Finance

Spend to Invest

FinanceInvesting
Woman smiling with bank card

It’s super easy to spend money. Each month we need to buy groceries, put gas in the car and pay our rent, just to list a few things that we need to spend our money on. Then there are the things we would love to get with our money, like a dinner out, a new pair of sneakers, or even going on that much-needed vacation!

What you can buy with your money is endless, and that’s why it is so easy to spend it.

What’s not quite so easy is having some money left over to invest.

That’s why Save has got your back by matching your spending with equivalent investments when you use your Save Debit Invest Card.

You really can Spend to Invest!

Let’s learn how your spending is converted into an investment with your Save Debit Invest Card.

‘Spend to Invest’ in 10 simple steps

Step 1: Make a qualifying purchase.

You buy the family a $300 dinner at your favorite Italian restaurant using your Save Debit Invest Card.

Step 2: Get a Push Notification

After paying the bill, you receive a notification on your cell phone telling you that your $300 spend will be matched by an investment.

Step 3: Go to ‘Transactions’ in your Save app

You can take a look in your Save app to see the money you’ve spent on your Italian night out listed under ‘Transactions’.

The next day, you go to the grocery store and spend $200. Then, you pay for your car to be serviced, spending $400.  Then, you continue using your Save Debit Invest Card on each day’s spend thereafter. Each item of your spending that qualifies will be matched by an equivalent investment and listed under ‘Transactions’ of your Save app as ‘pending investments’.

Step 4: View your ‘Debit Invest Total’

By the end of the month, you have spent $5,000 on qualifying purchases, all using your Save Debit Invest Card.

The total value of your spending during a given month will be added to your ‘Debit Invest Total’ ready for investment.

Step 5: Your investment matching will be traded the following month

A few days after the start of the new month, the $5,000 you spent the previous month will be reflected as a ‘pending program’ in the Save app waiting to be invested.

Your ‘Pending program’ will be invested on the second Wednesday of the month. This date will be presented to you in your Save app so you can see when to expect your trade to take place.

Step 6: On the ‘Trade Date’ your spending is invested

On the second Wednesday, Save will make a $5,000 equivalent investment on your behalf in your chosen portfolio. The amount invested will match the amount shown in your ‘pending program’ of your app.

Step 7: Your Invested Program

Once your $5,000 in equivalent investments have been traded, they will appear as invested within the Save app’s My Investments page.

Step 8: You receive a trade confirmation

About a week after your $5,000 has been invested, you will receive a ‘trade confirm’ message from Apex. Apex is the custodian of your investment.

To view your trade confirmation, you can log in online at Save, Accounts > Documents > Trade Confirms.

Step 9: Time to watch your investment

Each day, the value of your investment returns will be updated in your Save app for you to see. Go to ‘My Investments’ and you see the prior month’s debit invest programs. You will see the return as a $ amount and a % performance.

Step 10: Receive your investment return

In 12-months’ time, your investment will mature. Any return (net of fees) will be deposited back to your Save Debit Invest cash account.

For example, if your $5,000 investment matures and the return is 3%* net of fees, $150 will be paid into your account.

These simple steps to investing are done for you.

All you have to do is enjoy spending with your Save Debit Invest Card knowing that each time you spend you are building your investment.

Apply today to “Spend to Invest.”

*Average annual returns are based on hypothetical back-tested performance. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. Returns are subject to change daily. Minimum return will always be at least 0%. All return figures shown are for informational purposes only and are not actual customer returns. For more detailed information please see Hypothetical Back-testing.


Make your money work as hard as you do

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A great reason to invest is to generate additional income to fund your lifestyle

The problem is that to become an investor you need to have extra cash. If you’re spending what you earn and not living beyond your means, you either need to make more money or to cut-back on your spending.

What if you could invest without having to make these changes?

Switching household spend to your Save Debit Invest Card can cumulatively lead to a significant amount of investment matching. To illustrate, the average US household’s cost of living is estimated to be $4,536 a month*. By switching this expense to their Save card, Save would invest $4,536 each month on their behalf.

For every month you spend, your investment matching will be creating an additional possible source of income

Let’s imagine each month you:

  • Spend $4,536 on qualifying purchases.
  • Save invests $4,536 into your chosen investment strategy.
  • In 12-months’ time and each month from there on, you are paid any positive investment return generated, less Save’s management fee of 0.59%**.

Remember if your portfolio were to decline over a 12-month period, you simply would make a 0% return for that period. Additionally, Save only charges a fee if your portfolio’s gross return is greater than its fee.

Earn market returns paid directly into your debit card account

No change in your spending is necessary. For every month you spend, after 12-months, the investment return is paid directly into your debit card account. As such, you can generate additional income without changing your work-life balance or spending habits.

