Save makes savings social. Refer friends and family to Save, and watch your investment returns grow together.
Financial institutions are expected to spend 30.75 billion dollars on digital advertising by the end of this year. The aim of their advertising efforts, like any business, is to generate awareness and get potential clients to open new accounts.
At Save, we’d rather invest our available resources into improving our customers’ investments. This is why we’ve created a referral program that encourages happy customers to introduce friends who could also benefit from higher returns to Save.
2. When a friend signs up and funds their account, Save will add up to $5,000 in equivalent portfolio investments†† for you and your friend.
3. After a year, you both get to keep the returns from your investments without any risk to you.
Equivalent portfolio investments are investments we purchase on your behalf without taking any money from your account to fund them. This means we only use the economic value of your deposits to finance the investments, not your actual deposits, so your money is never at risk.
When your referral opens and funds a Market Savingsterm, you’ll each receive a bonus of $5,000 in equivalent portfolio investments.††
The equivalent portfolio investments will then be added to your chosen investment portfolio and invested for a year. While you don’t get to keep the market investments, you do get to keep all the returns they generate (minus our fee).
For example, if you successfully refer three friends that open and fund a Market Savings term, you’ll receive $5,000 in equivalent portfolio investments for each referral,†† to add to your chosen portfolio.
Successfully referring three friends can potentially earn you $1,239 in investment returns, while they earn $413 each. To ensure you receive all the potential returns from your referral bonuses, the investments must be held in your account until maturity and can’t be withdrawn.
As you can see, the Save referral program was designed to give our customers measurable gains in terms of actual returns.
Since joining Save, one customer has set out to build their very own savings squad and invited 24 friends and family members to sign up. Each successful referral will earn them a referral reward of $5,000 in equivalent portfolio investments.††
Assuming all 24 referrals are successful, the referring customer will receive $120,000 in equivalent portfolio investments and potentially earn over $9,900 from our referral program alone. These referral rewards will significantly boost the customer’s already existing earnings from banking with Save.
Do you have friends who could benefit from higher returns on their savings? Reward them and yourself. The more friends you refer to Save, the higher the savings opportunity.
As we see with the Silicon Valley Bank (SVB) and Signature Bank closures, having an FDIC-insured account keeps your deposits safe in the event that a bank fails.
On March 10, the Federal Deposit Insurance Corporation (FDIC) announced that Silicon Vally Bank (SVB) was closed by the California Department of Financial Protection and Innovation. Then, two days later, the FDIC announced Signature Bank was closed, too. To protect depositors, the FDIC took over the banks’ assets.
But what does that actually mean?
In these situations, the protection extended by the FDIC becomes a lifesaver for your money.
The standard amount covered by the FDIC is $250,000 per depositor, per ownership category, per FDIC-insured bank. This means that if you have $250,000 or less in an FDIC-insured account, all your money is fully protected. If you have $500,000 in a joint account, your deposits would still be fully insured as each owner is entitled to $250,000 worth of coverage.
Within 3 days, the FDIC announced that all “depositors will have full access to their money beginning Monday morning,” when Silicon Valley Bridge Bank, N.A., the bridge bank created by the FDIC, opens and resumes normal banking hours and activities, including online banking.
This bridge bank is essentially the new face of SVB. A bridge bank is a chartered national bank that operates under a board appointed by the FDIC. It takes the deposits and certain other liabilities and purchases certain assets of a failed bank. The bridge bank structure is designed to “bridge” the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.
Automatically, SVB depositors and borrowers will become customers of Silicon Valley Bridge Bank, N.A., and will have customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before. Similarly, the FDIC created a bridge bank for Signature Bank, N.A.
This sequence of events, while not universal, is typical of past bank closures handled by the FDIC.
What about fintech companies like Save and Chime? What would happen if they close?
Fortunately, fintech companies offer FDIC insurance due to their partnerships with Member FDIC-insured banks.
Let’s take Save’s Market Savings as an example, which combines the safety of an FDIC-insured deposit account with a variable APY* derived from market investments which is something that traditional savings accounts don’t offer. All Save customers’ Market Savings deposits are 100% FDIC-insured† to the maximum amount allowed by law.
The deposit safety is made possible through the innovative partnership between Save and our partner bank Webster Bank N.A., Member FDIC. Webster Bank is a leading bank in the Northeast that offers digital and traditional financial services to customers and commercial clients.
FDIC insurance is one of the key benefits of keeping your money in Save’s Market Savings program,† while Save’s growth-focused savings approach gives your money a real chance to grow.
People are increasingly choosing emerging fintech companies and digital banks over traditional banks because they’re more accessible, convenient, and offer better returns. However, customers shouldn’t have to compromise the safety of their money to get higher returns or more convenience.
The safety of your deposits is just as important as the return they generate. If you’re looking for an account with high-growth potential, choose one that will keep your money safe.
FDIC protection is just one of the many benefits offered by Save’s products. Learn more about the perks of banking with Save here.
Before you read on, please note that The Save Advisory Service does not provide comprehensive financial or tax planning or legal advice, and Clients are advised and afforded the opportunity to seek the advice and counsel of their own advisers. Neither Save Advisers nor any of its affiliates are responsible for determining any Client’s individual tax treatment regarding its Client Account. Furthermore, neither Save Advisers nor any of its affiliates are responsible for any state or federal income tax withholding, except as may otherwise be required by applicable law. Clients should take into consideration the limited nature of the Save Advisory Service in evaluating the investment advice and recommendations provided through the Site.
