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.
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.
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.
Sooke poet publishes narrative poems – an investment in life's third chapter – Vancouver Island Free Daily – vancouverislandfreedaily.com
It started with a bookmark from the Sooke Writer’s Collective at the local library.
“Interested in being part of a writing group?” it asked. Clare Winstanley was, so she called the number on the bookmark and has been a member ever since.
Winstanley has written poetry her whole life, but only since joining the group did she share them. Mid-pandemic, the poets of the collective decided to self-publish a chapbook. Winstanley contributed poetry and illustrations and enjoyed the whole thing so much she decided to do a solo project.
Bits of String and Thread: a tapestry of poemsis a collection of 17 narrative poems, drawings and photographs the semi-retired tutor self-published this summer.
As writing has taken centre stage in her life – she’s working on a novel right now – Winstanley wants to tell other adults to revisit the hobbies of their youth.
“As we mature, and perhaps finished taking care of families, perhaps a money-earning career becomes less central, we can invest in the second or third chapters of our lives and pick up things we had given up,” she said.
“It’s time to go back now and complete the things you started when you were younger.”
She said that her poems are layered with history, often going back in time, and they’re best read aloud.
“My aim as a poet is to create an effect with the sound of the words.”
Winstanley will read a selection of her poetry on Aug. 27 at 6 p.m. at the Sooke Arts Council Gallery at the corner of Church and Sooke roads. It’s a free event and can accommodate up to 25 people. The book is available for $15 at the gallery or through her website cemwinstanley.com .
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Ontario’s investment in improving school air quality provides benefits beyond pandemic, experts say – Global News
In the wake of the Ontario government adding millions in funding for schools to help ventilate air better, experts say the focus shouldn’t be on whether the money is enough but rather that this be a long-term investment for the future beyond COVID-19.
Ontario Education Minister Stephen Lecce announced $25 million will be put toward adding approximately 20,000 new standalone high-efficiency particulate air (HEPA) filters to the approximately 50,000 devices currently used in areas such as classrooms, gyms, libraries and other instructional spaces without mechanical ventilation.
So far, the government has committed more than $600 million to date for ventilation improvements across Ontario schools.
Schools with mechanical ventilation are expected to use the highest-grade filters possible and turn their systems on at least two hours before school starts, and schools without are expected to have standalone HEPA filter units in all classrooms.
Jeffrey Siegel, a professor in the department of civil and mineral engineering at the University of Toronto, told Global News on Wednesday that while the filters and improving ventilation systems will help in the fight against COVID-19, schools need more guidance than the government is putting out there.
“There are a lot of good words in the document but there’s also not a lot of detail, a lot of specifics,” he said. “Every school is a little different so there needs to be not just resources … but there also has to be information.”
Martin Luymes, VP of government and stakeholder relations for the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI), told Global News that portable HEPA units are an “appropriate solution” in the situations where classrooms don’t have fresh air circulation, such as older schools where the only form of ventilation would be to open windows.
“You will have a range of schools … for those that are 100 years old … those are environments where a HEPA filter or standalone filter might be a good solution or partial solution,” Luymes said, adding schools should know to hire professionals — engineers or HVAC contractors who are familiar with the installation process because it is not a “do-it-yourself system.”
Both men agreed however that things like HEPA filters are only part of the solution and that they are part of what they said should be a layered approach in regard to school safety.
“Any measures that are installed that involve air movement and air control and filtration are supplemental to measures including distancing, hand washing and all the other controls that have been introduced over the last year and a half,” Luymes said.
While Siegel argued there are things such as masking that are an even more important “layer” than filters.
“We need lots of different layers between an infected individual and an unaffected one so certainly things like filters are a good layer … but there are other things that are probably even more important – masks are a fantastic layer to reduce transmission, physical distancing. And I don’t just mean keeping people a little apart from each other but looking at the whole picture of how students and staff move through the school,” he said, highlighting students moving between classrooms and gym classes where breathing becomes more intense.
For Siegel, another potential shortcoming in the plan is where the resources are being targeted, saying they should go to where they will have the most benefit — to areas of society where health disparities have been exposed in the pandemic.
“It would make the most sense to invest the resources into those schools, to help correct that disparity.”
Siegel also pointed to looking beyond the announced $25 million on Wednesday and focus on how improving the ventilation systems in all schools contributes to the success of students’ futures and health beyond COVID.
If the HEPA filter is sized appropriately for the location it is placed — meaning it produces enough clean air for the space — then Spiegel said there will “absolutely” be a reduction in the risk of COVID-19.
Ontario investing $25 million additional funding for ventilation filters for schools, Lecce says
However, Siegel said regardless of whether the filter helps to decrease the transmission of infectious diseases, improving air quality comes with a long list of other, long-term benefits for staff but also students, in particular.
“In a school, those benefits are things like improved performance on standardized tests, better cognitive performance, lower absenteeism for the students, reduced asthma frequency and severity … none of those things are up for debate, those are well-established in science,” Siegel said.
“The way I look at it as is the worst outcome is a pretty good one and I think we’re also going to do something about the infectious disease risk,” he continued.
“We always focus on the cost and I get it, there’s a lot of economic pressures right now and $25 million is a big number no matter how you slice it but the other side of it is why don’t we also look at the benefits – reduce absenteeism … avoided healthcare costs – that’s the reason to do this – the benefit is much larger than the investment.”
—With files from Gabby Rodrigues and Sean O’Shea
© 2021 Global News, a division of Corus Entertainment Inc.
5 Downsides of ESG Investing – Wealth Professional
2. ESG may mean sacrificing returns: lower returns or higher risk
When you limit your investment options and pay more to include your ESG factors, you may give up on some investment return as you narrow the field that can provide you with returns. Many have written on why this kind of sustainable investing can feel like a money pit because the funds you favor can underperform compared to others that are less socially responsible and perhaps less risky, too.
Take time to do your ESG research and find companies that not only align with your values, but have the best returns, as there may now be more than one option to choose from if you spend time researching upfront before you invest.
3. Slightly higher fees
You may have to pay a little more in management fees for some ESG funds, which can also eat into your earnings. That’s because ESG funds require managers to do research and they’re often working with a smaller asset base, so you may pay more to be in their funds.
But, as one study showed, 66% of people around the globe are willing to pay more for sustainable goods. That number jumped to 73% with millennials. It’s always smart to focus on performance, but if you’re doing your research, you may discount the extra cost knowing that you’re investing in a higher cause.
4. No reporting requirements
While there are different analytic firms that can rate stocks on the socially responsible scale, the biggest pitfall these days in the ESG investment process is that there are no standards or ESG ratings to measure these funds’ performance. So, they can market themselves as good for the environment, but they may not be, and if you start comparing companies, it may feel like apples and oranges. You don’t have a way to tell because there are no reporting requirements and what is self-reported isn’t consistent across industries or companies since there is no universal standard.
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