Finhabits was created to provide people with an incentive to save and invest money for their retirement. The process is both efficient and easy. The technology embraced by Finhabits is on the cutting edge, offering easy access to exceptional and low-cost options for retirement savings.
Due to our research, we have given Finhabits 4.5 out of five possible stars. We have seen numerous Americans interested in making an investment, but with no idea where to begin. For this reason, our recommendation is to consider a digital wealth advisor. You may have heard this type of advisor referred to as a robo-advisor.
The idea is to use technology for the creation and management of your investment portfolio. Everything is covered for one low monthly fee. It is often difficult for individuals who have never made an investment in the past to develop good habits. As a digital wealth advisor, Finhabits will help you begin saving.
Numerous individuals are interested in saving for a vacation, a home or a new vehicle. The company was founded to assist novice investors in preparing for the future through the creation of a savings plan. Wealth can be built steadily through compound interest and time.
Finhabits offers the option of investing just $5 each week. The company then invests the money automatically using a wide range of low-risk investment opportunities. You can even choose the risk level of your portfolio, aggressive, balanced or conservative. The decision is yours.
When Finhabits was created, self-employed individuals were taken into consideration as well. We also realize not everyone has access to a retirement account sponsored by an employer. The company is passionate regarding individuals without any access to an opportunity for wealth management.
Finhabits is a certified B corporation. This simply means the company has made a commitment to balancing both profit and purpose. For an account less than $2,500 with 0.5 percent annual interest, the fee is just $1 per month. For accounts above $2,500, the individual pays ETF fees and 0.5 percent interest per year.
Finhabits even offers a special promotion where you can receive the first month of service absolutely free.
What is Finhabits?
Finhabits is a digital investment advisor registered with the SEC. The goal of the company is to help anyone save money for their future. Technically, Finhabits is a robo-advisor. The company works selectively with specific ETFs or select exchange-traded funds.
The company was created to provide investment advice for individuals without traditional access. Fintech was designed to help people build wealth at a low monthly cost. We have found since Finhabits is a certified B corporation, the company has made the process of investing simple, available and easily accessible.
Finhabits has specifically targeted both Latino communities and individuals speaking Spanish in the United States. This is because throughout the course of history, these individuals have experienced difficulty gaining access to opportunities for building wealth.
Portfolios are designed by the company consisting of popular ETFs. Each portfolio meets the needs of the investor such as retirement or saving to purchase a home. Finhabits offers IRAs or individual retirement accounts and personal investment accounts.
We understand Finhabits is so much more than an investment platform. The company was created to assist individuals new to making investments. This is because they may require help with building the habits necessary for the creation of long-term wealth. Just as the name implies, Finhabits helps people learn all about investment habits.
To ensure clients develop the correct mindset, the company sends out weekly reminders to make an investment. The ultimate goal is to build a mentality for building wealth. Over time, small deposits will earn interest to reach large gains. When asked what is Finhabits, we simply reply it is an opportunity for building wealth for the future.
The Background of Finhabits
In 2015, a graduate of MIT named Carlos Armando Garcia founded Finhabits. Once he graduated, he went to work for Merrill Lynch. This was when his first startup was created and sold successfully. In 2012, eVestment acquired Fundspire. Carlos was also responsible for the design and operation of a hedge fund named Madison Quant Labs.
Once Fundspire was acquired, Carlos was concerned about the retirement crisis occurring in America. During this time, 58 percent of all Americans stated their savings accounts contained less than $1,000. For individuals interested in retiring in the future, the issue was extremely serious.
The statistics for minority groups within the United States were even worse. Carlos made the decision to provide help for individuals interested in building wealth. He created an accessible digital platform that was very easy to use. The platform was especially beneficial for individuals without retirement accounts sponsored by employers.
The headquarters of Finhabits is in New York. The company is driven by a commitment to fairness, accessibility and above all, value. Since Finhabits is a B Corp, the focus was placed on purpose and profit. This distinction is incredibly important. The majority of wealth advisors have made a commitment to profit and mission.
