t have to worry about going into overdraft. Before you know it you’ll have a significant Stash balance. Your Stash grows as fast as South Africa’s biggest companies do because your spare change is invested in South Africa’s top 100 listed companies,” explains Juan Labuschagne, head of development at Stash.

An additional benefit of Stash is that you don’t pay any tax on the cash that is saved. As it’s invested in a tax free savings account you can invest up to R33, 000 a year, up to R500, 000 over your lifetime, into your tax-free investment. These limits go across all the tax free savings accounts you may have. You are not taxed on the growth of your money, not penalised when you cash out and can put in or withdraw money whenever you like. Labuschagne adds that the app keeps a record of the money you take out so that you are aware when you hit your annual or lifetime limit.

Stash is currently available for Android powered mobile phones. “In South Africa, 9 out of 10 smartphones are Android devices. Our goal is to get Stash in the hands of as many people as possible, so focusing on 90% of the market was ideal,” says Labuschagne. 

What’s in it for Liberty?

Downloading the app is free, as is the R50 and R10 incentives. Cashing out doesn’t cost you anything either and you don’t have to be a Liberty client to use the app. However, Liberty admit that the data the app provides them is the gold mine in itself.

According to The Economist’s post entitled ‘Data is giving rise to a new economy’, big data centres are the future for most companies and just like oil fields they produce crucial feedstocks for the world. We’ll be a more connected world soon, where companies will know how we like our coffee, when our birthdays are, where we like to shop and what our favourite meal is. In exchange for this sort of information, companies are willing to offer you services for free. Why? Because access to this type of information can lead to bigger profits, pure and simple.

So should you let big companies like Liberty know the ins and outs of your daily life? It all boils down to how much you trust the company offering you the free service and if you don’t mind letting them snoop around to see what you like to do and buy, then there technically is no harm in allowing them access to that information, provided they don’t pass that info on to third parties that could harass you. In this instance, Liberty have sworn not to do so.

You may think that what you do on a day to day basis may be so insignificant that it doesn’t really matter if a company knows this sort of information about you. But this could open you up to companies ‘reading your mind’ and tricking you into spending more by offering you the things that you like. While initially you may not be targeted it will only be a matter of time before companies will ‘cash in’ on the freebies they gave you.

The question is will you have the discipline to see through their marketing tactics. Or will you succumb and spend? If you are a disciplined saver then perhaps gimmicks such as this are harmless. But if you’re easily swayed perhaps it’s best to avoid subscribing to lots of offers, no matter how enticing or ‘free’ they are.