The investments in Save portfolios are held for over a year so they are taxed as long-term capital gains. This makes filing the returns you earn, like the Market Savings APY,* on your Save portfolio very efficient and appealing for customers who care about after-tax outcomes.
What are capital gains taxes?
Capital gains taxes are broken up between two types: short- and long-term capital gains. When you buy and sell assets such as stocks for a profit, the IRS looks at the gains as taxable gains, but they’re taxed differently depending on how long you’ve held the assets.
Breakdown: Capital gains taxes
Short-term capital gains mean you held the asset for less than a year and you’d be taxed at the same rate as you’d pay on your ordinary income, such as wages from a job. Whereas, if you held the asset for more than a year, which are long-term capital gains like Market Savings APY,* then your rates would be 0%, 15%, and 20%, depending on your income, which are typically much lower than ordinary income tax rates.**
The following tables and graph show hypothetical tax situations to explain how Save portfolio returns would potentially be taxed.
Assuming a marginal income tax of 28.40%, which is the average income tax for U.S. tax filers, and a long-term capital gain of 15%, the following scenario lays out the rate of return for regular savings accounts compared to Market Savings after taxes are factored in:
Regular Savings Account
Market Savings Investment Gains
APY
4.00%
8.26%
Income
4.00%
0.00%
Short Term gains
0.00%
0.00%
Long Term gains
0.00%
8.26%**
Taxes owed
1.14%
1.24%
After-tax returns
2.86%
7.02%
The benefits after taxes are even better for higher-income earners. In this scenario, we’re assuming a marginal income tax of 45%, and a long-term capital gain of 20%, the following scenario lays out the rate of return for regular savings accounts compared to Market Savings after taxes are factored in:
Regular Savings Account
Market Savings Investment Gains
APY
4.00%
8.26%
Income
4.00%
0.00%
Short Term gains
0.00%
0.00%
Long Term gains
0.00%
8.26%**
Taxes owed
1.80%
1.65%
After-tax returns
2.20%
6.61%
In comparison, interest from most bank accounts, including savings accounts (like the examples above), CDs, and money market accounts, are considered taxable income, which would have marginal tax rates according to your specific tax bracket.
The after-tax return is slightly more beneficial for higher tax bracket earners when comparing the Market Savings returns to traditional savings accounts.
Any capital gains applied to investments in your Save account will be reported on a 1099 for tax purposes. At the end of every calendar year, Save customers receive an email notification to advise of any tax forms available, and you can access these tax forms via your online portal or Save app.
Additionally, our systematic portfolio rebalances do not create taxable events as they are indices, therefore, there is no need for tax-loss harvesting. Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset realized investment gains with those losses, however, this is typically very hard to execute well.
Market Savings capital gains 2023 and beyond
Now, let’s say you file your 2022 taxes by April 18 (that’s Tax Day in case it’s not already on your calendar, you’re welcome). What do you plan to do with your tax return?
Obviously, we’re going to suggest you invest it in a Market Savings term to capitalize on the 8.26-9.18% APY,* depending on the term selected. Since the IRS began processing tax returns for 2022 on January 23, the average tax refund so far is $1,963, which is down 10.8% over 2022 refund totals, according to the IRS as of February 3.
Assuming you round your refund to $1,900 and deposit it in a 1-year FDIC-insured Market Savings term, which averages 8.26% APY* as of publication, then upon maturity, you could earn $156.94.
Remember, the Market Savings APY* is linked to an investment return. Just like any investment account, your returns are determined by market movements. The APY* presented is based on the hypothetical back-tested performance of the Save Moderate Portfolio with the understanding that in certain years the portfolio may have outperformed the APY,* and in other years it may have underperformed the APY* and even potentially returned 0%.
If the Market Savings APY could earn 0%, you may be wondering why you would deposit in the first place and invest it in the market yourself. Of course, you could, but a big advantage with Save is that your principal isn’t at risk because your deposit is put in an FDIC-insured account† with our partners at Webster Bank, N.A., Member FDIC.
Your Market Savings deposit is not encumbered, collateralized, or put at risk in the market. Save does not utilize your deposit for anything else aside from placing it with Webster Bank, N.A., Member FDIC, to ensure capital protection.†
Independently of your deposit, Save makes an investment on your behalf based on your portfolio allocation. When you open your account with Save, you’ll use the Recommendation Tool to choose the portfolio best suited for you.
Plus, we only charge a fee when you earn returns. When you do get returns, the management fee is 0.35% of the investment exposure. If your returns are less than 0.35%, we do not collect our management fee. This means we are fully aligned with our customers because their success is our success.
“We thrive only when there is strong performance, and our customers are happy,” said Adam Watts, COO and President of Save. “We believe that it’s the right thing to do and it’s also ultimately better for our business: because we want our customers to stay with us and keep growing their savings for years to come.”
** The Save Advisory Service does not provide comprehensive financial or tax planning or legal advice, and Clients are advised and afforded the opportunity to seek the advice and counsel of their own advisers. Neither Save Advisers nor any of its affiliates are responsible for determining any Client’s individual tax treatment regarding its Client Account. Furthermore, neither Save Advisers nor any of its affiliates are responsible for any state or federal income tax withholding, except as may otherwise be required by applicable law. Clients should take into consideration the limited nature of the Save Advisory Service in evaluating the investment advice and recommendations provided through the Site.
Your financial security is of utmost importance. An FDIC-insured account keeps your deposits safe in the unlikely event that a bank fails.
FDIC insurance is one of the major benefits of keeping your money in Save’s Market Savings program.* The Federal Deposit Insurance Corporation (FDIC) is an independent government agency that protects deposits in a US bank account in case your bank fails and is forced to close down.
