Last Updated on September 13, 2020 by joseph
If you’re anything like me, or if you’ve ever watched a movie set in Wall Street, then you’ve probably also always wondered how the stock exchange works and whether you can actually make money by investing in companies on the rise.
If you google the term stock market, you’re immediately demotivated by the sheer amount of information, endless variables, and impossible prerequisites of entering this highly exclusive and very secretive field. Now if you do decide to expend more effort and manage to weed through the smog of misinformation and hyper complexity of the fine details, you might find yourself at the door, or on the website, of a hedge fund.
Hedge Funds are essentially groups of financial experts who collect money or “investments” and use their expertise to buy and sell stocks to achieve the largest profit possible.
Individual investors with smaller capital and no corporate backing are usually called retail investors, and they’re usually given little to no information or guarantees before investing so tend to carry more risk.
Enter Instavest, a fresh initiative that promises to ease the challenge for amateur investors while increasing accessibility through an online, social-media style platform that connects them with experts and other investors.
Said experts offer financial and investment tips in exchange for compensation after profit is gained. What this does is that it both ensures retail investors’ money while incentivizing the financial experts to try and provide more guaranteed investments.
Attaining a 1.7 million dollar seed funding from world-famous Y Combinator incubator and Skype co-founder Jaan Tallinn, Instavest might be the next leap in personal investment options in the information age. Through an ambitious structure and platform, Instavest aims to overthrow the common conception of hedge funds in investments.
Instavest has a simple concept and execution; a simplified explanation of its function is simply that an investor signs up on the website, buys stocks as they would do on a brokerage website, then provide a brief rationale for the investment.
Other investors can later copy that investment and “tip” the primary investor. Expert investors are given more options in terms of investments they make public and compensated by optional premiums for fees.
However, Instavest’s faculties don’t stop there, these are some of the various features Instavest contains.
- Easily accessible, slick website design. A user signs up, providing their personal and financial information such as credit card numbers, which are legally required.
- Instavest uses bank-level security and doesn’t share your information which is also encrypted.
- Through a twitter style lay-out, expert investors are portrayed in a list with their credentials, money managed, and successful investment rates displayed for users to see.
- Users then decide whether or not to invest depending on the expert’s reputation and perceived value of the tip they’re offering.
- Through integrating with the Tradier API platform, Instavest facilitates the administration of smart brokerage advice from its expert investors straight to the customers directly and swiftly.
What Are a Few Improvements Instavest Has Provided on Its Platform to Optimize User Experience?
A challenge usually facing experts on Instavest is that compensation was optional to the user, and a lot of users would opt out of donating to the expert even though they made substantial profit; that’s why Instavest introduced a new feature where experts can offer to send monthly paid subscription newsletters to investors with their tips which are to be published publicly days later.
Another recent issue solved by the new version is access to brokerage accounts through the website. Before, when users decided to invest according to a tip from one of the experts, they’d have to log out Instavest, login to a stock exchange website and purchase the stocks they were advised to get.
A recent update has integrated access of the users’ profiles on 10 of the most popular stock exchange websites, which allows investors to invest directly through the Instavest website without having to disrupt their experience.
Other Than That, What Are Other Unique Selling Points Offered by Instavest to Its Users?
Unlike other trading platforms, Instavest doesn’t charge management fees, meaning customers are charged only if profits are made.
Contrary to traditional hedge funds and stock management firms, Instavest is completely based on transparency, meaning that every advisor is placed on a public list on the website where their previous investments, their success rate, and reputation based on a point system are assessed.
However, two main problems hedge funds have is that they usually require and work with large sums of money not available to an average person looking to invest some money for retirement or perhaps trying their luck. In addition, hedge fund managers are usually very secretive about their profit margins, don’t contractually guarantee a set profit margin, and are paid a base rate regardless of profit.
Perhaps the most crucial disadvantage to private Wall Street hedge funds is the issue of “gatekeeping” within the community. As the case remains, information on stock options along with investment capital have been distributed through financial institutions.
This meant that insider information on non-IPO companies and lucrative investments has been shielded from the public by small interest groups. Instavests undercuts this process by providing the same options to investors equally through its advanced software.
In addition, Instavest removes the need for private wealth management companies that don’t guarantee profit in up and down markets through “complex options strategies”. These strategies allow investors to follow lead investors’ financial moves in real-time on the website and decide their individual investments separately.
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I was initially very wary and confused about individually risking some of my money on unguaranteed profits and complicated variables that I have little to no knowledge of.
What Instavest does is that it empowers people like me, novice potential investors, and fortifies them with valuable information and a transparent and accessible platform to enter the stock exchange and investment world. In other words, it provides an alternative to Wall Street and hedge fund managers for the layman.