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There's plenty of room at the lower end. Of course if you're already a millionaire, investing and loans are easy. But if you only have $100, they're not. Tra

There's plenty of room at the lower end. Of course if you're already a millionaire, investing and loans are easy. But if you only have $100, they're not. Traditional investing and banking are designed to exclude the lower class/working class, to prey on them, and to be a losing game for them. Even if you can get by the minimum balance limits, when you have to pay a $10 fee to buy and a $10 fee to sell, you need to beat a 20% return just to break even on a $100 investment, let alone make a profit. But without the fees and the minimums millions more people could be investing a bit here and there and growing it. Predatory payday loans and rent-to-own businesses are enormous - even though they depend on exploiting people who really can't afford them. If there were a better alternative, millions of people might use it. With the middle class shrinking, the market is growing.

bko 11y ago
I agree that investing $100 in a stock isn't worth the time of a bank so the $10 fee they charge to purchase an ETF is high, but I think that would be the case for just about anyone because of the cost of even doing the book keeping, statements, etc. For instance, every ETF I invest in, I get the prospectus in the mail. That costs money to ship every year. They have to manage things like proxies voting as well. It's just not worth it to a bank. The $0.15 a year (15 bp of $100) in fees won't even coverage postage. Pay-day loans may appear sleazy but the companies that administer them don't have very high margins. There are risks to those loans and the small nature means that fixed costs are spread over a smaller base. You can review the financials of public companies in this space. EZCorp [0] and Cash America International [1] are in that space. Their last profit margins are 4.8% and -0.95%, respectively. Why are they so low? I don't know, but I don't claim to know enough about this market to make broad statements about exploitation or abuse. I just know that, like many markets in the US, there appear to be a low barrier to entry and competition eventually shrinks margins. Maybe you're right and they're doing some kind of financial trickery to appear as though they aren't making enormous profits, but if you believe that, by all means, enter the industry and change it from within. [0] http://money.cnn.com/quote/quote.html?symb=EZPW&source=story_quote_link http://money.cnn.com/quote/quote.html?symb=EZPW&source=story... [1] http://money.cnn.com/quote/quote.html?symb=CSH&source=story_quote_link http://money.cnn.com/quote/quote.html?symb=CSH&source=story_...
deleted 11y ago
[deleted]
thinkmassive 11y ago
There's an app called Robinhood[1] that allows you to trade for free. The purchase window is 24 hours, so I assume they short the stocks or otherwise leverage the daily fluctuations. For a legal way to gamble on the market for medium to long term, I find it intriguing. [1]https://www.robinhood.com/ https://www.robinhood.com/
spacecowboy_lon 11y ago
Is there no equivalent to Investment Trust in-house savings schemes in the USA? These are designed to allow small monthly investments cheaply ie £25/£50 per month.

bko 11y ago

I agree that investing $100 in a stock isn't worth the time of a bank so the $10 fee they charge to purchase an ETF is high, but I think that would be the case for just about anyone because of the cost of even doing the book keeping, statements, etc. For instance, every ETF I invest in, I get the prospectus in the mail. That costs money to ship every year. They have to manage things like proxies voting as well. It's just not worth it to a bank. The $0.15 a year (15 bp of $100) in fees won't even coverage postage. Pay-day loans may appear sleazy but the companies that administer them don't have very high margins. There are risks to those loans and the small nature means that fixed costs are spread over a smaller base. You can review the financials of public companies in this space. EZCorp [0] and Cash America International [1] are in that space. Their last profit margins are 4.8% and -0.95%, respectively. Why are they so low? I don't know, but I don't claim to know enough about this market to make broad statements about exploitation or abuse. I just know that, like many markets in the US, there appear to be a low barrier to entry and competition eventually shrinks margins. Maybe you're right and they're doing some kind of financial trickery to appear as though they aren't making enormous profits, but if you believe that, by all means, enter the industry and change it from within. [0] http://money.cnn.com/quote/quote.html?symb=EZPW&source=story_quote_link http://money.cnn.com/quote/quote.html?symb=EZPW&source=story... [1] http://money.cnn.com/quote/quote.html?symb=CSH&source=story_quote_link http://money.cnn.com/quote/quote.html?symb=CSH&source=story_...

deleted 11y ago

[deleted]

thinkmassive 11y ago

There's an app called Robinhood[1] that allows you to trade for free. The purchase window is 24 hours, so I assume they short the stocks or otherwise leverage the daily fluctuations. For a legal way to gamble on the market for medium to long term, I find it intriguing. [1]https://www.robinhood.com/ https://www.robinhood.com/

spacecowboy_lon 11y ago

Is there no equivalent to Investment Trust in-house savings schemes in the USA? These are designed to allow small monthly investments cheaply ie £25/£50 per month.