Bank failures are usually rare, but times of economic uncertainty can change that. While only four have failed since 2020, the aftermath of the 2008 financial crisis saw hundreds of banks shut their doors, including Washington Mutual Bank and the Citizens National Bank.
In these situations, the protection extended by the FDIC becomes a lifesaver for your money.
The standard amount covered by the FDIC is $250,000 per depositor, per ownership category, per FDIC-insured bank. This means that if you have $250,000 or less in an FDIC-insured account, all your money is fully protected. If you have $500,000 in a joint account, your deposits would still be fully insured as each owner is entitled to $250,000 worth of coverage.
Fortunately, some fintech companies offer FDIC insurance due to their partnerships with Member FDIC-insured banks.
Among them, includes Save®, which combines the safety of an FDIC-insured bank account with the return potential that traditional savings accounts don’t offer. All Save customers’ deposits are 100% FDIC-insured* to the maximum amount allowed by law.
This security guarantee is made possible through the innovative partnership between Save and Webster Bank N.A., Member FDIC. Webster Bank is a leading bank in the Northeast that offers digital and traditional financial services to customers and commercial clients.
While Save’s growth-focused savings approach gives your money a real chance to grow, FDIC-insured Webster Bank keeps your deposits safe.
For example, Save’s Market Savings program offers a potential average annual return between 8.26% and 9.18%** as of March 2023. Customers can watch their wealth grow while having peace of mind their money is 100% insured.
Deposit to initiate your Market Savings account today.
Unlike Save, not all emerging fintech companies can promise FDIC insurance.
Recently, Toronto-based cryptocurrency firm, Voyager Digital, claimed that all its customers were covered by FDIC insurance. After investigating these claims, the FDIC determined they were false and misleading and demanded that Voyager take immediate action to address these false statements. If Voyager failed, its customers would not be protected by FDIC coverage, and their hard-earned money would be at risk.
Voyager is not the only startup that doesn’t offer its customers guaranteed protection. On its company website, high-yield app Fair says it “will make its best efforts to not transfer losses to Fair members on their initial investment.”
In a recent interview with Bloomberg, Fair’s founder, Khalid Parekh, further explains that a private holding company he owns valued at $350 million would be able to cover customer losses.
While this may be the case, it’s not a legally binding guarantee. When you entrust an institution with your money, you deserve guaranteed protection and peace of mind.
People are increasingly choosing emerging fintech companies and digital banks over traditional banks because they’re more accessible, convenient, and offer better returns. However, customers shouldn’t have to compromise the safety of their money to get higher returns or more convenience.
The safety of your deposits is just as important as the return they generate. If you’re looking for an account with high-growth potential, choose one that will keep your money safe.
FDIC protection is just one of the many benefits offered by Save. Learn more about the perks of banking with Save here.
* To obtain FDIC insurance coverage, customer funds provided will be deposited into non-interest-bearing accounts at Webster Bank. FDIC insurance coverage for funds deposited at Webster Bank is limited to not more than $250,000 per depositor, per FDIC-insured bank, per ownership category. Actual deposit insurance coverage may be lower if you have other funds deposited at Webster Bank, N.A. Customers are responsible for determining the amount deposited in each account at Webster Bank, N.A., and for monitoring the total amount of their deposits at Webster Bank, N.A., to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Learn more at: https://www.fdic.gov/deposit/deposits. Only the funds customers provide and deposit with Webster Bank, N.A. will be eligible for FDIC insurance. Webster Bank is not providing any investment advice or responsible for the purchase or performance of any investment contracts. The funds held in the Apex Clearing Corporation accounts are not FDIC-insured, are not bank guaranteed, and may lose value with a minimum return of zero. Maximum balance and transfer limits apply. Neither Save Advisers, LLC, nor its affiliates, are a bank. Apex Clearing Corporation is a member of the Securities Investor Protection Corporation (“SIPC”), formed by Congress to protect “customers” of broker-dealers and to promote public confidence in the U.S. securities markets. Customers of a SIPC Member that fails financially are afforded certain benefits under the Securities Investor Protection Act (“SIPA”). These benefits are relevant only if the broker-dealer that “carries” a customer’s account fails and is liquidated under SIPA. At Apex Clearing Corporation, your investments are protected by SIPC up to a maximum of $500,000 total, including $250,000 in cash balances. Coverage limitations apply. To learn more about SIPC coverage, visit the SIPC website at www.sipc.org.
** APY, or annual percentage yield, is the yearly return on a bank or investment account. Save ‘Market Savings’ offers the potential to earn an APY with a variable rate (Variable APY). APY is derived from the investments made by Save on behalf of the customer within Save’s portfolio of strategies over the duration of term length selected by the customer. The Variable APY will never be less than the Minimum APY of 0% per annum but could be equal to the minimum APY of 0% per annum. The APY is equal to the cumulative return for the term selected on the applicable maturity date. Assuming a minimum APY of 0% per annum, if the APY applicable to a particular maturity date is less than or equal to the Minimum 0%, the customer will not receive any APY return for that investment upon maturity. Variable APY’s are subject to change at any time. APY is not guaranteed. The APY presented is hypothetical in nature and reflects the potential growth that could accrue if the investment is held for the entire term selected. Minimum deposit is $1,000. The deposit account portion of the Save Market Savings product and service is provided by Webster Bank, N.A., Member FDIC; and is non-interest bearing with a 0% APY. Management Fees associated with the investments may reduce earnings on the account. Customer withdrawal prior to maturity could result in additional associated costs.
