Money has to work, that’s why we invest. Instead of a brokerage account, in which we select financial instruments on our own, or an actively managed investment fund, there is another option in the market. I’m talking about passive investing on platforms like Finax. How does it work and is it worth taking advantage of this broker?

To begin with, we need to distinguish between passive investing and active investing.

Active investing is the buying and selling of financial instruments as it sees fit in response to various market events . Individual securities are selected, relying on the fact that they will bring a solid profit in the long or shorter term.

Passive investing, on the other hand, is the buying of the “entire market” through ETFs, the valuation of which reflects specific stock indices . So we don’t have to pick individual companies, but we grow (or fall) along with the entire market.

The advantage of active investment is the possibility of quick reactions, passive comfort. Discuss today Finax allows you to make money on the stock exchange without knowing the financial resources and the need to make constant investor decisions . Therefore, it is a good way to invest money for beginners who are the most numerous among Finax clients.

What is phenax?

Slovakia may not be associated with a dynamic financial market, but this is where Finax comes from. Its founders, Juraj Hrbatý and Radoslav Kasík, have worked for years in brokerages and investment funds, and have come to the conclusion that there is a lack of simple and cheap investor solutions in the market.

This is how Finax was created, to help people who find it very difficult to tackle the capital market on their own .

This passive investment platform operates as a brokerage firm licensed by the National Bank of Slovakia . Thanks to this, it can operate throughout the European Union, and the assets of those who invest with Finax are protected up to 50,000 euros.

How it works?

Simply speaking – after opening the account, we transfer Finax funds, and the specialists of this company invest them in global ETFs that reflect the assessment of stock indices. For example, the S&P 500 (that is, an index of the 500 largest US companies). When choosing conservative investor strategies, money also ends up in safer bond ETFs (investing, for example, in global government bonds).

Why did Finax choose this mode of operation and why might it be attractive to investors? The creators of this platform made a simple assumption that is confirmed by statistics. In the long run, passive investing is more effective than active investing.

Why does this happen? It mainly concerns the human factor. In order to stay ahead of the broad market with our investments for years, we will need dozens of right decisions about buying and selling individual financial instruments. Is such a golden streak possible? Even seasoned investors make mistakes and get upset with emotions…

In the long run, only 10% of actively managed US funds generate a rate of return higher than the broad market . It is staffed by professionals. Does the individual investor have a chance to win the index?

independent passive investing

These arguments are really convincing, but can we invest only passively with the help of platforms like Finax or Aion Bank recently? If we want, we can definitely do it on our own. Access to ETFs is available to anyone with a relevant brokerage account.

For example, on investment accounts opened in mBank or Bank Ochrony Środowiska (Bossa), we have access to several hundred global ETFs. The commission for buying is 0.29% (Finax charges 1.2% for management – which will be discussed in the title about fees shortly).

The offer of the Polish broker XTB sounds even better – buying ETFs costs us nothing, because the commission is 0%! However, we will have to bear the burden of choice in such a case. After all, there are a lot of ETFs – the higher fees at Finax are related to the service of selecting and rebalancing individual ETFs. On the other hand, US indices are in such a long-term bullish trend that we don’t need an additional broker to earn from the S&P 500 or Nasdaq ETFs.

In short – for passive novice investors, Finax would be a satisfactory solution. Professionals tend to buy ETFs themselves.

How do you invest in ETFs? Independently using a brokerage account or via platforms such as Finax. Below is a rating of brokerage accounts, thanks to which we can buy ETFs ourselves with a commission of up to 0%!