The company also works with credit unions located around or in New York City trying to help the Latino communities. Since Finhabits is a robo-advisor, there is a lot of competition with the top names in the industry. This includes Betterment, Wealthsimple, Wealthfront and Bloom.
The Features of Finhabits
The company offers two different account types. Clients can choose individual retirement accounts or personal investment accounts. A Finhabits account offers a lot of benefits including:
- Accounts can be opened quickly. Less than 10 minutes are necessary to open an account. Finhabits does not charge any opening fees.
- The company offers guided investment planning, Retirement accounts are created specifically for each individual as a reflection of their priorities.
- Clients can make an investment in ETFs with low fees. Each portfolio consists of popular ETFs. The average fee is 0.11 percent.
- Accounts are easily managed on the go. Clients can track the progress of their accounts using an Android or iOS app or online.
- Portfolio management is automatics including any additional cash, dividends or interest.
- Weekly minimums are low, the minimum for a recurring weekly investment is just $5. All investments are scheduled weekly.
- The platform is excellent for Spanish speakers because both the apps and the platform are available in both Spanish and English.
- The account fees are very reasonable. The fee for an account less than $2,500 is just $1 monthly. Accounts over $2,500 are charged just 0.5 percent.
How Does Finhabits Work?
The first question we generally hear is how does Finhabits work? The company is a digital wealth platform available at a low-cost to make investing easy for anyone. Investment portfolios are created and managed automatically according to the risk tolerance and goals of each investor.
Finhabits is responsible for the creation and automatic management of investment portfolios. Each portfolio consists of Vanguard and Blackrock ETF funds. As funds are added by the client, digital wizardry is used by the company for purchasing and selling ETFs, and readjusting portfolios to make certain clients remain on track.
Finhabits Contributions, Minimums and Fees
We recommend Finhabits as the ideal robo-advisor for individuals interested in making low-cost investments. The account and investment fees are detailed below.
- The fee for accounts with less than $2,500 invested is $1 each month.
- The fee for accounts with more than $2,500 invested is 0.5 percent monthly.
- The average ETF fee is 0.12 percent, with fees ranging from 0.07 percent to 0.30 percent
- In addition to the above fees, additional variable fees may be charged by Fintech for other items including miscellaneous fees such as physical statements sent through the mail. Finhabits may also charge for wrap-up fees including technology, clearing and trading services.
The company is extremely generous regarding minimums. In most instances, funds are invested the first day after a deposit. The requirements include:
- Weekly minimum of $5 for funding an account
- Zero minimum for opening an account
- The contribution limit for both Roth and traditional IRAs has been set by the government. For individuals below the age of 50, the yearly limit is $6,000. For individuals above the age of fifty, the yearly limit is $7,000.
ETFs, Returns and Portfolio Allocations
There is a reason we recommend signing up to make an investment with Finhabits. This is because you are placing your funds into a system capable of creating a portfolio and making good investments for the future. The portfolio goal is the generation of low-risk returns through an investment in ETFs.
An ETF spreads out the risk because it is a diversified investment group. The ETFs invested in by Finhabits are either run by Vanguard or Blackrock. The specific ETF types used to create a portfolio include:
- United States stock market
- International stock markets
- Corporate bonds
- Government bonds
- Inflation protected and tax-exempt bonds
Despite being a robo-advisor, Finhabits only offers three different allocation types for portfolios. Although this may not be ideal for more experienced investors, it is perfect for individuals just starting out on the investment path. All three investment options are very straightforward.
Finhabits provides the help necessary to begin through three separate investment goals. The investor can change goals anytime they want. The three goals are:
- Preparing for retirement
- Building a reserve for emergencies
- Making an investment for either a long or mid-term goal
All of the above goals relate to the three available portfolio types, growth, balanced and conservative. The estimated returns and asset allocations are defined below.
Finhabits Conservative Portfolio: The estimated rate of return for the conservative portfolio is two percent. This is an excellent portfolio for individuals interested in making an investment for a rainy day. Many of these individuals are unable to take a risk on a higher return.
