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Finhabits Review

Finhabits’ CEO Carlos Armando Garcia noticed a disparity between financial services offered and utilized by minorities in the U.S. “As a diverse country, we still face many challenges. For far too long financial services only catered to a select few,” he says on his website.

securely through Finhabits's website

1 Minute Review

Finhabits’ CEO Carlos Armando Garcia noticed a disparity between financial services offered and utilized by minorities in the U.S. In an effort to give minorities access to mainstream financial services and build wealth, the CEO founded Finhabits. It's an easy-to-use, low-cost robo advisor that helps users open IRAs, save for emergencies, and invest their money. Learn More

Best For

  • Those who don’t have access to an employer-sponsored retirement plan
  • Investors looking for a low minimum investment amount
  • Brand-new investors

Pros

  • Finhabits will help you get started, so you don’t need to know a lot about investing at the outset
  • You can start with as little as $5 minimum per week
  • Free for the first month

Cons

  • There’s a monthly fee in addition to the fund fees, plus other miscellaneous fees
  • Limited investment options
  • Expected and historical returns on some portfolios are fairly low

Blacks and Latinos are less likely than whites to work for companies that offer tax-advantaged investment accounts; whites are therefore twice as likely to have retirement accounts. According to NBC, only 26 percent of Hispanic families had retirement savings in 2013, compared to 41 percent of black families and 65 percent of white families.

This reason is the “why” behind launching Finhabits and its bilingual platform. (See the Racial Divide story for more information.)

What Finhabits offers

If you don’t consider yourself flush with cash, need a place to park a retirement fund or would like to do some general investing, check out Finhabits’ simple-to-understand website.

Note: Though the CEO had minorities on his mind when he founded his company, it’s not a requirement that you consider yourself a minority when investing with Finhabits.

Commissions and fees

Finhabits invests your money in low-cost exchange-traded funds (ETFs) at companies such as Vanguard and BlackRock. These funds charge you, on average, 0.12% per year. In addition to the fund fee, accounts under $2,500 will be $1 per month and accounts above $2,500 will be 0.5% of your investment amount per year.

You may also be charged miscellaneous fees for items such as physical copies of account statements. Once you sign up, you can check out Finhabits’ advisory agreement for full fee details.

Platform and tools

Finhabits texts customers on a weekly basis to remind them to save. Finhabits’ app, blogs and text-messaging service explains simple financial concepts (including the all-powerful compound interest chart), reinforcing the “need to save” mantra that many of Finhabits’ clients have just gotten around to learning.

Finhabits website and marketing materials are geared toward making investing a habit, which is why all of its tools and website focus on the habitual part of investing for the long term.

Security

According to its website, Finhabits is an SEC Registered Investment Advisor and offers bank-level security including a 256-bit SSL encrypted connection on its website. In addition, your money is held in accounts insured up to $500,000 by SIPC.

Customer service

Prepped for newbie investors, FinHabits’ website is covered with FAQs. You can reach out to support@finhabits.com for more information or you can also call 1-800-492-1175 for more information or to get started.

Ease of use

It’s a snap to get started. Walk through Finhabits’ processes with three steps:

  1. Select your goal. (You can choose to invest in general or save for retirement.)
  2. Schedule your contributions.
  3. Finhabits will make your investment plan.

No matter what you’re saving, Finhabits offers two handy calculators. You’ll be able to plug in your age, weekly deposit, risk level and initial amount. A calculator will be able to show you how much retirement savings you’ll have once you hit retirement age.

If you’re interested in saving money, you’ll be able to plug in the amount you’d like to save, how much you can contribute every week, and the calculator will tell you how long it’ll take to get there.

Next, you’ll establish your contributions (don’t worry, you can always change the amount later) by adding in your name, date of birth, gender, phone number, marital status, and address. Finhabits will know how to work with you even better once you answer some questions about employment, income, tax filing status, net worth, and investing experience.

Next, you’ll select your portfolio with Finhabits’ help. They’ll recommend what they think is best based on your age and risk tolerance.

Lastly, you’ll connect your bank and enter in your Social Security number.

Final thoughts

Through our research, we learned that Finhabits also has partnerships with credit unions, including Neighborhood Federal Credit Union, which serves New York City’s predominantly Latino neighborhoods of West Harlem, Washington Heights and Inwood. Finhabits has taken an admirable stab at getting everyone on board the “investing is fun” train.

In general, micro investing has opened so many doors for individuals, especially those who assume that they need a lot of money to invest (it’s just not true!) If you’re one of those individuals, remember, it only takes $5 a week and a small commitment to make a lot of money compound in your favor.