The below table is designed to demonstrate the types of monthly returns that could be generated based on an average monthly spend of $4,436. The returns shown are average returns that would have been generated by the Moderate strategy per month since 2006. As you can see, after 12-months of being invested your monthly spending can lead to an additional income. No predictions are being made, and what is paid depends on the performance of your chosen investment strategy.

Average monthly spend ($)12-month period toPotential Example Return ($)Example Return (%)
4,536.00January   145.153.20%
4,536.00February140.163.09%
4,536.00March136.993.02%
4,536.00April132.902.93%
4,536.00May129.282.85%
4,536.00June128.372.83%
4,536.00July123.832.73%
4,536.00August120.662.66%
4,536.00September131.092.89%
4,536.00October142.433.14%
4,536.00November148.783.28%
4,536.00December147.423.25%

The below bar chart brings the table above to life, showing you how the monthly returns could look if you spend on a cumulative monthly basis. Again no predictions are being made and what is paid depends on the performance of your chosen investment strategy.

Although the average annual return for Save’s Moderate investment strategy is 2.98%, the actual monthly return you’re paid fluctuates in line with the performance of your chosen investment strategy.***

What might you spend this additional income on?

A celebratory meal out with your family? A new pair of sneakers? Or maybe you will use this additional source of income to start investing even more!

Join Save today HERE and make your money work as hard as you worked making it.

*Source: https://www.expatistan.com/cost-of-living

** Any investments that are made on your behalf will be charged a management fee of 0.59%, if there are returns. If your returns are less than 0.59%, there’s no fee. You can see more information about our fees by reading Save’s Terms & Conditions.

***Average annual returns are based on hypothetical back-tested performance. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. Returns are subject to change daily. Minimum return will always be at least 0%. All return figures shown are for informational purposes only and are not actual customer returns. For more detailed information please see Hypothetical Back-testing.

The debit account component of the Save Debit Invest card product is provided by Radius Bank now Lending Club Bank, N.A., Member FDIC pursuant to license by Mastercard.

Emma Wright, Financial Coach, Chartered Financial Planner, founder of Emma Wright Coaching. 

Re-writing the rulebook of RISK

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Risk is inherent to investing.  In general, the biggest concern most people have when investing is that you could lose all of your money. 

But what are the risks when no financial loss is possible?

Moreover, what are the risks you face when it is your spending, not your savings, that generates your investments?

Understanding some of the risks that Save investors face

First things first: with your Save investment, in the event that your chosen strategy were to make a negative return over a 12-month period, you simply wouldn’t earn a return for that particular month’s investment.  In other words, your investment return for that period would be zero.  A negative return where you were to lose money would not be possible.

Beyond the risk of a zero return, risks still exist that you need to be aware of.

Inflation risk

Inflation will impact the return you make in real terms. Inflation impacts all investment returns. For example, if inflation is 2% for the year:

  • If your investment grows by 5%, then you will have made a real return of 3%.
  • If your investment grows by 1%, then you will have made a real return of -1%, which is a loss in real terms.

Under most circumstances, leaving your money in savings will likely leave you more exposed to the impact of inflation than if you invest because most checking bank accounts aren’t currently expected to pay you interest that is greater than inflation. As the price of goods and services in the US rises over time, your purchasing power will therefore diminish. Save, however, combines bank account features with investing to potentially give you a better chance of beating inflation and maintaining your purchasing power. To learn more about this go to ‘A New Way to Maintain your Purchasing Power’.

Fluctuation of your monthly returns

The average annual return is currently 3.00%*. This is what we’d expect you to earn on average over a 12-month period.

However, the return you receive each month from your Save investment will fluctuate in line with the performance of your chosen investment strategy.

  • If your chosen investment strategy generates a return of 5.00% over a 12-month period, you will be paid 4.41%, after Save have taken their management fee**.
  • If your chosen investment strategy generates a return of 2.00% over a 12-month period, you will be paid 1.41%, after Save have taken their management fee**.
  • If your chosen investment strategy generates a negative return, you simply won’t earn a return for that month, and neither do Save. Save won’t change you a management fee if they don’t make you a return for that 12-month period.

Your return potential isn’t capped, but it is not guaranteed and will vary month to month.

Opportunity cost

For the opportunity of an investment-linked return, by using your Save Debit Invest Card, you are giving up receiving other potential reward cards available to you.

There are other reward cards available that will pay you a fixed return. However, the fixed return is smaller than the average annual return of your Save Debit Invest Card. For example:

  • Citi Double Cash Card pays a fixed 2.00%
  • Discover Cashback Debit pays a fixed 1.00%
  • Chase Freedom pays a fixed 1.50%

To have the chance of earning, on average, a higher return of 3.00% you are giving up a smaller guaranteed return. This is the trade-off you make when you become an investor.

Save have re-written the rule book of risk

While you can’t remove every risk with your Save investment, it’s important to remember;

  1. In the event of a zero return, if you have been using your Save Debit Invest Card on a frequent monthly basis, there is always next month’s potential return.
  2. Save won’t charge you a fee if you don’t make you any money on your investment.

