Fundlater: Own a $10K investment portfolio with only $4K upfront

For many people, the biggest hurdle to investing is thinking they don't have enough money to start. Others are hesitant to commit a large sum. These are a couple of reasons InvestSMART launched Fundlater a little more than four years ago. 

The idea was to create a low-cost savings plan that lets you fast-track a diversified investment portfolio without waiting to build your savings. Fundlater can be a great way to kick off your investment journey.  

How does Fundlater work? 

You only need $4,000 to get started. Fundlater provides you with a $6,000 loan, giving you $10,000 to invest immediately. That $10,000 will then be invested in a professionally managed diversified exchange-traded fund (ETF) portfolio 

You then make 20 monthly repayments of $325 to pay off the loan. This includes a $25 monthly facility fee. You can make larger or more frequent repayments if you want to pay down the loan quicker. 

Fundlater is a non-recourse loan - not a margin loan. This means there are no margin calls and InvestSMART can't pursue you for any additional compensation, even if the value of your portfolio doesn't cover the full amount of the loan. 

Who can invest using Fundlater? 

Fundlater is available for individual and joint accounts. Investors must be over 18, but adults can also open an account for a child (held in trust).  

Where can I invest my money using Fundlater? 

You can invest in one of three of InvestSMART's diversified portfolios using Fundlater: Growth, Ethical Growth, or High Growth. 

The Growth and Ethical Growth Portfolios have a minimum suggested investment timeframe of five years or more while the High Growth Portfolio is suitable for those with an investment timeframe of at least seven years. 

All three portfolios have delivered strong returns over both the short and long term, as you can see from the table below. Of course, past performance is not an indicator of future returns. 

Returns as at 31 December 2024. 

How much does Fundlater cost? 

There's a $25 monthly facility fee which is built into the monthly repayments. So, If you borrow $6,000 and pay it off over 20 months, the total cost of Fundlater will be $500. Pay out the loan earlier, though, and the total cost will be lower. 

There are other fees associated with investing that are important to consider as well. InvestSMART's management fee is 0.55% a year. So, on a $10,000 investment that equates to $55 a year. The management fee is capped at $550 a year, which means that even if you have an investment worth more than $100,000 the most you'll pay is $550 a year. 

Transaction costs, which cover InvestSMART's costs of buying and selling investments, also apply. This is mainly brokerage which is the greater of $4.40 per trade or 0.088% of the value of the trade and is paid entirely to a third-party broker. 

There are also indirect costs charged by the underlying ETFs.  

What happens if I miss a payment? 

If you don't make one of your monthly payments of $325, you'll be sent a number of email reminders.  

If the payment has not been received 10 days after your monthly payment due date, InvestSMART may sell all securities within your portfolio. You will receive back the portfolio value minus the outstanding instalments. 

If you don't think you'll be able to make your repayment by the due date, it's important to reach out to the InvestSMART customer service team. 

Can I close my account before making all my repayments? 

You can close your account whenever you like. InvestSMART will sell down your portfolio, deduct any outstanding instalments and return the remaining amount to you. 

If the sum of the remaining instalments is greater than the portfolio's value, you won't get any money back, but you also won't owe InvestSMART anything. 

What happens if the market crashes? 

Market volatility is always a risk when you invest, but it's a normal part of investing - especially for long-term portfolios. With diversification across multiple asset classes, these portfolios are designed to help minimise risk over time. 

Even if the value of your portfolio drops, you don't have to worry about a margin call. Losses are only realised if you close your account. As long as you continue to make your repayments, your account will stay active. This gives your portfolio the opportunity to recover from any negative market movements over time. 

What our customers say about Fundlater 

We asked four investors - including board members Paul Clitheroe and Effie Zahos - to share their experience with Fundlater. Here's what they had to say. 

Andi 

I've been an investor with Fundlater in the High Growth Portfolio since May 2023 and have recently opted to redraw a second loan on my account after paying down the first.  

My time with Fundlater started by becoming an InvestSMART member then hearing about the product online; it stood out to me as a simple and low-cost way to not only add leverage to my existing portfolio but to diversify with minimal fuss.  

I'm an experienced investor and Fundlater sits alongside a number of other vehicles in my broader portfolio including other Exchange Traded Funds. Ultimately my goals for the investment are two-fold and have currently been met:  

1. Long-term wealth building and planning for retirement  

2. Achieve market-level returns minus fees, especially better than cash in the bank  

Opening my account was easy and the few times that I've needed any support from the Fundlater Team I have been impressed with the quality and swiftness of their help.  

