Blog 3. Wealthsimple. its.. simple.

I have never imagined that someone could explain how to invest my money for the future in such simple terms and look so elegant while doing it. They take a monthly contribution from you, they distribute it across their investing assets according to what type of an investor you are and then.. well you simply read their amusing blog and forget about it.

Yes forget about it. Low risk investments do take time to grow. Come on be patient. Didn’t you save half of your chocolate when you were a child for later on? Probably you were a better investor than now. Thinking of the next day rather than just today. Definitely I never did that. Eat fast, die fat, that was my motto.

But what about the risk? Well, I guess, it has been said a million gazzilion times, do not egg me for this, but it would be prudent if you put your eggs in different baskets. Lots of them to be exact (diversification). And thats what they do. Wealthsimple invests in a lot of baskets for you. But they do not fool around. They don’t actively invest your money. They don’t play with it. They simply let it grow with a feathery touch when and if needed. Lets say if you put a lot of eggs in one basket they will simply divide them again once in a while, so one of them does not get too heavy (rebalancing).

What a time to be alive ha? Who new that all these could be available to everyone and only to the stupendously rich? How cool is it to say that you as well have a portfolio of different asset classes invested in different markets and what other mambo jumbo you could come up with to simply say you are thinking of the future? And who would have thought that you would learn about diversification or rebalancing just by thinking of eggs and baskets.

And what about how the money is invested? Well this is where it either get exciting for some or freakishly boring for others. Wealthsimple utilises what us called modern portfolio theory, something that as a finance student you would probably spend days on to simply figure out the following. An investor who does not really like risk tries to get as much money in the future as possible with the given level of risk the investor took. Of-course this is a massive generalisation but pretty much the essence of it.

Now, couldn’t you do the same at home? Well of-course. But is it worth your time? Not to mention that it will be quite more expensive. And the rebalancing every now and then? Why not give the hard work to somebody else, such as Wealthsimple and you continue with your daily life, especially since they state their fees upfront. No surprises.

As a final note. Where am I going with these blogs, what do they have to do with actually building your own online bank? Well, first you need to draw inspiration from somewhere, and why not to it from the best, the most innovative fresh minded entrepreneurs out there. Moreover, a bank could combine all these together. Imagine if Monzo that was discussed in blog one was to merge with Wealthsimple to offer a more complete package. Could your bank actually care for you and ensure your future but also help you in your day to day life? And it could be argued, thats what they do?

Or do they?

 

Blog 2. Inspiration (Monzo)

To come to grips with how to build an online bank for the new word we need to first analyze what already exists out there. I have no interest in explaining how the big complex institutions work but I will rather focus on the smaller ones, the ones that capture my interest and imagination, the ones that have stripped away all the complexities, and offer simple, comprehensible and transparent options moving us forwards in exciting new ways.

We will begin with Monzo bank, undoubtedly one of my favourites (if not the colour of their card, I am more of a black and grey person myself) that captures the aforementioned so elegantly, its almost makes anyone wonder why banks seem to be so complex and incomprehensible.

To have a bank means to have a means of storing your hard earned cash and been able to access it at any time. To have money and not been able to spend it is like to have abs and wear a T-shirt while going to the beach. With this in mind, the ultimate simplicity is what Monzo offers, well with a bit more. Through the use of their app you are able to view your savings and through the use of their card, you are able to spend it. But, you can ALSO view your transactions in simple terms and in a way that you could understand them (i.e. £3.00 Starbucks and not £3.00 XXX…Star…Ilikecoffeesomuch…whoknowswhatelsethebankmightputhere), not to mention the fact you could make budgets for yourself, cancel your card, receive instant notifications on what you have spent,  and use your card to pay abroad with all exchange rates calculated for you.

I guess, anyone could argue that banks have been doing that for ages. And you are right, But is the sheer simplicity in which your data are presented to you, that makes this experience invaluable. Its the fact that its refreshing, just like having watermelon in the summer.

But they did not stop there. The fresh ideas kept on coming. Crowdfunding their capital, they ensure that people are there to back them up in their new endeavours, and being able to save money according to each goal that you set in your life, such as going on a trip to the Bahamas or buying that new motorbike that you always wanted make Monzo somehow more personal more involved more like YOUR bank. I guess it seems like going to one of the “old school” banks is as if you talk to your mum or dad about something that bothers you and going to Monzo is as if you talk to your big brother. They all want whats best for you, but its the delivery that matters.

As a final thought simplicity is key.

Leonardo da Vinci even believed that

“Simplicity is the ultimate sophistication”

 

Blog 1. First Steps

For a finance student, it seems like being creative was out of the question, unless it has to do with some simple numbers, and that with the help of a calculator of-corse (although it is true some professionals can really get creative with the numbers). Strangely, I found myself writing my first blog on what seems like an absurd idea. Searching for my mission in life, for what truly drives me I tried to think big, and not let myself down by what is possible or not.

Driven by the idea of educating others on the area of finance, and most importantly my self first, I made vivid plans in my mind of what would happen if banks where a bit different and if everyone could actually understand how money works, within a bank but in extrapolation in their pension schemes, investments etc. Would it be possible to learn all these relevant information quickly and easily by being involved and not having to study them at a university level? Could we prevent the financial crisis, or even better achieve a better future and a good retirement for everyone? Would it be possible to understand how a loan works and why my interest rate is so low just through one app? Your banking app? To be honest, I am not actually sure, but I truly find myself, happily surprised every time I read one of the informative and quick information notes on my Moneybox app or the amazing magazine of Wealthsimple where I invest my pennies every week.

Heavily influenced by Tim Ferriss, my newest role model in pretty much everything in life I asked myself. “What would it look if it was simple?” What would it look if building an online bank was simple? Is it actually simple? And if so, can it be recreated in a better way.