With the news of the FTX demise and arrest of their founder Sam Bankman-Fried (known commonly as SBF), it can be difficult to trust new startups and fintechs. But we’ll share how you can spot credible fintechs.
Ultimately, credibility can be found in trust signals that are linked to government-regulated memberships and a fintech’s partner network.
Credibility factor #1: FDIC insurance
You’ve likely seen some fintech companies use this language: “[Company name], nor any of their affiliates is a bank, but we partner with [partner] Bank, Member FDIC.”
This commonly used disclosure aside, language like this provides customers with two trust signals. One, that they have a partnership with an established, external bank, and two, that the mentioned bank is a member of the Federal Deposit Insurance Corporation (FDIC), which means that the FDIC regulates state-chartered banks that do not belong to the Federal Reserve System.
Credible fintechs like Save, Chime, and Betterment use this kind of language because while they’re not banks themselves, they have forged partnerships with established banks, which are all FDIC-regulated. The FDIC is an independent government agency that protects deposits in a US bank account in case your bank fails and is forced to close down.
Bank failures are usually rare, but times of economic uncertainty can change that. While only four have failed since 2020, the aftermath of the 2008 financial crisis saw hundreds of banks shut their doors, including Washington Mutual Bank and the Citizens National Bank. In these situations, the protection extended by the FDIC becomes a lifesaver for your money.
The standard amount covered by the FDIC is $250,000 per depositor, per ownership category, per FDIC-insured bank. This means that if you have $250,000 or less in an FDIC-insured account, all your money is fully protected. If you have $500,000 in a joint account, your deposits would still be fully insured as each owner is entitled to $250,000 worth of coverage.
When you’re investigating a fintech that offers investing-related practices, look for regulation from the Securities and Exchange Commission. Since 1933, largely in response to the market crash of 1929 that led to the Great Depression, this government-run entity’s mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.
“To achieve this, we require public companies, fund and asset managers, investment professionals, and other market participants to regularly disclose significant financial and other information so investors have the timely, accurate, and complete information they need to make confident and informed decisions about when or where to invest,” the SEC states online.
“We protect investors by vigorously enforcing the federal securities laws to hold wrongdoers accountable and deter future misconduct.”
Through the years, the SEC has kept public companies, fund and asset managers, investment professionals, and other market participants, like Save and Betterment, honest. They hold the firms that register for SEC regulation to the highest standard, which include, but aren’t limited to:
The firm’s marketing and communications to customers are clear and not misleading in any way.
Employees of the firm must adhere to strict guidelines, including insider trading, and not use personal accounts to misrepresent the company or their products to potential customers.
Ensuring investors are provided with information relevant to a company’s financial prospects or stock price to make informed investment decisions.
In comparison with the FTX saga, a person familiar with the SEC’s view on crypto regulation said the agency believes crypto firms, like FTX, are illegally operating outside of U.S. securities laws and instead lean on other licenses that provide minimal consumer protection to create a “patchwork of regulators,” according to Fox Business. “Those representations, while nominally true, don’t cover their activity,” the person told Fox Business.
Credibility factor #3: Look for FINRA/SPIC-insured partners
Write and enforce rules governing the ethical activities of all registered broker-dealer firms and registered brokers in the U.S.;
Examine firms for compliance with those rules;
Foster market transparency; and
Educate investors.
The Securities Investor Protection Corporation (SPIC) on the other hand, protects customers if their brokerage firm fails. It’s similar to FDIC insurance, but instead of insuring your checking and/or savings accounts at your bank, they’re protecting the securities and cash in your brokerage account up to $500,000.
Credible fintechs like Save and Betterment have associations with both FINRA and SPIC, but in different ways. Betterment is both carrying and introducing broker-dealer registered with FINRA and SPIC, whereas, Save has a brokerage partner at Apex Clearing Corporation.
Credibility factor #4: Who are their partners?
Finally, learning more about a fintech’s partnership network and those partners’ credibility themselves can aid in gathering a fintech’s trust signals. Partners of Save, Chime, and Betterment include Webster Bank, N.A., Member FDIC ($65 billion in assets), The Bancorp Bank, N.A. ($6.8 billion in assets) and Stride Bank, N.A. (1.17 billion in assets), Members FDIC, and nbkc bank, Member FDIC, respectively. All of these partner banks are Members FDIC, which protects your deposits up to $250,000 per depositor, per ownership category, per FDIC-insured bank.
Using these signals can help ensure you’re aligning yourself with credible fintech partners to manage your money. Otherwise, you’re taking a risk of losing it all, much like some FTX investors are fearful of. While the downfall of FTX is still ongoing, some customers may face $2 billion in funds lost.
Alternatively, if they created an account with a credible fintech that has Member FDIC or FINRA/SPIC-insured partners, then they would have benefitted from the government-backed insurance and higher trust standards that FTX was allegedly not held to.
We have launched a new portfolio – the Global Multi-Strategy – which has been built using a cutting-edge quantitative approach that we believe can navigate the uncertain years ahead. The portfolio’s primary aim is to generate returns across market regimes by combining multiple sub-strategies across styles and asset classes.
The Global Multi-Strategy portfolio has been designed in partnership with Second Foundation Partners, the publisher of Epsilon Theory and manager of a global macro hedge fund that utilizes their pioneering research. This research focuses on generating market-based returns by making trading decisions using natural language processing (NLP) analysis of financial news.