Latest investigation: March 7, 2022

The ranking is created according to the most selected offers

		–	Factor ? CFDs available on US bonds, costs depend on the specific instrument Bond trading commission	0% ? 0% commission on monthly sales of €100,000. Transactions exceeding this limit will be charged 0.2% (minimum €10) commission. Stock trading commission	0 EUR or 10 EUR ? PLN 0 if at least one transaction has been opened for 365 days or there are no funds in the account, if not opened Account management	424 people chose this offer ” Check “ ⊕ Add to Compare ⊖ Remove from comparison
eToro – Investment Account		zloty 0 ? PLN 0 (only for clients of eToro Europe Ltd and eToro UK Ltd and does not apply to short or leveraged transactions in stocks) Commission on index contracts	–	zloty 0 ? PLN 0 (only for clients of eToro Europe Ltd and eToro UK Ltd and does not apply to short or leveraged transactions in stocks) Stock trading commission	zloty 0 ? You can join eToro for free – every registered user gets a free $100,000 demo account. However, like all online platforms, eToro charges different spreads and fees on certain trades and payments. Account management	178 people chose this offer ” Check “ ⊕ Add to Compare ⊖ Remove from comparison	67% of accounts that invest in CFDs lose money
		zloty 0 ? When you trade indices, TMS Brokers does not charge any fees for holding overnight indices (there are no funding costs, such as SWAP). This is very good news for investors in the medium and long term. The only cost is the spread, which is the difference between the buying and selling price. Check price differences in stock indices in TMS view. Commission on index contracts	–	0% or 0.19% ? Commission PLN 0 on foreign exchanges 0.19% or minimum. PLN 5 commission on WSE Stock trading commission	zloty 0 ? Only invoice charges may arise if there has been no account activity for 12 consecutive months. Then the account maintenance fee will be PLN 9 per month. Account management	76 people chose this offer ” Check “ ⊕ Add to Compare ⊖ Remove from comparison

The offered financial instruments, especially those that are leveraged, carry the risk of experiencing losses in excess of the invested capital.

Smart investment with Finax step by step

When we choose Finax, it is very easy to start investing.

1. In the beginning, we must choose an investment objective . There are 6 options to choose from: Smart Pig Bank, Financial Reserve, Retirement, Children’s Future, Wealth Building, Smart Pension. In individual solutions, a different level of investment risk will be applied, through an appropriate proportion of investments in the equity and bond portfolio. The most flexible and comprehensive plan is “Wealth Building”.

2. After selecting the target, we will be asked to fill out an investment questionnaire . Here we define the investment horizon measured in years, the investment currency and the amount of payments.

3. Below, we provide answers about our income, investor knowledge, and our attitude to risk . These questions are part of the compulsory test that you pass in every brokerage house.

4. Based on the information provided, the robber’s advisor (i.e. investment algorithm) presents us with an investment plan with the appropriate allocation between stocks and bonds and the potential return on investment. We can change these criteria if they do not suit us.

5. If we like the plan, we can proceed to registration . For this purpose, we must choose the login and password and accept the regulations of Finax.

6. Now is the time to provide your personal data and verify your identity . We can do this by uploading two pages of proof or by video verification.

7. We still have to verify the email address (or mobile phone) and sign the contract electronically .

8. Once we pass the verification process and open the account, we are separated from the investment only by depositing funds into a Finax account (managed by mBank).

9. According to the information that can be found on the Finax website, the company’s specialists buy ETFs every Tuesday on the Frankfurt Stock Exchange . It is the next Tuesday after the money to be invested is deposited.

10. Once funds are deposited and financial instruments are purchased by Finax, we can monitor the ETF portfolio on our account and our investment progress.

11. At any time we may choose to withdraw funds at no cost .

The entire Finax account registration process takes only 15 minutes. Some Finax wallets are open to the public – for example a typical investment portfolio of one of the founders of Finax.

Finax – Fee and Rate of Return

Now is the time to determine the cost and whether it pays off. At Finax, we only pay for two services.

1. Portfolio Management – 1.2% per annum of the total amount invested.
2. Payment carry forward – 1.2% – if our payments are less than 1,000 euros. If it is equal or higher – the fee is 0%.

How do these costs compare to mutual funds? Very attractive – because usually in cooperation with management funds we have to pay 3-4% . Compared to brokerage accounts, these fees are high (especially if we take into account the 0% commission for buying XTB ETFs). However, it should be noted that Finax relaxes us in the matter of choosing the right ETFs.

However, there is another issue that is more important than the fees themselves, and that is the rate of return. After all, everyone will even agree to a 10% commission if the potential rate of return is 100%.

How does this look in Finax? Very decent. Below we list the table which can be found on the website of this platform. Compares the rates of return of Finax individual strategies to the popular NN Investments fund. The results are really great.

So is it worth it?

Finex is an excellent option for people who do not have knowledge of the financial markets or time to analyze the situation of the stock market and make trading choices on their own .

In addition, the fees are not prohibitive and the rate of return is fixed. The content and information on the Finax website is also impressive. Thanks to their professional nature, it is easy to learn all the secrets of passive investing.

On the other hand, people who have more experience in the market and who make investor decisions themselves are happy with them, and are likely not to use Finax’s services. However, it is good that there are such investment platforms for everyone that allow safe work within the capital markets.

Company and contact details

Finax, OCP, as
Bajkalská 19B
821 01 Bratislava
Slovakia

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