New financial apps demystify stocks and bonds for Latinos
The concept of making money off money was foreign to Garcia, an
Finhabits launched last year into a crowded world of robo-advisers, savings apps, online lending platforms and other financial-technology companies.
But it is one of the few aimed at demystifying stocks and bonds for Hispanics, particularly young professionals who have the means to start investing but may have inherited a fuzzy understanding of the financial system from their immigrant parents.
"Hispanics are very hard workers and we are able to generate quick income for our families. Sometimes we are good at savings but we put the money under the mattress," said Garcia, who previously founded two other companies, including an internet analytics service for hedge funds.
Other financial-tech startups aimed at Latinos have focused on immediate financial needs: paying off debt, building credit and gaining access to loans. Few besides Finhabits are dedicated to encouraging investing and long-term financial planning.
Another is Mi Dinero Mi Futuro, a personal financial planning platform started by
"No one talked to me about money," said Ortega, the daughter of
Finhabits follows in the footsteps of robo-advisors Betterment,
More than competing with established players, the founders of Finhabits and Mi Dinero Mi Future see themselves as creating a new market among Latinos, who they believe are overlooked by traditional financial institutions and even many of the digital newcomers.
It is not an easy market to penetrate, however.
According to a 2014
Another study, done in 2016 by the
"This demographic has been very tough to crack historically," said
With Finhabits, beginner investors can start with
Through its app, blogs and text-messaging services, Finhabits explains financial concepts (portfolio diversification? It's like ordering different types of tacos) and compound interest to persuade people that investing their money is safer and wiser than trying to "hit the fat one," as Latinos refer to the lottery jackpot.
Crucial to the Latino community, Finhabits lets users open an account with an Individual Taxpayer Identification Number, a processing number issued by the
Savvier investors can simply set up accounts directly with Vanguard or BlackRock, which require more active knowledge of investing. But most often, those big players don't have formal marketing strategies for Hispanics.
Garcia said Finhabits has about 10,000 active clients who invest an average of
One challenge for financial start-ups is earning the public's trust. Finhabits and Mi Dinero Mi Futuro are trying to that through partnerships with institutions already targeting minority and underserved communities.
Finhabits is a provider in
Finhabits also has partnerships with credit unions, including
"It's difficult for many people to think about the future. They live paycheck to paycheck. Many people just think
Ortega, who recently received a new round of investment from venture fund
At a financial boot camp in
Growing up, Monge said her family was "not part of the formal banking structure at all. The money came in and you pay the rent and you pay for food."
Now a mother of two boys, Monge has used Mi Dinero Mi Futuro to budget her money, buy life insurance and open a high-yield savings account.
"It was an eye-opening experience," she said.
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