I blame the rising cost of lettuce.
Expensive produce aside, it’s been getting harder to earn a decent return recently, and inflation is making your money less valuable every day. So, it’s important that you be aware of your options when it comes to managing your savings.
The problem is that traditionally, earning a good return meant that your money was locked away, and you wouldn’t be able to access it if you needed to.
This is an issue for families (mine at least) where things are constantly going wrong. Car registration, broken washing machine, new tires, the list go’s on. If your savings are your safety net and there is even a slight chance you might need it, it should be easy to access.
The Pillars of saving.
There are three aspects to saving money that, I feel, are the most critical. The first is how you ACCESS the money if you need it, and the second is the RETURN you earn. Depending on your situation, you usually sacrifice one for the other.
Very rarely do you get a good balance of both.
The third and lesser spoken about pillar of investing is STABILITY, or how safe your money is from the volatility of the markets.
So the ideal scenario when thinking about the three pillars of saving is that your money is stored somewhere accessible, earning a good return and is relatively safe.
The holy trifecta!
So, how can you make a decent return while also having access to your money and being sheltered from volatility?
Put it under your mattress...
Traditionally, you had two options, You could either
1. Have your money rotting away in a bank account, earning a low interest rate, but have instant access to it, or
2. Invest in the stock market and potentially earn a decent return, but have your money locked away unless you sell.
3. Bonus option: Buy Dogecoin and watch your hard earned money go down the toilet. Speaking from personal experience...
The first two options absolutely serve their purpose, but what about those in-between folks that want to earn a good return, and have the flexibility to do what they want with their money.
If that’s you, I think I’ve found something that does just that.
The Blossom App Review
Blossom is an easy-to-use, fixed income investment app that allows you to earn a return while maintaining the flexibility and stability that the traditional stock market lacks.
Mitch, you say, what's so special about that? Can’t I just put my money in a Term Deposit and call it a day?
Well, yes… BUT.
What makes Blossom special is how they offer the benefits of a higher return investment, while smoothing out the volatility that usually comes from something that pays you more than the peanuts you would get in a Term Deposit.
Who wants to have their money locked away anyway?!
Allow me to explain why Blossom is so exciting.
How does Blossom make money?
This is where the special sauce is. I feel weird saying this, but how they have set up their business model is actually what makes it so good for its customers.
A business model that is good for customers AND makes a profit?! Who would have thought.
The anti-capitalist in me is screaming right now.
Ok, let’s chat about how they pull this off.
First things first. Blossom targets a 4.25% p.a return on your money. (Updated 25/11/22)
That’s great, as its miles above what you can get in your savings account, but what is fascinating is how they get there and how they make it consistent.
Here’s how Blossom works.
1. Your money is invested in the Blossom Fund, A diversified portfolio of lower risk financial assets. Mainly corporate and government bonds.
2. Of the interest or return made on that money, the first 4.25% pa is paid to you. Yep, they pay you first. Legends.
3. 0.5% is paid to the company that manages the fund. In this case, Fortlake Asset Management.
4. Then, 0.5% is used to cover expenses.
5. Any excess returns above what was paid out in steps 2-4 go to what they call the “Threshold Manager”. This is basically an account that blossom keeps in reserve for use in case the funds returns are below 4.25% for the customer. They will use this money to “top up” the returns to aim for 4%. This increases the stability of returns for you. That’s good!
It is worth noting that Blossom is cautious to say that they ‘target’ a 4.25% return. This means they may not hit 4.25% all the time, and they want to avoid committing themselves to saying that they will. Although in my experience with the app over the last year, the returns have been extremely consistent.
Your annualised 4.25% returns are paid into your blossom account daily and for an obsessive finance nerd like me, this is extremely cool. My money is growing, and I don’t have to wait until the end of the month to see it.
It’s so satisfying to see progress daily.
Does Blossom have any fees?
No fees to deposit, withdraw or signup.
Blossom makes money on any performance above 4.25% (see above).
Where does Blossom invest my money?
The Blossom Fund is a diversified portfolio of lower risk financial assets in the form of a unit trust. In non-wall street finance bro talk, this just means that when you transfer money into your blossom account, you are buying units in the fund, not the underlying assets that the fund is made up of. Got it? Good.
As a fixed income fund, Blossom’s approach focusses on the preservation of capital (not loosing your money) and providing a steady stream of income.
Ok, but why don’t I just invest in fixed income assets myself?
Good question! This is something I was wondering when I was road testing Blossom. After doing some research, I found that it’s actually really difficult to buy fixed income investments as an average Joe/Mitch. The main problem I found was that the minimum investment amount was far too high. I’m taking thousands of dollars.