Apply for your Save Debit Invest Card HERE today.

*Average annual returns are based on hypothetical back-tested performance. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. Returns are subject to change daily. Minimum return will always be at least 0%. The return figures shown are for informational purposes only and are not actual customer returns. For more detailed information please see Hypothetical Back-testing.

**Any investments that are made on your behalf will be charged a management fee of 0.59%, if there are returns. If your returns are less than 0.59%, there’s no fee. You can see more information about our fees by reading Save’s Terms & Conditions.

Card comparisons made based on public disclosures available by other issuers. Source: Discover, Citi, Chase websites. Interest rates for these comparisons were sourced as of 8/06/2021.

Emma Wright, Financial Coach, Chartered Financial Planner, founder of Emma Wright Coaching. 

What’s inside your wallet?

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Let’s take a look!

That dollar bill in your wallet is an asset that you will inevitably exchange for something else of value.

When you buy an investment, each type of investment is classed as an ASSET. The price you pay reflects its value.

When you own your home, then your home becomes your asset; when you own your car, your car becomes your asset; etc. The reason you buy an asset is that you’re expecting to receive a benefit or a potential reward from owning it.

The concept of receiving a potential future reward is why you become an investor. The purpose of investing is to hold assets that you expect will provide a return over time.

What happens when you group similar assets together?

You create an asset class. For example, your home would be considered part of the ‘Real Estate’ asset class.

There are 5 main asset classes when investing

  1. Treasuries – often classified as the safe haven, money you lend to the Government in return for fixed interest.
  2. Bonds – money you lend to a company in return for fixed interest. Bonds tend to be less risky than Equities and Commodities.
  3. Equities – own a company’s stock in return for a share in the company’s performance and capital growth.
  4. Real Estate– ownership in residential or commercial property in return for capital growth and potential rental income.
  5. Commodities – a raw material, such as gold, coffee, wheat, oil, etc.

Each asset class provides a different type of benefit from the other, but each one can generate a potential financial reward.

What else is inside your wallet?

Your Save Debit Invest Card! This is your gateway to investing into even more asset classes simply by spending your money each month.

When you spend using your Save Debit Invest Card, for every $1 you spend on qualified purchases, Save will invest $1 into your chosen investment strategy.

There are three investment strategies to choose from. Each strategy will invest into multiple asset classes on your behalf. For example, the Conservative strategy currently includes the following asset classes:

Source: Save, 12 July 2021

Let’s bring this to life

Imagine you renovate your home, which costs $30,000. Not only is the value of your home likely to rise once the work is complete, but if you use your Save Debit Invest Card for all of your renovation spendings, Save will invest another $30,000 on your behalf. This means that the $30,000 you spent also gives you access to lots of other valuable asset classes in one single transaction.

Your Save Debit Invest Card is therefore yet another asset you can keep inside your wallet.

To get your Save Debit Invest Card today visit: https://signup.joinsave.com/personal-info

Emma Wright, Financial Coach, Chartered Financial Planner, founder of Emma Wright Coaching.

Vacation celebration. Turn your vacation into an investment

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You’ve landed that big client contract that you’ve been working tirelessly on.

It’s time to celebrate with an ice-cold beer. Let’s plan your well-deserved, and much needed, family vacation that you’ve been dreaming about for months.

Are you ready to wind down with sandy toes and a good book while the kids frolic in crystal clear waters?

Your dream family vacation spending checklist

  • Flights for a family of four: $2,000
  • Dreamy beach-side resort: $4,000
  • New beach-ready wardrobe: $1,000
  • Uber to the airport: $100
  • Last-minute airport purchases, like forgotten sunscreen, diapers, and that book you’ve been meaning to read: $100
  • Ice creams and cocktails to keep you cool: $500
  • Nightly fine dining, you do enough cooking at home: $2,100
  • Day trips making memories: $2,000
  • A massage, or two, to make sure you’re fully relaxed and rejuvenated: $500

All in, you’ll need to spend $12,300.

Making memories for the whole family that will last a lifetime isn’t cheap, but it’s priceless.

What’s holding you back?

Are you considering what else you could be doing with your hard earned money?

What if Save converted your vacation spending into an investment?

All you need to do is use your Save Debit Invest Card for all of your vacation spending. You are then ensuring that the money you worked so hard to make will work for you.

For every $1 you spend on qualifying purchases with your Save Debit Invest Card, Save will invest $1 on your behalf. This means that the $12,300 that you spend on your dream vacation will be matched by Save who will invest $12,300 into your designated portfolio.

Let’s bring your family vacation spending & investment to life

  • You open a Save Debit Invest Card today HERE.
  • There are three investment strategies to choose from. Let’s say that you choose the Moderate strategy when you open your account.
  • You spend $12,300 on your dream vacation.
  • Save invests $12,300 on your behalf into the Moderate strategy for one year.
  • In one year’s time, Save pays you the return achieved by the Moderate strategy directly into your Save debit account.
  • If the average annual return after fees, of 2.99%*, is achieved, this would mean a cash reward of $368.