I have recommended Fundlater to family and friends when discussing ways to plan for your future as it is a unique, leveraged and easy access option for investors of all knowledge levels. 

Andi is a consultant from Victoria 

David 

I have been invested with Fundlater since January 2024 having discovered it while searching online for a small leveraged portfolio to help offset interest on a loan.  

Fundlater stood out above the others due to its simplicity and the lack of invasive questioning that other products in the space tend to require.  

As a mature, experienced investor this only makes up a part of my broader portfolio, but I was comfortable using the High Growth option given I knew the long-term rate of return required to offset my loan and can accept the risk understanding that performance may vary year to year.  

Speaking of performance, it has been in line with expectations to this point and while index-based investing is not overly exciting it has done the job for this set-and-forget portion of my portfolio, and I've recently opted to redraw after paying down my first loan in full. 

Opening my account was straightforward and easy, plus the option to chat with a team member for online support was useful.   

Since the account has been up and running, I have enjoyed the look and feel of the website along with the reporting, reminders and other information provided to me.   

I have recommended Fundlater to friends and family for their own portfolios. 

David is an accountant from Western Australia 

Paul Clitheroe 

My wife and I wanted a cheap, simple, diversified investment where we - or any other family member - could add to our grandkids' investment with the click of a button so we decided to use Fundlater. 

We liked Fundlater because it provides a low-cost, fully diversified portfolio. After all, history tells us that over the long term, growth investments outperform lower-risk asset classes such as fixed interest. 

We felt that being environmentally conscious with this money was important, particularly for our kids and grandkids, so we liked the ability to be able to choose the InvestSMART Ethical Growth Portfolio.  

A real plus of Fundlater is the automatic gearing facility, which we pay off in monthly instalments. Our grandkids have already benefitted from this. Sure, it has been a very good period for markets, but they have earned some 23%, not just on their money but also the geared amount provided by InvestSMART. 

There is a monthly facility fee but, mind you, our grandkid's money has earned a lot more than the facility fee.  

I think the Fundlater app is very important. Our kids have downloaded it so if something happens to us, they are already on top of their kids' money. We would really hate leaving a messy estate to our kids. The app makes this investment very simple to track. Our adult kids can also add birthday money and so on if they wish.  

Paul is Chairman of InvestSMART. 

Effie Zahos 

It was a mix of curiosity and a desire to set money aside for my children's future that made me choose to try out Fundlater. I still vividly remember the day the CEO of InvestSMART, Ron Hodge, presented the concept to the board. I thought it was great because Aussies are known for being great at paying off debt but not as consistent with saving regularly. Fundlater provides a disciplined saving mechanism without the added risks typically linked to borrowing to invest in shares using a margin loan. 

As a journalist, I wanted to report on the product, and what better way to truly understand it than by investing in it myself? 

Besides the great return, I've really enjoyed how automated the product is. I started with a $4,000 deposit, which was boosted by a $6,000 loan, letting me dive straight into the market with a $10,000 investment. Once I paid off the loan, I topped up again with another $6,000, turning what began as research into a $20,000 diversified portfolio. 

My tip for anyone thinking of using Fundlater? As the loan balance gets smaller, it can make sense to pay it off early if your budget allows. That's because the $25 facility fee becomes a bigger percentage of the remaining balance. That said, the total fee over the 20-month term is $500, and I've certainly earned more than that in returns.  

Another suggestion is to take advantage of the top-up facility. Once you're in the habit of making regular monthly repayments, it's much easier to keep the momentum going rather than pausing and having to restart later. 

Effie is a Director of InvestSMART and 9News Money Editor.  

Special offer 

Any Fundlater account opened and funded in January or February comes with free access to our online Bootcamp course* (usually $99). This course covers everything from budgeting and saving to investment strategies and investor psychology. You can complete it at your own pace over three months. Visit fundlater.com.au for details. 

*The "Free Bootcamp" Offer (Offer) is provided to you by InvestSMART Financial Services Pty Limited ACN 089 038 531 AFSL 226435 (InvestSMART) and is only available to investors who open and fund a new Fundlater account from 1 January 2025 to 28 February 2025. InvestSMART will email you a complimentary Bootcamp coupon code within 10 days of receiving the investment funds in your Fundlater account.  The Bootcamp coupon code will expire on 31 August 2025.