They also require you to lock your money away for extended periods, which I wasn’t comfortable with.
This sounds pretty complicated but all you really need to know is that your money is invested on your behalf, by professionals, in assets that generate income in a risk-adverse way.
Is Blossom ethical?
To put it bluntly, I don’t want any of my money invested in fossil fuels, tobacco, or guns. You can call me a hippy all you want, but I won’t be contributing to any industry that makes the world worse. As a father of two, I think this is incredibly important.
If you’ve read any of my other finance articles, you will know that ethics play a massive part in our decision-making as a family. Choosing where you put your money ethically is a great way to support causes that you are passionate about or not contribute to the ones that you aren’t.
Blossom's mission, as they state on their website, is to ‘leave your savings and the environment in a better position than we found them’.
This sounds nice, but is it just marketing mumbo jumbo or does it actually mean something?
Well, Blossom has a Chair of Environmental and Social Governance!
All talk and no walk, they are not!
Dr. Kylie-Anne Richards overseas Blossom’s ethical and purposeful investments, she is also the Executive Director. Busy job!
Dr Richards and the team curate what they invest in and avoid fossil fuels and many other, not so great industries.
As an added bonus, for every person who joins and funds their account, they plant a tree. We love to see it.
Whats the app like?
I love a good user interface, one of life great pleasures….
Look, if 1000 words into this article, and you didn’t know I was a nerd already, then you haven’t been paying attention.
Anyway, let’s continue.
The app is great.
It's fresh, easy to navigate and effective.
I’ve been using Blossom since it launched and have been following along with all the upgrades and improvements. It started out with basic features and has grown to include things like a savings goal tracker, calculator, and a feature they call ‘Auto-Grow’, a round-up system.
Lets dive a little deeper into the features of the app.
This feature rounds up the purchases you make in your bank account and then auto transfers them when they hit a certain threshold to your blossom account. Great if you don't want to think about investing.
I don't have the Auto-grow feature set up just yet. Our bank accounts are set up in a way that there is just enough money available for what we need. Having money coming out based on how many transactions we do may throw things out of whack.
I'm a big fan of tracking metrics. Seeing a little progress bar move across the screen absolutely floats my boat. So the goals feature in the Blossom app is a big plus.
Here's how it works.
Think of the Blossom ‘Greenhouse' as your transaction account and your goals as seperate savers. From the Greenhouse you can transfer funds to your goals just like a savings accounts. Pretty familiar setup.
Where things get interesting is how you set your goals up visually and functionally.
You can specify what you are saving for, how much you need to save and your savings deadline. You can even send your Auto-grow roundups and earnings directly to a specific goal.
So this month you might want to boost your emergency fund. Cool, I'll send my roundups straight in there. Next month, BAM, let's start hitting that house deposit hard.
What's the catch?
My money has been invested with blossom for almost two years now, and I’ve been waiting for something to go wrong.
We had money with another financial startup, and it all went belly up (looking at you Xinja), so we are cautious about who we trust.
Any issues I’ve had have been quickly resolved by the Co-founder of the company, Gaby. I’ve been chatting to her through the support feature since the app was launched, and she is very helpful. Especially since I can be a pretty annoying customer, not in a rude way, I just get excited when I find a product I like. It has been great to chat and give feedback along the way.
1. There is no minimum deposit amount
2. No fees for deposits or withdrawals
3. No Signup fees
4. You can withdraw your money at any time. (Takes about 24hrs in my experience).
5. Interest is paid daily
6. Interest compounds quarterly
7. Targets a 4.25% pa return
8. Bank level security
Should I try the Blossom app?
Well, for legal reasons, I’m not going to tell you to do anything apart from signing up for the dad mode press, the best newsletter on the Internet. Had to squeeze a shameless plug in here somewhere!
You should, however, do your research and see if it would be the right fit for your personal financial situation. And if you’re not sure, speak to a certified financial advisor. Don’t take financial advice off the internet….
Blossom works really well as our place to park money we don’t need to use but may need access to in the future. We can earn a decent return and withdraw within 24hrs if something comes up. It’s the perfect blend of performance and flexibility for us, and I can’t wait to continue to use it.
If you’re interested in trying Blossom, you can use my referral code below and we each get $5 to either keep or plant a tree with. Dope! Click HERE for the code!
See you in the next one xx
Note: In response to the rising cash rate, Blossom has increased their targeted returns from 4% to 4.25%. I can see this continuing to happen in the coming months as the cash rate increases further. I'll keep you posted and update this article if anything changes. Updated 25/11/22