Together, we have built a sophisticated quantitative strategy, implemented via liquid ETFs, that Save’s Market Savings customers can choose for their next FDIC-insured deposit.
Approach
Whether markets go up, down, or sideways, sources of returns exist. Extracting those returns does not require you to personally have the right opinion about markets themselves; instead, what arguably matters most in the short to medium term is figuring out what everyone else thinks and what they, en masse, may do next.
As the poker saying goes, “you don’t just play the cards, you play the players”. The fundamentals of a company or sector (the cards) are important, but even more important is figuring out how other market participants (the players) will react to news and rumors about those fundamentals.
For example, you might think (at the time of writing in December 2022) that stocks are still expensive and “should” fall further – and you could be right sometime in 2023 – but if the market decides otherwise in January (responding positively to, say, news about China re-opening or US jobs), then your investment portfolio may suffer.
This is the thinking that forms the basis of our new Global Multi-Strategy portfolio, designed in partnership with Second Foundation Partners and benefiting from a decade of quantitative research and development into how the themes and patterns found in financial media – called “narratives” – interact with financial markets and their participants.
U.S. Equity Sectors Relative Value* *where “relative value” refers to a long-short approach that takes long positions in some preferred assets, versus short positions in some less favored assets, seeking to gain from the relative outperformance of the preferred assets.
Each sub-strategy utilizes a different set of trading signals, with the aim that by combining the different sub-strategies, the portfolio is potentially able to generate returns across all market environments.
Signal Calculation
Using both Big Data (millions of media articles and transcripts) and Big Compute (trillions of unstructured data operations), the strategy first analyzes the language across everything published in the English language about companies and markets:
Narrative maps, like the example below, are then produced and their evolution is analyzed. Each node on the map is an article, and the physical distance between any two articles indicates how linguistically similar or different those articles are.
A numerically large cluster of closely spaced nodes suggests a lot of focus on a given topic (say, inflation), and that those articles are largely in agreement in their assessment of that topic (let’s say, “inflation is high”). This also allows us to assess the stage in the life-cycle of the inflation theme, as well as its relative importance compared to other narratives, for example – is inflation currently emerging as an important topic grabbing a lot of new attention, or is its significance waning, giving way to ‘recession fears’ as the predominant topic?
Source: Second Foundation Partners
In other words, the mathematical operations search for specific narratives that spark specific investor behaviors in response. These behavioral “triggers” are systematically evaluated daily and drive dozens of individual buy-and-sell signals across dozens of global assets. Once triggered, signals tend to have a persistent lifespan of the order of weeks.
These buy-and-sell signals are systematically rolled up into the 6 sub-strategies of the Global Multi-Strategy portfolio.
Current Signals (Dec 2022)
At the time of writing, the analysis suggests that: financial media believes inflation is declining, the outlook for interest rates is shifting toward easing (reducing), and a recession could be approaching; additionally, the analysis shows there has been significant recent bearish thinking, and that common knowledge of the bullish case for energy (relative to other sectors) has reached saturation, among other things.
Final Comment – Play the players
By expeditiously and accurately capturing the narrative states relevant to market participants (the players), and skillfully determining what those players might subsequently be predisposed to do next, a narrative-based approach can arguably trigger trading decisions faster, and with a greater success rate, than other traditional investment approaches that only consider fundamentals (the cards).
Subsequently, we believe the Global Multi-Strategy portfolio can deliver the return profile that our customers are looking for.
In response to growing expectations that companies must show leadership in ESG, we have expanded our strategy offerings to include the Environmental, Social, and Governance (ESG) portfolio.
Assets in global sustainable funds were $2.24 trillion at the end of September, according to Morningstar Direct, and we are meeting this market opportunity with the first ESG-oriented savings program in the banking industry.
The newly-launched diversified ESG portfolio comprises iShares “ESG Aware” ETFs, that seek to select and overweight ESG companies and avoid certain non-ESG assets.
ESG stands for environmental, social, and governance. These three categories have certain standards for a company so investors can screen potential investments to align them with their beliefs.
The environmental standards consider how a company safeguards the environment, including corporate policies addressing climate change.
The social standards examine how a company manages relationships with employees, suppliers, customers, and the communities where it operates.
Lastly, the governance standards deal with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
We believe that responsibly-constructed portfolios should not only benefit the world, but also the investor, so our ESG portfolio utilizes the same sophisticated, rules-based investment techniques as the original Save Global Diversified Markets portfolios. Additionally, it maintains a similar global multi-asset class approach, while utilizing ESG-focused ETFs and avoiding investments in certain commodities like agriculture and livestock.
The ETFs that make up our ESG portfolio select companies deemed acceptable under specific environmental, social, and governance rules.
Additionally, limiting the effects of climate change is the responsibility of every industry, including banking. In addition to this new investment strategy, we support tree-planting projects in collaboration with Reforest’Action. To promote and participate in the restoration of forests, we are underwriting the planting of a tree for every $5,000 deposited in any Market Savings term, up to $50 million in deposits. This will plant about 50,000 trees in upstate New York. An initial photo from the planting site is below.
Forests are the world’s largest carbon sink and forest ecosystems support 80% of the world’s biodiversity. Planting trees has many benefits, including improving the climate, biodiversity, health, and employment. Our sponsored trees are in Cobleskill, NY on a former organic dairy farm. Chestnut, hazelnut, red oak, acadia, persimmon, and black walnut are the varieties of trees that will limit soil erosion and improve air and soil quality.
