stefanheule

5 lat temudiscuss

It's definitely not trivial, there is a lot of jargon, and a lot of regulation. We don't have any silver bullets, but we found Y combinator (the startup program) to be hugely helpful to connect us with other startup folks who have gone through similar problems.

stefanheule

5 lat temudiscuss

I won't lie, this is not my favorite aspect, but the only way to do it is have numbers be represented as a string (e.g. "10.128") and use a library to manipulate them. The number type unfortunately just does not work.

stefanheule

5 lat temudiscuss

I think you are right if you assume that people generally keep their checking account balance at exactly what they need. If that's the case, then I agree, there isn't really a point to what we offer.

However, doing that is really hard, and requires you to micromanage your checking account. I personally (before using FC) had $10-20k in my checking account, because 1) I really want to make sure I don't miss a rent payment because I mess and 2) I don't want to micromanage. So, at least in my situation, some of the money is moving in and out and can't really be invested, but a decent chunk (probably >10k) just sits there. I imagine this is true for many people.

stefanheule

5 lat temudiscuss

Personally, I'm the former kind of person. I have enough to not suffer from a 40% downturn, and I'd rather have my emergency fund invested in the market.

But I agree, not everyone is like this. Note though that you don't have to invest in the S&P500, there are many lower-risk (and lower-return) investments to choose from. For instance, bonds historically have seen 6% average return, with their worst year seeing a drop of 8.1% (source: https://investor.vanguard.com/investing/how-to-invest/model-...).

stefanheule

5 lat temudiscuss

The key difference is that we allow you to invest all your money and still give you instant access to cash. With traditional banks/brokerage accounts, yes, you can invest your money, but if you invest it all, you can't go to the ATM and withdraw money. With Financial Choice, you can.

stefanheule

5 lat temudiscuss

Thank you!

1. It's a good question, I don't think we have really looked into this, so honestly I can say much. But worth of further investigation on our side!

2. It turns out that we need a number of features (investment account, checking account with debit card, etc, ability to spend money against your investments, and a few more), and there are not too many players left that we could build on top of. So it was process of elimination mostly.

3. We haven't, this is our first big public launch.

4. We are built on AWS using lambdas and DynamoDB. We are using Typescript as our main programming language, both in the front-end and backend, which is very convenient, especially since we are using a monorepo. Makes code-sharing very easy. Our frontend is built using React.

stefanheule

5 lat temudiscuss

One of the core points of Bogleheads is to never time the market, and I actually fully live by that. This is one reason why I like what we do at Financial Choice, it removes another way for me to try and time the market: Before FC I would manually move extra funds in to an investment account on a sporadic fashion, but this was definitely prone to market timing either explicitly, or implicitly. If when I tried not to time the market, you often think of moving the extra money when you hear news about markets, so this was definitely not uninfluenced by that. With FC I take myself out of the loop and remove a source of trying to time the market.

stefanheule

5 lat temudiscuss

I like your explanation of how to think about money, and I think it's the right strategy for some people. But there are also a lot of people (e.g. if you have a decent amount of extra taxable investments) you can do better your checking account in the market. Yes, this has risks (markets can drop), but this is okay for many people. One way to deal with this is to just keep more money in the "checking account". This is fine, now that the balance is getting market returns.

stefanheule

5 lat temudiscuss

You bring up some very good points, thank you. I agree we want to be careful to not call this a checking account, and I think we need to work on our wording here.

"passive index investing and instant cash access are fundamentally opposed": I agree, this is the case right now, but we want to change that, because there isn't any fundamental reason for this.

Yes, people will owe tax, but remember that only your gains are getting taxed. So if you get a tax bill, it's because you made money. That is still a net-positive. There are also a lot of things you can do to reduce (though not eliminate) the tax burdon, such as carefully selection what investments to sell, predicting money flow (e.g. not investing a paycheck if rent is due a day later), tax loss harvesting, etc.

stefanheule

5 lat temudiscuss

We have debated this question a fair bit at Financial Choice. I agree, the barrier does seem low, but also keep in mind that this is often the case for new companies, and the barrier is often higher than it seems for existing companies. For really established players, it's often hard to move fast (anyone who has worked at a big company probably knows this, there is often so much red tape).

But I also think for others, this is quite a mental shift on how to look at checking and investing accounts. There are some investment companies like Wealthfront and Betterment who are starting to move into checking accounts, but it feels very much like a afterthought to a customer.

We are hoping to truly unite the two account types.

stefanheule

5 lat temudiscuss

I completely agree, what a nice summary :) I also agree that this is not for everyone, and honestly one thing that's on our mind is making sure we give the users the tools to know what kind of risk they should and should not take on. We are not there yet, but we're hoping to have some very cool modeling tools available that help with this.

But I'm also curious, what other steps could we take to make sure people use this in an appropriate way?

comments