And there’s more!

Your investment potential isn’t capped, so if your chosen strategy generates a higher return, you will benefit from this outperformance. The actual return you make could be higher or lower than the average annual return. What you make depends on how the investment strategy performs during the year of your investment after the deduction of Save’s management fee. If the strategy makes a loss, you won’t suffer any penalty, you simply won’t earn a return for that monthly spend.

Stop dreaming, celebrate your successes and turn your vacation into an investment so your next vacation is even better!

*Average annual returns are based on hypothetical back-tested performance. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. Returns are subject to change daily. Minimum return will always be at least 0%. All return figures shown are for informational purposes only and are not actual customer returns. For more detailed information please see Hypothetical Back-testing.

Emma Wright, Financial Coach, Chartered Financial Planner, founder of Emma Wright Coaching.

A New Way to Maintain your Purchasing Power

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It’s hard work being a parent in charge of your growing family. So, is your money working as hard as you behind the scenes?

One of the biggest areas families spend their money on is groceries. With growing mouths to feed, it is easy to spend $1,000 a month or more on food alone.

What is scary is the impact inflation is having on the rising cost of your grocery bill. Inflation is the general increase in prices over time. For a healthy economy, the Federal Reserve has a target for US inflation to be, on average, 2% a year. If this target is met, this year’s $1,000 a month grocery bill will cost you $1,020 in a year’s time. To offset this rising cost, you will need to find an extra $20 per month or $240 for the entire year. Every $1 you spend is losing its purchasing power over time.

If you want to buy the same basket of groceries in a year’s time, you need your $1,000 in your bank account to grow in value beyond the rate of inflation. If not, you will need to find the extra money by either working more hours or earning more money.

So, it is vital you make each $1 you need to spend work as hard as it possibly can for you.

Become an investor and maintain your purchasing power

A real return is one that is greater than inflation, and one of the best ways to generate a real return to combat the impact of inflation is to invest in the stock market.

Most checking accounts don’t offer much in the form of returns, much less returns that keep ahead of inflation. However, history has shown that the stock market can consistently outperform both cash and inflation over time, and stock market investing is a key way of maintaining your money’s purchasing power. The S&P500 Index, which is used as a benchmark for the biggest 500 companies in the US economy, has grown in value by 172% over the last 20 years as of January 1, 2021, outperforming inflation measured by the Consumer Price Index by 122%. This outperformance shows how the stock market can generate real returns even after accounting for inflation.*

You don’t need to be an expert to invest

There are tools to help you invest. One such tool is to use a portfolio that is managed on your behalf by an expert. This means that you can sit back and relax or carry on with being a busy parent knowing that:

  • An expert portfolio manager will pick the investments that they think will perform the best based on your profile.
  • You don’t have to spend your time managing your own portfolio.
  • The risk of investing is managed and well diversified.

Save has created three portfolios: Conservative, Moderate and Growth. All you have to decide is which one is right for you. Learn more about Save’s portfolios here: https://www.joinsave.com/analyzer

Maintaining your purchasing power

If you select the Save Moderate strategy with a Save Debit Invest Card, the expected return after fees is currently 2.99%** per annum. If you spend $1,000 on groceries, Save will invest $1,000 into the Moderate strategy on your behalf. In one year’s time, if the average expected return is generated, Save will pay you a reward of $29.99. This means that, if the rate of inflation remains at 2%, when you buy your groceries next year you will have the extra cash you need in your checking account to more than maintain your purchasing power.

 

* https://fred.stlouisfed.org, https://fred.stlouisfed.org/series/CPALTT01USM659N
Consumer Price Index: Total All Items for the United States, Growth Rate Same Period Previous Year, Annual, Not Seasonally Adjusted

**Average annual returns are based on hypothetical back-tested performance. Hypothetical back-tested performance is no guarantee of future performance and actual results will vary. Returns are subject to change daily. Minimum return will always be at least 0%. All return figures shown are for informational purposes only and are not actual customer returns. For more detailed information please see Hypothetical Back-testing.

Emma Wright, Financial Coach, Chartered Financial Planner, founder of Emma Wright Coaching.

American Entrepreneurial Spirit combined with a Nordic Safety Net: How Save® Built a Distinctive Company Culture

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Save® was founded with an important mission: to help people earn a higher yield on their savings.  We are fundamentally changing how things are done in the world of finance in a way that puts the customer first. We are reimagining the concepts of risk and reward for everyday people who want to save money. We are putting more money into the pockets of people who have been short-changed, overcharged and under-rewarded by the financial system.