“Consumers are increasingly turning to ethical choices in all aspects of life including investments, and with no ESG savings accounts available in the banking market, we jumped at the opportunity to deliver this new kind of sustainable and responsible investment offer,” said Michael Nelskyla, Founder and CEO of Save. “We recognize that investors have a role to play in improving the human impact on major issues such as climate and Save sees it as our fiduciary responsibility to offer ethical investing through our Market Savings program for those consumers who seek these choices.”
The new ESG portfolio is available to customers through our Portfolio Recommendation tool during the Market Savings signup. Our Market Savings program is FDIC insured1 and currently earns 7.60%-9.24% APY2 depending on the program term.
1 To obtain FDIC insurance coverage, customer funds provided will be deposited into non-interest-bearing accounts at Webster Bank. FDIC insurance coverage for funds deposited at Webster Bank is limited to not more than $250,000 per depositor, per FDIC-insured bank, per ownership category. Actual deposit insurance coverage may be lower if you have other funds deposited at Webster Bank, N.A. Customers are responsible for determining the amount deposited in each account at Webster Bank, N.A., and for monitoring the total amount of their deposits at Webster Bank, N.A., to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Learn more at: https://www.fdic.gov/deposit/deposits. Only the funds customers provide and deposit with Webster Bank, N.A., will be eligible for FDIC insurance. Webster Bank is not providing any investment advice or responsible for the purchase or performance of any investment contracts. The funds held in the Apex Clearing Corporation accounts are not FDIC-insured, are not bank guaranteed, and may lose value with a minimum return of zero. Maximum balance and transfer limits apply. Neither Save Advisers, LLC., nor its affiliates, are a bank. Apex Clearing Corporation is a member of the Securities Investor Protection Corporation (“SIPC”), formed by Congress to protect “customers” of broker-dealers and to promote public confidence in the U.S. securities markets. Customers of a SIPC Member that fails financially are afforded certain benefits under the Securities Investor Protection Act (“SIPA”). These benefits are relevant only if the broker-dealer that “carries” a customer’s account fails and is liquidated under SIPA. At Apex Clearing Corporation, your investments are protected by SIPC up to a maximum of $500,000 total, including $250,000 in cash balances. Coverage limitations apply. To learn more about SIPC coverage, visit the SIPC website at www.sipc.org.
2 APY, or annual percentage yield, is the yearly return on a bank or investment account. Save ‘Market Savings’ offers the potential to earn an APY with a variable rate (Variable APY). APY is derived from the investments made by Save on behalf of the customer within Save’s portfolio of strategies over the duration of term length selected by the customer. The Variable APY will never be less than the Minimum APY of 0% per annum but could be equal to the minimum APY of 0% per annum. The APY is equal to the cumulative return for the term selected on the applicable maturity date. Assuming a minimum APY of 0% per annum, if the APY applicable to a particular maturity date is less than or equal to the Minimum 0%, the customer will not receive any APY return for that investment upon maturity. Variable APY’s are subject to change at any time. APY is not guaranteed. The APY presented is hypothetical in nature and reflects the potential growth that could accrue if the investment is held for the entire term selected. Minimum deposit is $1,000. The deposit account portion of the Save Market Savings product and service is provided by Webster Bank, N.A., Member FDIC; and is non-interest bearing with a 0% APY. Management Fees associated with the investments may reduce earnings on the account. Customer withdrawal prior to maturity could result in additional associated costs.
Portfolio diversification is key. A balanced investment portfolio is made up of a variety of investments that work together to help you achieve your financial goals while reducing risk.
For an individual investor, the more diverse their portfolio, the more protected they are from potential losses arising from market fluctuations. A portfolio that is too concentrated (for example, all invested in stocks) is subject to greater risk than one that spreads investments across different asset classes and geographic regions.
At Save, we utilize quantitative techniques to determine relative asset preferences, carry out risk-based asset allocation, and apply volatility control overlays to ensure our portfolios are diversified and expected to perform. This approach provides your portfolio with much-needed stability and reduces the risks of extreme fluctuations in the value of your assets over time.
An additional benefit of Save’s portfolios is that it isn’t your money that’s being invested. Your deposit is placed in an FDIC-insured account† with Webster Bank, N.A., Member FDIC, and it is never encumbered, collateralized, or put at risk in the market. There is no requirement for customers to outlay their own capital, nor do we fund it from customer accounts.
Instead, we and our partners take the economic value of your deposits and invest on your behalf in your selected Save portfolio.
Each Global Diversified Markets Portfolio utilizes a sophisticated rules-based investment approach that captures returns across a wide range of asset classes and regions, seeking to maximize the consistency of returns.
The portfolios invest across global equities, government and corporate bonds, inflation-protected bonds, real estate, gold, and the broad commodity universe (remember what we said above – diversification is key).
In addition to diversification, our rules-based approach assesses the trend and risk of each asset on a daily basis, as well as their correlations, subsequently allocating more weight to the assets expected to outperform while maintaining a diversified portfolio – seeking to maintain a stable level of volatility and minimize drawdowns. In simpler terms, we watch our portfolios on a daily basis in order to ensure they perform as well as possible regardless of market conditions.
Most recently, we’ve softly launched our Environmental, Social, and Governance (ESG) Portfolio, which caters to customers who want to align their investments with their environmental, social, and governance beliefs.
The ESG Portfolio utilizes the same sophisticated, rules-based investment techniques as the original Global Diversified Markets Portfolios and maintains a similar global multi-asset class approach, while utilizing ESG-focused ETFs and avoiding investments in certain commodities like agriculture and livestock.
