Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Making Small Investments in Canada
NCFA Guest Post | Oct 30, 2019
Saving money should not be associated with large amounts. Even a cent saved every day can eventually bring us substantial rewards. But the problem is that we do not usually think positively about small savings. If we cannot stockpile a large amount, we simply do not take the trouble to lay money aside. What is worth taking the penny challenge, we usually think, if by the end of the year we will accumulate only $667.95?
While it is always preferable to discover larger amounts of money in our money box or bank account, effortlessly saving $667.95 is still not a mean achievement. There are so many ways to save money with ease that not resorting to them seems unwise, especially now, when saving is facilitated by technology. Indeed, we now have a rich arsenal of saving apps that make small investments for us even without our conscious participation in the process.
All we need to do is download an application, let it salt away our pennies for us, and then become pleasantly surprised by a handsome amount of money amassed in our bank account. What is particularly pleasant about the whole enterprise is that we can totally forget that the saving is taking place but still hoard some money by the end of the year. The newest apps lay aside such small amounts for us that we never feel the subtraction either financially or emotionally.
See: How Data-driven Strategies Can Improve Impact Investing Outcomes
The money-saving app that enjoys the most popularity now in Canada is robo-advisor, a technological (and much cheaper) alternative to human financial advisors. It is a sophisticated platform that advises people with the help of innovative technology. Indeed, the robo-advisor uses the most advanced algorithms to manage your funds and rebalance your portfolio, when required. Yet even though robo-advisors are highly developed, investing with them is easy. All you need to do is to fill out your personal information, clarify your investment goals, and indicate your risk-tolerance. After you have submitted all this data, the robo-advisor will create your portfolio and will manage it for you, enlarging your investments along the way. If you want a robo-advisor to help you get richer, choose one of the best robo-advisors in Canada: any of the listed platforms will bring you to prosperity.
Equally popular now in Canada is a platform that saves your lose change every time you make a purchase and pay for it by your credit or debit card. Unlike robo-advisors that require an initial investment of $500, change-saving platforms do not need any initial investments. Nor do they ever hurt your finances, since they put aside such an infinitesimal amount for you that you almost cannot physically feel it.
The trendiest change-saving platforms now are Acorns, Betterment, Qapital, Digit, and Wealthfront. All these platforms combine the robo-advisor model with an automated savings tool. These apps are called ‘round-ups” because they automatically round up your payments on linked debit or credit cards. The cents that were added to the amount you paid become transferred to your computer-managed portfolio.
Suppose you are buying a cup of coffee at Tim Hortons. Your large cup of coffee would cost you $1.98 CAD. When you are paying for your coffee with a linked credit or debit card, the software will round this amount up to $2 CAD, investing 0.02 cents into your portfolio. Or suppose you decide to buy a medium-size cup of coffee instead of the large one. The medium size cup of coffee at Tim Hortons costs $1.77 CAD. The software will round this amount up to $2 CAD and will place the difference in your portfolio. This operation will be done every time you use your card to pay an uneven amount of money for your purchases.
See: Six steps to achieve financial gender parity this #IWD
These money-saving devices are not only easy to use but also cheap. Robo-advisors cost only $100-$150 CAD. Additional service fees are equally low. All extra fees are calculated as a percentage of your assets, though some companies will determine your fees in advance. The price of any fixed fee will depend on the size of your portfolio and will usually range from $20 to $200 CAD a month. When you pay your fees as a percentage of your assets, the price may range from 15 to 50 percent of the size of your account.
Even less you would pay with any round-ups app. If you have less than $5,000 CAD in your bank account, you will pay only a dollar a month. When your account balance is larger than $5,000 CAD, you will annually pay about 0.25 percent of your balance. There is no large initial investment with round-ups platform either. You can invest as little as $5 CAD.
Granted, no money-saving platform will make you filthy rich overnight. But this does not mean that these platforms are utterly pointless. Both robo-advisor and round-ups apps help you save some money for a rainy day, and no amount of money in your pocket, however small, can be considered useless.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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