Our company DNA combines the best of America and Finland. Two different places with different cultures and ways of doing business. But we believe that Save can combine the best of two worlds: the Nordic model of our Founder and CEO Michael’s homeland of Finland, with its approach of pragmatic solutions and mitigation of risk, combined with our Houston, Texas-based team led by our COO Adam Watts with its entrepreneurial dynamism and American optimism.

We want people to have a safety net for their savings and be able to capitalize on the entrepreneurial upside of market investments.

Here are a few reasons why we believe the Save® company culture will be a winning combination for your savings.

Re-thinking the Concept of “Risk Capital” for Savings

One of the first principles of investing is “Risk and Reward.” If you are willing to take more risk with your money, you should be rewarded for it with higher returns. If you are not willing to put your money at risk, you should be willing to settle for lower but steady returns.

In the current low-interest rate environment, we’ve ended up with a situation where bank accounts are paying near-zero interest. If customers aren’t satisfied with earning no yield on their cash savings, they have to take risks in the markets.

We believe we’ve found a solution for conservative investors or savers who need stable yields but without putting their cash deposits at risk. We give you the American-style entrepreneurial upside of smooth, steady market returns combined with the Nordic-style safety net of avoiding the risk of investment loss. 

Putting the Customer Back at the Center of the Business Relationship

Too often in the world of finance, customers – especially everyday savers with simple bank accounts – are treated almost as an afterthought. Money talks, and if you’re just an average American with 3 months of savings in the bank, most banks aren’t listening to you.

At Save®, we have aggressively reimagined the relationship between savers and the banks that host their savings accounts. We are genuinely putting the customer first. Everything we do is focused on, “how can we cut costs for the customer, how can we pass those cost savings on to the customer, how can we enlist the customer as a partner in helping to boost their own yields on their savings?”

Everything we do at Save is focused on giving value back to the customer. We have developed pragmatic, fair customer-centered solutions that provide a better value for all while also being proactively innovative in redesigning the way our industry works.

The Safety Net: FDIC Insurance

Every Save® account is connected with a FDIC-insured bank account. Your deposits are never at risk. We only invest the interest on your deposits, so no matter what happens with the ups and downs of the markets, your initial deposit is never at risk for investment loss. 

The Upside: Market Investments

Instead of settling for near-zero interest rates, Save gives you the upside of market investments. We invest the interest on your deposits in a diversified, tech-optimized investment portfolio that includes cash equivalents, stocks, bonds, commodities and real estate exchange traded funds (ETFs).  Portfolios are rebalanced daily and selected to protect your money from loss while generating stable returns that are potentially higher than any high-yield savings account, CD or bond index fund.

We are bringing the benefits of financial technology that previously might have been used only by big institutional investors, and we are making it available to everyday people with a savings account.

The world’s first Debit Invest Card

The Save Debit Invest Card uses our portfolio technology to reward our customers for everyday debit card spending. For every dollar of signature spend with your Save card, we’ll give you a dollar of equivalent portfolio investments. This is the world’s first debit card that boosts people’s saving power on a dollar for dollar basis.

Instead of other rewards cards that encourage people to spend more money or cash in their reward points for gifts that they might not really need, the Save Debit Invest Card is a dose of Nordic-style pragmatism: whenever you spend money, we’ll help you boost your savings.

The Save Debit Invest Card can add significant growth potential to your savings account by letting people participate in the upside of market returns without having to invest any more money, take any risks, or otherwise change their behavior as savers and investors. Depending on how much you spend and how the overall markets perform each year, your savings account might outperform the stock market.

Combining the debit card with the savings account makes for a very compelling way to save without risk.

Safe but also engaging

Most bank products are unexciting and deliver little. Put in your money; earn near-zero yields. There’s safety but no upside.  Most market investments are not safe. Invest your money and you might experience short-term volatility, you might lose your investment, you might lose money that you can’t afford to lose. There’s upside but no safety.

Save is something new and different. It’s safe and engaging – you can keep your money safe while still participating in the markets. The same process you would use for opening a simple bank account can now be used to get your money working for you. None of your cash has to sit on the sidelines now. And you get regular notifications and can watch your portfolio grow through the Save app and dashboard with daily portfolio updates.

A Safety Net That Optimizes Your Upside and is Fair on Fees

Too often in financial services, the financial gains of customers’ investment money are not fully returned to customers. Too many customers are getting short-changed by high fees, underperforming advisers, and opaque arrangements. Think about a typical bank customer that earns near-zero interest on their savings while paying monthly fees and high interest on credit cards. Think of all the financial advisers that charge 2% fees per year, whether they make money or not. 

Save offers no-risk investments but also doesn’t charge any fees if there isn’t any return in the portfolios. This means we are fully aligned with our customers. We thrive only when there is strong performance, and our customers are happy. 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.

Whether you’re from Texas or Finland or anywhere else in the world, we believe that Save is a compelling new way to help you earn higher yields on your savings while avoiding the risks, costs and downsides of other types of investments and savings accounts. If you want to get the best of both worlds, with Nordic-style safety and Texas-style dynamism, sign up for a Save account today.