Specifically, for index components that involve companies (rather than countries), such as equities and corporate bonds, the portfolio invests in iShares ESG Aware ETFs. These seek to provide similar risk and return as their respective broad market benchmarks, while only selecting companies deemed acceptable under the specific environmental, social, and governance rules.
While there is no “right” or “wrong” way to build and maintain a diversified portfolio, there are several important things to consider when it comes to selecting and investing in the appropriate mix of securities to help you reach your investment goals, assuming you don’t go with one of Save’s daily-balanced portfolios.
The following steps will help you build a sound – and diversified – investment strategy:
Analyze your financial situation to determine your goals (such as time horizon and target returns) and what types of investments can help you achieve them. For example, if you need your investments to be more liquid and accessible at any time, then you might not want to put your money into Series I Bonds or long-term CDs because both come with penalty fees for withdrawing your money before maturity.
Once you have your goals defined, you can focus on building your strategy. First, look at the asset allocation (stocks and bonds are the basic types) you’re considering. Then read this investing advice from Forbes about how to diversify your investments.
Once you learn the ropes, maintain your strategy and perform regular reviews of your strategy to ensure it remains consistent with your objectives and risk tolerance level. Much like our portfolios, you must review where your money is and how it’s doing regularly and rebalance your portfolio as needed to maintain your desired asset allocation. If manually doing this doesn’t sound like your cup of tea, consider robo-advisors, or Market Savings terms so that professionals are managing your portfolio for you. An additional benefit of Save portfolios, too, is that you’re not charged a fee if your portfolio doesn’t perform past the fee’s total of 0.35%.
During their last class, Professor Manolo Sanchez’s students heard from two local entrepreneurs who are working firsthand to try to disrupt traditional financial services. Save COO Adam Watts was among the invited entrepreneurs.
Watts began the lecture by highlighting our Market Savings terms, which are currently 7.64% APY for a one-year term, 5.75% APY for a two-year term, and 9.29% APY for a five-year term.* Recently, Market Savings was featured alongside competitors’ rates on GOBankingRates where the Market Savings APY blows competitors’ rates out of the water.
“Frequently, you will see our products outperform the leaders within that space by two to three times,” Watts said. “All while maintaining that great thing you love about your bank products where there is no risk to your cash, and you maintain FDIC insurance.”†
We’re able to achieve high APYs thanks to our partnerships. For Market Savings, we utilize two accounts; one deposit account with our partners at Webster Bank, N.A., Member FDIC, and one investment account with our partners at Apex Clearing Corporation. All cash deposited by customers for Market Savings is placed in an FDIC-insured bank account† and is not used to fund investments and is therefore not at risk of loss.
This allows all Market Savings deposits to be FDIC-insured† and invest equivalent portfolio investments on the behalf of Save customers at the same time. What we mean by equivalent portfolio investments is essentially taking the economic value of your deposits and purchasing securities on your behalf. Any equivalent investment is funded by Save partner banks. We do not fund it from customer accounts, and there is no requirement for customer outlay of their own capital.
The FDIC insurance† combined with higher APY* on your principal is motivated by our endless pursuit of looking after our customers. This practice extends into other aspects of our business, like our fee structure.
“We are the only wealth advisor – probably in the entire world – that doesn’t charge a fee unless you actually make money after our fees are deducted,” Watts said.
We are changing the investment world by doing something no other financial advisor is doing: If you don’t make money, we don’t make money.
Save’s management fee in the Market Savings program is 0.35% per year, but your portfolio has to earn more than 0.35% before we take our fee. This is our way of guaranteeing that your initial investment always stays intact while it grows.
The following is a breakdown of our fee structure:
Portfolio earns less than 0.35%
Portfolio earns exactly 0.35%
Portfolio earns more than 0.35%
Save charges no fee
Save charges no fee
You collect all earnings above 0.35%
Your initial deposit stays intact
Your initial deposit stays intact
Your initial deposit stays intact
Our fee structure is structured this way, there’s never going to be a scenario where we benefit, and the customer does not.
“There are two key points with the Market Savings: One that we never put [our customers’] cash at risk,” Watts said during the lecture. “And then two because our fee structure is structured this way, there’s never going to be a scenario where we benefit, and the customer does not.”
After explaining how Market Savings works and a few business details, like the fee structure, to the students, the lecture took a more organic turn as students began to ask questions.
Overall, it was an honor to speak to the class and we look forward to future partnerships with Rice University.
Deposits in Market Savings are FDIC insured2 and the investments are made by Save on your behalf to generate a higher return on your principal.
The Market Savings program is a unique alternative to traditional saving and investing products thanks to the dynamic duo of FDIC insurance and market returns.
There are several investment options for investors to choose from, including investing on your own, investing in CDs, bonds, Treasury Bills, fixed indexed annuities, etc. This article will reveal how the Market Savings program differs from these investing avenues.
Therefore, it all depends on your personal return goals and your risk tolerance. A $1,000 investment in stocks might achieve a return higher than the Market Savings program, but if the equity market declines, you may lose a substantial part of your principal.
With the Market Savings program, your deposit is FDIC-insured,2 your investments will utilize sophisticated investment approaches that allocate across several asset classes in seeking to provide stable returns over time, and dividends paid out by the ETFs in the portfolio are reinvested automatically.
Even if your Save investment strategies could have periods with a negative performance, your deposit is secure.
I could invest in the ETFs Save uses to avoid the management fee
Once again, it depends on your personal return goals and your risk tolerance. With the Save Market Savings program, your deposit is FDIC-insured,2 and Save utilizes sophisticated investment approaches in order to provide substantial, reliable returns – making the most of the decades-worth of portfolio construction and financial product development experience across the Save team.
