News Retail investors use their opportunities on the capital market with fintechs

News Retail investors use their opportunities on the capital market with fintechs

 Monday, 29.08.16 , written by Cora Christine Döhn In the low-interest phase, high-return investments are no longer just an option, they are a must. This has been recognized by the numerous fintechs, who are also paving the way for small investors to invest in the investment world. But it is precisely the small investors still motivate them to take their finances confidently in the hand. Because nothing  Lars Reiner von Ginmon im Interview

Lars Reiner is Managing Director at Ginmon

High yielding assets such as equities have long been only an option for the rich. But fintechs have greatly reduced the cost of custody account management and management in the stock market, making it socially acceptable for so-called retail investors. Now, investing in equities is possible even from a small investment . But how exactly do the fintechs work and how do they change the financial market? Lars Reiner von Ginmon answers these questions in an interview with In addition, he explains that many more people should deal with their money.

Fintechs are helping to make access to finance easier for retail investors. What is your experience? How much do retail investors use their new opportunity?

Lars Reiner: Direct access to shares on the stock market has actually been possible for private investors for a long time. However, many options, such as investing in individual stocks, are rarely suitable for building sustainable wealth . Because the risk is just too high. Many retail investors who still invest, even lose money in the stock market instead of multiplying it. That should not be so natural.

For the accumulation of assets, diversification by investing in a large number of equities and other asset classes – so-called portfolios – is generally required. In this way, an optimal risk-return ratio is made possible . The way in which such equity portfolios are composed is traditionally decided by a fund manager. However, since the management of the portfolios is very costly, these investments have long been worthwhile only from high six-figure amounts. This is of course much more than most individuals have in their petty cash.

Many fintechs are now trying to automate exactly the cost-intensive aspects of investing. For example, Ginmon has digitized portfolio management and can offer it much cheaper than investment funds managed by individuals. Investments are possible from as little as € 1,000 one-off investment and a monthly savings rate of € 50 .

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What advantages do fintechs offer over traditional investment opportunities for retail investors and inexperienced savers?

Lars Reiner: The basic advantage is that even small investors have the opportunity to have their money managed professionally and thus for the first time the regular investment of smaller amounts really worthwhile . However, we have found that people without investment experience generally have less interest in capital market-based products. The broad masses in Germany must first slowly approach this form of investment. In the US that looks quite different. Around 60 percent of the population now invest money there in the capital market . Accordingly, they are more open to alternative investment and investment opportunities than the Germans.

Fintechs: That’s hidden behind the name

Fintechs are financial service providers that use technical means to simplify processes. For example, automated procedures reduce administrative costs. For this reason, high-return investments on the stock market are no longer too expensive for retail investors.

What are the most common questions about investing that you encounter?

Lars Reiner: Our experience has shown that most people who want to invest money are already well versed in the capital market. Questions therefore arise more in terms of content. For example, many savers want to know technical details or understand our fee model.

It is interesting that many people contact us via chat, e-mail and sometimes on the phone to find out whether actually approachable people are behind Ginmon and not robots.

Can inexperienced savers learn more about the financial world through fintechs?

Lars Reiner: In our view, it is very important to inform savers about investing on the capital market – especially now that simple money saving on the call money account is no longer an option due to the low interest rate environment. The lack of interest forces everyone to search for savings alternatives . Due to Fintechs’ high degree of automation, it is possible to invest in the capital market even without previous knowledge of the capital market, and it is gradually becoming more and more aware of this type of investment.

We inform interested parties, for example, on our website, our blog and our public relations. Our vision is to significantly increase the proportion of Germans who spend their money on the capital market. We only achieve this goal by helping to make the financial market more transparent . Up to now, capital market investors and financial market people have been particularly interested in us, as they are looking forward to an alternative investment opportunity.

We want to change that. Even if we do not make every person a financial professional: we aim to make the investment as a whole “normal” and that no investor has to worry about where to invest his money. He should sit back and relax, read the business section in the paper and have the certainty that he will always invest optimally . At the same time, it demonstrably achieves a significantly higher return compared to actively managed funds or independent portfolios.

Thank you for the interview, Mr. Reiner!

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  • Cora Christine Döhn
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