Learn more and sign up for an account today at joinsave.com 

Managing Risks for Steady Returns: The Save Portfolio Strategy

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Save is offering something that is different than a typical savings account: we give your deposits the safety of FDIC insurance while we invest the interest or give you debit card rewards in the form of a diversified portfolio of investments, backed by sophisticated strategies and financial technology. The goal is to deliver a stable investment return that is significantly higher than any bank savings account. So how do we do it? How does the Save portfolio strategy work, and what can you expect us to do in managing your money for the optimal balance of risk-management and positive market returns?

Whether you’re an experienced investor or just getting started with learning about the stock market, we believe that sharing more information with you about the Save strategy and the way we manage your investments with attention to risk management and delivering stable returns will give you confidence in keeping your money with us.

Save is using portfolio strategies and similar technology solutions that have already been used for many years by institutional investors, such as pension funds and insurance companies. Indeed, most large institutions that need to achieve steady, stable returns to earn income for their customers have been utilizing these types of strategies and tools. What Save is doing is democratizing these strategies: we are bringing the same types of financial planning and portfolio design methodologies that institutional investors use, along with our advanced financial technologies, to help everyday people earn higher yields on their savings.  

We talked with Sid Browne, Ph.D., Chief Investment Officer of Save, about how the Save portfolio strategy works, how our portfolios are designed, and what it means for how we manage your money.

Finding a Better Balance of Risk and Reward

One of the fundamental concepts about investing is the idea of earning a risk premium. Investors are supposed to get rewarded over time for taking on certain economic risks that other folks don’t want to take. Risks don’t always pay off; for example, not every individual stock or exchange traded fund (ETF) always goes up in price. But over the long run, with a disciplined approach and a thoughtful strategy, investors mostly should expect to earn some upside return in exchange for investing in riskier assets.

When investors are risk-averse, or have a shorter time horizon, they often look to the world of fixed income, such as U.S. Treasury bonds or money market/cash equivalents. These are considered “safe” assets, where investors are guaranteed to earn a certain fixed rate of return, but that return (especially in today’s near-zero interest rate environment) might be very low.

The proper risk and reward balance is something that every investor must strike individually. The Save portfolio strategy is focused on this concept: is the upside potential good enough for the risk that you are taking? Save has designed a sophisticated portfolio that is diversified across asset classes(stocks, bonds, cash equivalents, some commodities, some real estate ETFs) and is also diversified across the risk spectrum.

Save does not just “buy and hold” a portfolio for an entire year; we try to be active “risk managers” of your investment dollars. We make ongoing adjustments, backed by advanced financial technology, to make the right moves at the right moments, to put your money into the right blend of assets to minimize your risks and create a steady, stable return relative to the  equity market itself.

Our portfolio is not designed to take excessive risks. We are not attempting to earn maximum yields. We are trying to minimize the ups and downs and protect against excessive volatility. We are trying to deliver consistent, steady results. To use a baseball metaphor: sometimes batters try to hit home runs every time, but they also strike out a lot. We are not trying to hit home runs. We are trying to hit consistent singles.

Identifying the Good Risks, “Winners” and “Losers”

There are three components that Save uses in building our portfolio:

  1. Choose Investments with a Good individual Risk-Reward trade-offs: We don’t just analyze investments based on price, we analyze based on risk and estimate how volatile these investments are likely to be. For example, if you have $100 to invest and are trying to choose among 10 different investments that have a price of $10 each but some of them are likely to lose or gain $5 and some are likely to lose or gain $1, you wouldn’t put $10 into each of the 10 investments but would balance the investments to manage the risks while still capturing some upside. To properly balance those different risks, one needs to invest less in the riskier assets while increasing the investment in the lower risk assets. We do that at Save in a scientific and systematic fashion.
  1. Buy “Winners,” Avoid “Losers;” Choosing Investments Based on Positive Trends: We have built a filter based on the concept of “Trend Following”  into our technology that helps us analyze investments based on how they are trending: are these investments going up or down in price? We try to buy “winners” (investments that are trending upward) and avoid “losers” (investments that are trending down). We want to capture some of that positive momentum and be on board for a rising tide. Based on our analysis, if an investment does not have a positive trend signal, we reduce our investment in it at that time and only increase our investment when we have strong evidence that it has a high probability of gaining positive returns. Our research has shown that reducing the size of losing trades from the portfolio is a key component at increasing the compounding rate, which is the goal of long-term investing.
  1. “Dial It Up or Down” Based on Volatility: The Save portfolio is also built to manage periods of ongoing market volatility. We are trying to deliver stable, smooth compounding returns to our customers. But, obviously, as anyone who has lived through 2008 and 2020 can tell you, the markets are rarely stable and smooth! We have designed the portfolio to target a particular level of market volatility that we are willing to accept in order to try to earn the appropriate risk premium, and we dial up or dial down the portfolio’s risk exposure based on our overall risk assessment of the general market volatility.

