• Small investors do not have the same opportunities to appreciate their wealth as the rich.
• Finax brings a revolution in this respect to Slovakia and makes one of the most effective investment instruments on the market available to everyone.
• Why is Finax smart investing so much better than the competition?

We all know that ordinary people do not have access to the same money management options as rich people. When you walk into a bank or a stockbroker with a million euros, you get a different treatment than when you show up with 5,000 euros.

Why are small investors discriminated against?

The truth is that you can hardly invest EUR 5 000 effectively. There are some natural limitations, the aim of which is to leave the more sophisticated financial instruments in the hands of professionals or experienced investors. It is also not advisable, for example, to invest small amounts in specific projects.

The second reason is partly objective discrimination. In principle, private banking has just as much to do with a client who brings in EUR 1 million as with a client who brings in EUR 10 000. But the returns to the institution are disproportionately different.

Therefore, wealthier people get different service, different fees, different services and products. For small investors, access to these instruments is limited by high minimum upfront investments. Ultimately, this is the way it works in every sector of commerce and services.

How do solvent people around the world manage their assets?

Wealthy people confirm that investing is the way to a better life. As long as a person brings discipline and efficiency to their finances, there is a high probability that their wealth will grow. This will also increase his security, financial security and create a source of passive income. Everyone breathes easier with assets.

The following two charts show the structure of assets and the contribution of each asset class to the growth of wealth for wealthy people in 2017, according to Capgemini's regular World Wealth Report. Equities dominate portfolios - accounting for almost a third of wealth.

Source: Capgemini World Wealth Report 2023

Wealthy individuals give stocks the most credit for growing their wealth - 9 in 10 "rich" people see them as an important factor in increasing the value of their wealth, and more than half see them as the most important. Interestingly, they see income from business and employment as the asset with the smallest contribution to growth.

You will hardly find a better alternative on the market for your savings

With Finax, you can invest in more than 10,000 securities around the world from just €10 per month. And all this with just one fair fee of 1% per year + VAT.

Smart investing offers a very simple and efficient way to appreciate your funds. Copying world indices is the cornerstone of investing.

In addition, smart portfolios deliver some of the highest returns in the market over the long term, completely tax free.

From the beginning of the idea of Finax, we wanted to create a universal product for everyone. We see no reason why good things should only be accessible to the rich.

To achieve this goal, we had to come up with a simple tool. Another requirement was a technologically advanced solution. Only technology can ensure reliability, objectivity and reduce costs to get the best result for you.

We are constantly working on making investing more accessible

Our work did not end with the creation of the Intelligent Investing portfolios. We've made a number of advances in making investing more accessible since Finax was founded.

We have reduced the minimum deposit from the original €20 to half that amount, €10. As soon as corporate finance allowed, we abolished the fee for deposits up to €1,000. This move represented the biggest advantage for investors who cannot afford to deposit a large amount at once but want to put aside smaller amounts regularly from their paychecks.

We also increased the discount for inviting a friend. For each activated account of an invited friend, investors now get 1000 euros managed for 3 years for free. Again, beginners and small investors can benefit the most from this, so all it takes is a few invitations to have the entire account managed for their first few years completely free of charge.

Those who already have some savings in other products can similarly benefit from the investment transfer discount, which we have extended to different asset types in the meantime. Half of the amount moved will be managed by Finax for two years completely free of charge. Small investors will thus be able to substantially reduce the fees charged for managing their savings: an option that has traditionally been available to more affluent clients.

Our most recent innovation in this regard was the launch of Smart Deposit. While banks were hesitant to raise interest rates on savings and fixed deposits, Smart Deposit made the high central bank interest rates you have read about in the media many times available to ordinary people. The current gross return of 3.8% per annum is paid daily and you don't have to meet any additional conditions to get it. See its evolution on Dominik Hrbatý's transparent account.

What options have Slovaks had so far to value their savings?

They were usually limited to mutual funds, private bond issues, managed portfolios of securities dealers or individually opened brokerage accounts where you have to choose the instruments yourself.

These forms of appreciation have numerous drawbacks compared to passive investing in index ETFs such as those offered by Finax.

Mutual funds have disproportionately high fees and disproportionately poor performance to go with them. Over the horizon of the last 5 years (which covers almost the entire period since the inception of Finax), only one popular mutual fund has been able to beat the after-tax net return appreciation of the Finax equity portfolio.

The management fees for these funds range from 1.5% to 3% p.a. In addition, they charge an entry fee of 4% to 5% of the investment amount. Their costs are often double those of Finax.

Private Slovak bonds can be part of portfolios, but we do not consider them a suitable instrument for retail investors. Their yield often does not correspond to the risk. Private bond issues cannot be considered as safer securities than shares of large companies. And their yield is generally lower than stock markets. They are illiquid and carry significant credit risk. Moreover, their returns are taxed.

Among securities dealers in Slovakia, very few offer relevant investment products. We do not find among them portfolios that beat the market in terms of long-term performance. Their risk is disproportionate. The fee structure takes into account the interests of the trader first, then the client. The minimum required initial investment is often an insurmountable barrier for most Slovaks.

Term deposits are also a resurgent option, for which interest rates have started to rise after years of rising thanks to the ECB's key rate hikes. Unfortunately, interest rates on most savings accounts and fixed-term deposits still lag far behind central bank rates. A few banks offer a higher rate, but the investor has to commit the money for a year and meet various other conditions (e.g. use several other products with the same bank). The Smart Deposit offers an appreciation replicating the central bank's short-term interest rate without having to tie up the money for a certain period of time or open other products. In addition, its returns are tax-free, whereas a 19% tax is payable on fixed-term accounts.

The remaining investment option is to open your own investment account directly with an online broker. Cost-wise, this alternative is the most attractive. In order to manage your investments effectively, you need a lot of knowledge, study, dedication and, most importantly, time. However, most people are not interested in delving into the ins and outs of the investment world, which is fine and understandable. But that cannot be a reason not to invest and devalue your savings.

As long as you manage your portfolio yourself, you are very unlikely to outperform the market despite low fees. Emotions, fear, your psychology, lack of information and time will quickly cross your vision.

The other options you may run into are mostly speculation or misdirection. As a rule, you will end up having a negative experience with them.

Market returns are the optimum profit you can earn by investing for the long term. You'll be hard pressed to make more somewhere. Higher than market returns are speculation or carry significantly more risk. That's where passive investing through index ETFs comes in.

Democratisation also in the pensions field

Exactly one year ago, we brought our disruptive approach working in favour of ordinary investors to the field of supplementary pension savings. We became the first provider of the Pan-European Pension Product (PEPP), the pan-European third pillar.

Until then, supplementary pension savings had been inaccessible to competition from smaller companies. Pillar 3 funds were offered by only 4 licensed firms and few were dedicated to transparent communication about their performance. As a result, many funds barely matched inflation over the long term. Instead of appreciating savings, money was just being put away.

PEPP also allowed any smaller investment firm to register its product as a supplementary pension savings. By bringing it to the Slovak market, we have expanded the range of options from which savers can choose. We believe that this competition will create an overall push for lower fees and better performing portfolios in Pillar 3, which will again benefit ordinary people in particular.

We are not stopping in our work on behalf of retail investors. We will continue to innovate to bring the same benefits to all those who do not care about their financial future. So don't put off starting to invest, even if you don't have high savings. We'll help you get started, from as little as €10 a month. In Slovakia, you don't have to be rich to make good use of your savings.