Millennials are jumping into the stock market in greater numbers. However, there’s still a sizable segment of Millennials who are afraid of or do not understand investing, therefore they keep their money out of the market. The missed monetary gains of these uninvolved Millennials could mean the difference between retiring or not retiring at all. Instead, this fearful segment of the Millennial generation keep their money safe in a checking account. Neel Ganu realized the money sitting in a checking account should be put to work earning you money, since the interest returns from a bank are nil compared to stock market returns. He and his team created Finch. Finch is a consumer fintech company providing financial accounts to invest your checking account balance on your behalf. The startup is located in Cambridge, Massachusetts.
Finch founder Neel Ganu.
Neel Ganu
Frederick Daso: What was the idea’s genesis to invest a portion of one’s checking balance into the stock market?
Neel Ganu: Typically, people keep money in up to three accounts: a checking account that is easy to use provides instant access but virtually no returns, a savings account that provides relatively easy, yet limited access, but earns minimal returns and an investment account that holds and grows your money, but provides limited access with several restrictions.
These accounts each have rigid and defined roles. It’s how people have been managing money for a long time, but that’s because it’s been the only option.
The few individuals that optimize their finances utilize a combination of these accounts. Individuals must manage the flow of money between their funds through an ongoing manual process to put their money to work. This friction helps to explain why 86% of Americans do not invest outside of their retirement accounts.
Daso: How did you come to realize that cash sitting in checking accounts was an untapped resource for everyday Americans?
Ganu: This means that a massive part of the population is missing out on the opportunity to build long-term wealth. We know it’s not without reason. For the majority, investing is overwhelming and intimidating. Plus, it means their hard-earned money is out of their immediate reach during moments of need. But by keeping their money idle in a traditional checking account, they could be missing out on up to 50% of their wealth every ten years!
The good news is that the last ten years have seen fintech innovators’ advent challenging the status quo. By introducing commission-free trading, fractional investing, and removing account minimums, they have helped democratize investing. These innovations have made it easier than ever to start investing today. Despite this, an overwhelming number of people still stay on the sidelines, signaling that an even simpler solution is needed.
We knew that to help transform the way people manage their money, we needed to create a solution where customers could unlock the benefits of investing without changing their behavior significantly—the process required to be as frictionless as possible.
Finch’s debit card (left) and mobile application (right).
Maya Nijhawan
Daso: The combination of returns of an investment account and a standard bank account liquidity seems to imply a certain level of risk. How did you assess the everyday person’s appetite to accept that risk and develop a related financial product to meet their needs?
Ganu: Our investment options are carefully curated to reflect the level of risk we consider appropriate for an everyday account. We only offer large, low-cost, diversified exchange-traded funds (ETFs) created by some of the largest asset managers in the market on our platform.
We take the time to better understand people’s risk tolerance and investing experience. Using this approach, we provide personalized investment recommendations to our customers based on their risk profiles and needs.
Finch offers two types of portfolios: Stable and Growth.
The Stable portfolio consists of cash and a mix of ETFs that invest in short-term government and corporate bonds. The goal of this portfolio is to allow you to dip your toes into investing while aiming to preserve your capital. This portfolio gives you the potential to earn a return marginally greater than, but comparable to, what you would make in a high yield savings account. Over the past ten years, if you had kept your money in Finch’s Stable portfolio, you would have earned 9.0x more than a checking version and 1.8x more than a high yield savings account.
The Growth portfolio consists of cash and a mix of ETFs that invest in US large stocks and bonds. The goal of this portfolio is to help you to unlock the benefits of investing and build long term wealth. Over the past ten years, if you had kept your money in Finch’s Growth portfolio, you would have increased your wealth by 33%.
As a reflection of our values, and growing importance to Millennials, we also offer a sustainable version of both portfolios that invest in companies with a positive environmental impact, are socially responsible, and commit to high governance standards. Within these portfolios, we also help you customize your portfolio mix based on your unique risk profile.
Daso: Why did you pick your first customer segment as individuals who are not active, but financially focused users?
Ganu: When I came up with Finch’s idea, what I knew was that I had a great innovative product, and it solved a personal problem that many of my peers and I faced. Our customer research validated that this problem resonated throughout my generation.
Our target customers are millennials who know that investing is right for them, but various reasons may not have taken the first steps to get started. Three out of five millennials do not invest today, and the two main reasons we hear is that they find the process complex and that they can’t afford to have their money locked away. Finch addresses both these challenges.
Millennials have been frequently overlooked when it comes to managing their money. They have less flexibility to save than other generations, with 62% of them living paycheck to paycheck. Millennials are investing less than before, with almost 20% fewer investing today compared to 2008. Adding to this, Millennials need more retirement funds than other generations due to longer lifespans and reduced Social Security. The good news is that retirement is still a long way off, and they have time to get back on track. We picked this group because we believe they stand to benefit the most from what we offer at Finch.
Daso: How did you focus on building your team to address each portion of Finch’s business’s key risks?
Ganu: Finch has three significant areas where we needed to build the team to set ourselves up for success.
The first was marketing. Being able to articulate our purpose, create a strong narrative and community, identify our target audience, and develop a go-to-market strategy for this group was a massive task our marketing team was tasked with. Hiring our Head of Marketing and our Digital Content Manager helped address these key marketing initiatives.
The second was customer service. Being a digital-only account, superior customer experience and support is a must. The only time we will ever interact with customers in person (over the phone/chat) is through our customer service team. We have a strong focus on having customer service and experience in house to ensure that our customers get the best service and we can help them when it comes to their money as fast as possible. Hiring our Customer Success Manager to design our support program from the ground floor helped address this necessity, and we will look at scaling this team as we grow our customer base.
The third was product and operations. Being able to execute our plan and have our product closely integrated with operations ensures that customers have a seamless experience regardless of how they interact with us. Managing this ensures that we are building a product and platform that our customers love. Hiring our Head of Operations and our Product Manager has played an essential role in execution and ensuring we are aligned with regulatory and compliance requirements.
Our team members help address core risks and develop growth, service support playbooks for critical parts of what we are building, and have allowed taking our product from zero to one.
Daso: What personally drew you to working on this problem?
Ganu: I was always perplexed by why investing was so hard.
Despite spending the majority of my career leading financial institutions through their investment decisions, when it came to managing my own money, I always felt I could do better – but I didn’t, and ended up holding my balance in cash.
Having discovered that a staggering three in five Millennials do not invest at all in the US, I realized I was not alone in my inertia. Compounding this with the growing financial debt among Millennials, with 62% living paycheck to paycheck, opened my eyes to how significant this issue is.
Many people express that investing is too complex, while others feel they have very little financial flexibility to think about investing and other economic opportunities. But by keeping their money idle in a traditional checking account, they could be missing out on up to 50% of their wealth every ten years.
Determined to empower younger generations and help close the wealth gap financially, I set out to find a more straightforward and more impactful way to support financial growth while pursuing my studies at MIT.
What if investing was less intimidating, unlike choosing a wine at a fancy restaurant? What if people could earn investment returns directly on their checking balance rather than needing to sweep their money all over the place? What if it were possible for people to spend their invested balance whenever they wanted?
These “what if’s” led to the creation of Finch (formerly Trio), your new productive everyday account that integrates the benefits of investing and the flexibility of checking into a seamless all-in-one account.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