Finhabits Low-Risk Portfolio: A low-risk portfolio can keep up with the current 1.76 percent inflation rate, but barely. This is a great way to build a fund for emergencies.
Finhabits Balanced Portfolio: The balanced portfolio offers an estimated rate of return between three and six percent. Finhabits believes this is the best possible option for individuals interested in the creation of a retirement account.
An investment in the balanced portfolio involves more international stocks as opposed to conservative bonds. Although this will increase the risk, the returns generated are larger.
Finhabits Aggressive Portfolio: An aggressive portfolio earns an estimated rate between four and eight percent. This is the most aggressive portfolio offered by the company. The focus is placed on stocks, with extremely few bonds. Whether or not this portfolio is a good fit is dependant on the situation of each individual.
The aggressive portfolio is often a good choice for a long-term investment strategy such as a retirement account for the future. We feel it is important to be aware there are both pros and cons for this type of portfolio.
The pros include:
- Texts are sent each week as a reminder to save
- Simple to set up and begin saving
- Extremely low weekly minimum and account minimum
- Managed portfolios are great for new investors learning how to make an investment for the first time
- Access to either a Roth IRA or a traditional IRA
The cons include:
- The requirement for a weekly minimum
- Limited flexibility pertaining to the investment
- Funding, monthly and miscellaneous fees
- Investment options are limited as opposed to lower-cost robo-advisors including Charles Schwab and Wealthfront
Opening an Account with Finhabits
Finhabits was founded with the purpose of helping people learn how to save. The efficient and simple idea is investing money for future retirement. Registering for a Finhabits account is a straightforward and simple process. The company even offers additional information for individuals not yet ready to invest.
Finhabits provides a detailed FAQ section, an investing e-zine and a company blog. Investments can only be made through Finhabits by residents of the United States. When the individual decides to open an account the following is required.
- Individual tax identification number or social security number
- Phone number
- Valid United States bank account
- Permanent residence address in the United States
Once registration has been completed, a Finhabits account can be opened by taking the following steps.
Step 1: Choose the investment goal
Step 2: Choose the type of portfolio
Step 3: Add funds by connecting a bank account
Step 4: The contribution limit per week is set
The investment goal, weekly contribution and type of portfolio can be changed by the investor at any time. We recommend taking a little time to ensure a plan is in place regarding how the investments will be made prior to completing the registration process.
The investment can be used for different purposes such as saving up for a down-payment to purchase a home or the creation of a small emergency fund. As the individual starts to invest, Finhabits will take steps to ensure the person is in an investment mindset. Nudges and encouragement are provided along the way.
Reminders are sent by the company each week to ensure the investor remembers to make an investment. Although this will not be ideal for everyone, a lot of investors will be reminded to keep their goals in mind.
Should an Investment be Made with Finhabits?
The short answer is yes. Finhabits is different than most of the top digital wealth advisors. The company uses a different focus for targeting its audience. Right from the start, Finhabits has been intent on assisting marginalized groups lacking traditional opportunities for investments. The company offers the help required.
This company is one of the very few robo-advisors who has made a strong commitment to Spanish speaking communities. The platform provides an excellent bilingual experience. The only real downside we can see is the $1 monthly fee for accounts with less than $2,500.
Many individuals can barely afford an investment of $5 each week. The $1 monthly fee is actually five percent of the total monthly investment. We believe this fee is worth the cost because the mission of the company is integrating both profit and passion. Finhabits believes everyone deserves access to services for financial management.
We approve of the company being a certified B corporation. This makes a tremendous difference in the space for fintech wealth management. Finhabits has also partnered with the Neighborhood Federal Credit Union. The credit union serves mostly the Latino communities of New York City.
Fintech has made a niche as a company offering digital wealth management. The company offers just the right nudges and tools for anyone entering the investment sector for the first time. The company ensures the mindset of their clients is in the proper place.
For anyone who became confused or believed any of the robo-advisors were offering a little too much, we recommend Finhabits. The platform is easy to use, simple and direct. Finhabits may just be the ideal investment advisor for your specific needs.