These are the same academic approaches utilized by sophisticated hedge funds, pension funds, and insurance companies – delivered by the Market Savings program without intermediaries, and with a reasonable fee that is only charged if the investment portfolios perform.
Direct investment in ETFs could provide greater or smaller returns with the risk that you could lose some of your original investment.
Treasury Bills
T-bills: It depends on your personal return goals and your risk tolerance. As described by the SEC, Treasury Bills “are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.” Hence, your investment is likely safe, but your returns are not likely to be particularly high.
Series I savings bonds
Inflation-proof Series I savings bonds are a great option for investors, especially now since the rate is 9.62% for the first six months. But there are some downsides. After the initial 6 months, though, the rate may fluctuate depending on economic conditions. Additionally, the program is limited to $10,000 per person and per married couple and carries penalties for early withdrawal before the 5-year maturity.
Alternatively, the Market Savings program is capped at $250,000 per depositor because that is the maximum coverage FDIC insurance offers. While not as high at the 6-month bond rate, the APY for the 1-, 2-, and 5-year terms are 5.73%, 5.78%, and 9.35%.1
CDs and market-linked CDs
A CD may also be an FDIC-insured option that pays a fixed rate and, in some cases, a market-linked return (market-linked CDs), but the Market Savings program offers APYs significantly higher than fixed-rate CDs.1
The Market Savings program also yields higher potential APYs than market-linked CDs because we use our proprietary investment strategies and don’t charge commissions or fees beyond our management fee.1
Some CDs also carry a significant unwind penalty that diminishes the overall product return compared to the Market Savings program.
Fixed Indexed Annuity
The Market Savings program is very similar to a Fixed Indexed Annuity, except for a couple of things, which are listed in the chart below.
Features
Market Savings
Fixed Indexed Annuity
FDIC Insured
Yes
No
Term Length
1-, 2-, and 5-years
Usually >5 years
Fees Charged
Save charges a 0.35% fee only when there is a return above 0.35%.
Fees up to 5% upfront
Tax efficient investments
Yes
Yes
The safety of your money is just as important as the return they generate. If you’re looking for an account with high-growth potential without a risk to your principle, consider Market Savings. Learn more about the perks of banking with Save here.
1 Generally, an APY (or annual percentage yield) is the yearly return on a bank or investment account. Save Market Savings is a hybrid product and service that includes deposit account linked to an investment product. The deposit account portion of the Save Market Savings product and service is provided by Webster Bank, N.A., Member FDIC; and is non-interest bearing with a 0% APY. The investment portion of the Save Market Savings product and service offers the potential to earn an APY with a variable rate (Variable APY). The Variable APY, if any, is derived from the investments made by Save on behalf of the customer within Save’s portfolio of strategies over the duration of term length selected by the customer. The Variable APY, if any, will be equal to the cumulative return for the investments selected for you by Save for the term selected on the applicable maturity date. The Variable APY may be 0% but will never be less than the Minimum Variable APY of 0% per annum. Assuming a minimum Variable APY of 0% per annum, if the Variable APY applicable to a particular maturity date is less than or equal to the Minimum 0%, the customer will not receive any Variable APY return for that investment upon maturity. Variable APY’s are subject to change at any time. Variable APY is not guaranteed. The Variable APY presented is hypothetical in nature and reflects the potential growth that could accrue if the investment is held for the entire term selected. Variable APY’s are based on hypothetical back-tested performance in the Save Moderate Portfolio from 2006 to present and are shown net of fees. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. For more detailed information please see Hypothetical Back-testing. The minimum deposit amount is $1,000 for the 1-year term and $5,000 for the 2-year and 5-year term. Deposits are FDIC-insured up to the maximum allowed by law, $250,000 per depositor, per bank. Management Fees associated with the investments may reduce earnings on the account. Customer withdrawal prior to maturity could result in additional associated costs.
2 To obtain FDIC insurance coverage, customer funds provided will be deposited into non-interest-bearing accounts at Webster Bank. FDIC insurance coverage for funds deposited at Webster Bank is limited to not more than $250,000 per depositor, per FDIC-insured bank, per ownership category. Actual deposit insurance coverage may be lower if you have other funds deposited at Webster Bank, N.A.. Customers are responsible for determining the amount deposited in each account at Webster Bank, N.A., and for monitoring the total amount of their deposits at Webster Bank, N.A., to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Learn more at: https://www.fdic.gov/deposit/deposits. Only the funds customers provide and deposit with Webster Bank, N.A. will be eligible for FDIC insurance. Webster Bank is not providing any investment advice or responsible for the purchase or performance of any investment contracts. The funds held in the Apex Clearing Corporation accounts are not FDIC-insured, are not bank guaranteed, and may lose value with a minimum return of zero. Maximum balance and transfer limits apply. Neither Save Advisers, LLC, nor its affiliates, are a bank. Apex Clearing Corporation is a member of the Securities Investor Protection Corporation (“SIPC”), formed by Congress to protect “customers” of broker-dealers and to promote public confidence in the U.S. securities markets. Customers of a SIPC Member that fails financially are afforded certain benefits under the Securities Investor Protection Act (“SIPA”). These benefits are relevant only if the broker-dealer that “carries” a customer’s account fails and is liquidated under SIPA. At Apex Clearing Corporation, your investments are protected by SIPC up to a maximum of $500,000 total, including $250,000 in cash balances. Coverage limitations apply. To learn more about SIPC coverage, visit the SIPC website at www.sipc.org.