Think of the Save portfolio as being a radio with a dial on it: we can “turn up the volume” or “turn down the volume” based on changing market conditions. We want the portfolio to have a constant level of risk exposure to manage volatility. We don’t want our portfolio to go up and down as wildly as the broader markets, but we do want to capitalize on opportunities in ways that make sense for our investment strategy when the markets are more or less volatile.

In times of greater assessed market risk, we reduce our portfolio’s exposure to the stock market. But, at times of lower risk, when we want to get higher returns and the opportunity is right, we can increase our portfolio’s exposure to the stock market. We are constantly shrinking or expanding our asset allocations, with the goal of keeping our portfolio’s volatility within a constant range. We want to put a bit more money into certain assets at certain times and shift money away from other assets at other times with the goal of generating those smooth, stable returns while managing risks. We can “dial it up” or “dial it down” at any time in a tax-efficient manner.   

Adapting to Changing Conditions

As our customers’ fiduciary savings adviser, Save is not “risk seeking.” We intend to generate smooth, steady returns on our customers’ savings. We are not overly ambitious with our growth targets and risk tolerances. And we constantly readjust our positions based on changing market conditions.  

We don’t just set up a portfolio on Day 1 of the yearlong investment period and then leave it alone for a year. The portfolio changes dynamically day to day in order to achieve our target exposures and volatility. The portfolio is constantly traded to try to put the right amounts of money into the right investments to keep earning returns and managing risks for our customers during the course of each 1-year investment period. 

Some people might say: “Why do I need Save? Why can’t I build my own diversified portfolio, manage it myself, and try to get the same return?”

We believe that our financial technology can deliver something that no individual investor can accomplish for themselves: managing risks in this tightly controlled, disciplined way while generating a smooth, steady return with tax-free rebalances. As an example, since our portfolios rebalance daily, this means we would do 30 trades a day or 7560 trades per customer account per year, at least.  This is very hard to accomplish by an individual and there is a likelihood returns may be eroded due to trading costs or other inefficiencies.

Save is giving our customers access to a sophisticated type of risk management and active investment management that is difficult to create or replicate for themselves. Until now, this type of technology has been available for the institutional investor world – such as pensions, or insurance companies. Save is now offering it to individual savers for the first time ever. 

Offloading Risks: Guaranteed Deposits, Protection Against Losses

Another component of the Save portfolio strategy is that we completely protect our customers against risk of loss of their initial investment. Even if the markets perform poorly and the portfolio does not deliver a return over the course of an entire year, Save customers are always guaranteed to keep 100% of their cash deposits, which are FDIC-insured to the full limits of the law.

Save customers can withdraw their deposits without penalty at any time during the 1-year investment period, but if you want to earn a return, we ask you to leave your money with us for the full year. Why? Because there is a cost that Save has to pay upfront to purchase your investments. Part of that cost is related to the way that we manage your risks to protect you against losses. 

This is another technique from the world of institutional investing that we are making available to individual savers: offloading of risk. We build a portfolio for our customers, and then we purchase a security on that portfolio from our bank partners that tracks the upside of the portfolio on a one-for-one basis We invest only the interest in this security and never touch the initial capital, which is in an FDIC insured account.

What does this mean for your savings? Even if the Save portfolio does not deliver a market return, our customers will always be protected against the risk of loss. Your deposits are always safe and FDIC-insured, and your investments are managed in a way that protects you from any losses no matter what happens in the markets. 

In spite of our advanced technology, the Save portfolio strategy is ultimately Old Fashioned tried and true Finance 101: we want to minimize risk in order to maximize the compounding rate, which is the key to building wealth over time. We do it by tilting exposures to investments that have a higher probability of gains while tilting exposures away from investments that have a lower probability.  All the while, we do this in a risk-diversified manner, targeting volatility over time(and dialing the portfolio’s exposure up or down as needed) and protecting our customers against losses by transferring risk away from our customers .

Save is transforming the idea of “risk of loss” in investing. When you put your money into a Save Market Savings account or use our Debit Invest Card, you agree to give up the guaranteed (low) interest that you would earn from a conventional bank account, and we transform that interest income into risk capital that can actually be invested to generate a return. But only the interest on your deposits, not your deposits themselves, is ever at risk.

We believe that Save has developed a one-of-a-kind solution that can help savers achieve significant yields on their savings, while enjoying the full safety of FDIC insurance. Save’s portfolio strategy is not about getting rich quick; it’s not about maximizing growth; it’s about delivering smooth, steady returns while managing the customer’s risks while protecting the customer against any possibility of loss. 

Ready to join Save? Sign up for your Save account today.

Record High Personal Saving Demands, Near-Zero Yields: Americans Need a Better Way to Save

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The COVID-19 crisis has reminded every American of the importance of having some cash savings in the bank. Millions of Americans are more worried than ever about their financial future and are scrambling to save more money. But what if those bank savings accounts aren’t paying any interest? What are savers supposed to do if saving doesn’t pay?

