The financial markets have become synonymous with the too-big-to-fail banks and billion dollar hedge funds. It feels like there’s no room in there for the everyday person with not-that-deep pockets.
But that might be about to change…
FirstStep, a fintech start-up based out of Melbourne and Sydney, wants to democratise investing and open it up to the masses, aiming to let anyone start investing by doing so in small way.
The start-up has developed a mobile app that lets you automatically invest your loose change from everyday purchases into a diversified, low-cost investment portfolio, comprising exchange traded funds (ETFs).
How does FirstStep work?
The app lets a user sign up in less than five minutes and start investing with no minimum.
It then works in the background to automatically invest loose change amounts from everyday electronic transactions. Say you buy a coffee for $3.50, and round it up to the nearest dollar, that 50 cents, is your loose change investment.
Loose change is invested in a simple, diversified portfolio comprising a number of ETFs that track a broad base of securities, from Australian shares and fixed income to international and US shares.
Users can choose to do one-time or recurring deposits to voluntarily grow their portfolio and will also be able to withdraw their total investment and have their money back in three to four business days.
And as for the management fees, FirstStep will charge a percentage fee proportionate to funds under management, instead of a fixed dollar fee.
What is FirstStep looking to achieve?
The FirstStep team has long had an interest, and gained experience, in finance, investing and tech.
Founder Tarang Patel (pictured) started coding at the age of 8 at an internet café in Kenya. He also started investing when his grandfather gave him a small parcel of shares at the age of 13, and has been investing ever since.
Firstep’s Shiraj De Silva told Anthill that more and more people are not investing in their financial future.
“Direct share market participation has been declining over the past decade. High minimum investment amounts, high fees and complexity involved make that first investment a challenge.
“An entire generation risks missing out on the benefits of long term investing.
“We believe in democratizing investing and are passionate about using mobile technology, low-cost financial products and monetizing payments and spending data to achieve this.
“Our target market is millennials aged 18-34, and specifically university students, and young professionals. They are time-poor and want to use a mobile app to get started investing with no minimum investment and small contributions in an unconscious way.
“We also hope to help parents with young children to start an investment account for their children and make small monthly contributions for them till they turn 18.”
FirstStep is currently developing and beta testing their mobile app and core technology with a select group of beta users and they hope to launch in the first quarter of 2016.
They have also opened up an early access signup list, which has seen significant interest just in the past four weeks, for users keen to get early access to the app.
FirstStep is also one of two fintech start-ups accepted into Incubate’s 2015 Winter Class, the University of Sydney accelerator program and has received a small grant. Shiraj also revealed that they are currently in the process of raising capital to support their early 2016 launch plans.