According to recent data from the Federal Reserve, as of June 2020 the U.S. personal saving rate is now at 19%, a historical high. Americans are clearly looking to save as much money as they can during uncertain economic times. Unfortunately for these savers, bank savings accounts are paying near-zero yields. Even so-called “high yield” online savings accounts and CDs are paying APY rates in the range of 1.30-1.50%.

What are savers supposed to do? There has to be a better way to save. There has to be a better choice other than “risk your savings in the volatile stock market” or “earn near zero interest in a bank account.”

Introducing: Save

The better way to save is here. It’s not just a savings account, it’s a savetech platform that helps people maximize their savings.

Save was created by a team of financial industry veterans, quantitative experts, investment managers and data scientists. Our goal is to offer a better way for people to manage their savings.

Just as the robo-advisor category has emerged in recent years to give individual investors more options and flexibility for how to manage their retirement savings and stock market portfolios, Save intends to create a new category of personal finance as the world’s first “robo-advisor for savings.”

What is a “Savetech” Platform and “Robo-advisor for Savings?”

Save is not a typical savings account: it’s a comprehensive “savetech” platform – an FDIC-insured savings account that lets savers earn the potential upside of market investments.

How does it work?

Our savetech platform has a few components:

  • Market Savings Account: When you sign up for a Save account, your deposits are placed in an FDIC-insured Market Savings Account through our banking partnership. You can withdraw your deposits at any time and your money is fully FDIC-insured to the same extent as a typical bank savings account or CD.
  • Interest Invested in Market Portfolio: However, instead of having to settle for the small amount of near-zero interest that a bank savings account would pay, Save invests your interest in our diversified portfolio of investments (stocks, bonds, cash, some commodities and real estate). The portfolio is optimized with technology with the goal of delivering stable returns. Based on hypothetical back-tested performance, we expect that our portfolio can deliver average annual returns of 3.15%**.
  • The Save referral program: Save makes saving social. Whenever a Save customer refers a friend or family member to open a Save account, they will each receive a bonus of $1,000 of equivalent portfolio investments; this can help boost your investment returns significantly. This referral program is designed to be exceptionally generous and have strong upside potential for customers returns. Most institutions might give you a free toaster for referring a new customer; we give you measurable gains in terms of actual returns.
  • Everyday spending rewards: Save also offers a debit card linked to your Save account where you can earn additional rewards of the equivalent of $1 of additional portfolio investments for every $1 spent. So if you spend $10,000 per year on your Save Debit Invest card, your Market Savings Account will be credited with the equivalent return for an extra $10,000 of savings.
Low Fee “Savings Advisor”

You might be wondering: if Save can promise such a compelling returns, how much are the fees? The answer: our fee is only 35 basis points (0.35%) – and we only charge the fee if the portfolio delivers a return greater than the fee. Unlike many other investment managers, Save only makes money if we succeed at making money for you.

We serve as a “savings advisor” to our customers. We invest their money responsibly with sophisticated investments, optimized with financial technology and targeted for their savings goals, but we only make money when our customers make money. And our customers have no risk of losing their initial deposits, which are FDIC-insured through our banking partnerships.

With Save, you get the safety net of FDIC-insured deposits, and the upside of an entrepreneurial fintech “savings advisor” that smartly manages your savings yield to help your savings grow faster with market investments.

How Liquid is Your Save Account?

Save offers similar liquidity to a bank savings account: you can withdraw your deposits from Save at any time, but you have to leave your deposits with us for 12 months to earn a yield. We require customers to make a minimum 12-month commitment to earn a yield, based on the costs of investing/managing the portfolio assets.

What is in the Save Market Investment Portfolio?

Save is a savings advisor, so we help customize your portfolio based on your risk tolerance and savings goals. But in general, we invest our customers’ savings yields in a diversified portfolio of cash equivalents, U.S. and international stocks, bonds, U.S. Treasuries, emerging markets, commodities, and real estate.

The goal of our portfolio: deliver stable returns with short-term upside, but with a higher yield than any savings account or CD can achieve.

Until now, this type of tech-driven investment has mainly been available only to institutional investors or sophisticated high-net worth investors. We want to democratize these investments and make them available to the U.S. consumer market.

The moment is right for innovation in the personal savings space. No other company is offering this combination of FDIC-insured deposits and market-driven upside. At a time when the stock market is volatile and bank accounts are paying nearly nothing, our fintech “savetech” platform is reinventing the idea of what it means to make your savings grow. We believe this will be a new category of personal finance that will open up new growth opportunities for potentially millions of everyday savers and investors.

Tired of zero-interest bank accounts? Want a better place to put your savings? Sign up for Save.

Register here for Priority Access: https://www.joinsave.com/reserveyourspot

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