While the latter is correct – the more you have to invest, the better the options available to you (we'll get to that later) – the former is a myth. And one that needs debunking.
If there's only one thing you take away from this article, let it be this: pretty much anyone with savings can invest. Investing is not something that is only available to the wealthy 1%, even if the best investment products are.
As legendary investor Warren Buffett puts it, “...investment is the process of laying out money now to receive more money in the future.” So why is it that many people don't invest their money?
We'd argue that two things stop people from doing it; a lack of understanding, and fear.
Let's start with the lack of understanding.
Most people won't jump into doing something they don't understand. And rightly so. And many people don't understand investing. To a lot of people, the stock market is just a dizzying array of company names, numbers, and percentages. The numbers go up and down in cycles, and the learning curve can feel very steep indeed, and therefore off-putting.
And that lack of understanding leads to fear.
If you add the lack of knowledge about investing, and the misconception that only the super wealthy can do it, to the fact that the average person probably only hears about the stock market when there's a crash, like there was back in 2008, or when there's other negative news, it becomes easy to understand why people might be afraid to put their hard-earned money into investments. Especially if they were going to do it on their own.
So what do most people do? They leave their money in low-interest savings accounts. They might not earn a great deal for the saver, but they're low risk, and people understand them.
But, paradoxically, according to Fool.com, it turns out that the third biggest financial fear for Americans is having insufficient savings to retire (32%), the fourth is outliving retirement savings (21%), and the fifth is becoming a financial burden (20%).
That's a lot of Americans who are afraid of their long-term financial prospects. And yet, according to a new poll from Gallup, less than half of young Americans are putting their money in stocks (just 37%, which is down from 55% in 2001).
So how is it that we have a large number of people who are worried about their financial futures, and yet a large number of those same people are also averse to investing – a proven route to healthy long-term finances (even if it does carry an element of risk). It all comes back to a lack of understanding, of both investing in general, and the opportunities, as well as fear.
In addition, there is an unfair advantage weighted towards the 1% - the super wealthy – when it comes to investment products. And that means an uneven playing field and a situation where the rich keep getting richer.
As this article in 'The Guardian' puts it, “Since 2008, the wealth of the richest 1% has been growing at an average of 6% a year – much faster than the 3% growth in wealth of the remaining 99% of the world’s population.”
As a result, the world’s richest 1% are “on course to control as much as two-thirds of the world’s wealth by 2030.” The wealth gap continues to get bigger at a faster rate, and an inequality tipping point is fast approaching.
So, the goal for anyone looking to change the current status quo, then, has to be twofold:
- To better educate people on investing and the opportunities available to them
- Provide access to better investment opportunities usually reserved for the super wealthy
If the above is achieved, then more people will turn to investment, and that will lead to a fairer spread of wealth. Right? And that's something that's desperately needed.
The question is, then, are there any companies out there that are trying to solve this problem? It turns out that yes, there are.
In the fintech and cryptocurrency space, there is a company called Huddl that is also seeking to do the above. However, there's a distinct difference when it comes to the overall mission of this company.
In their own words, “Huddl is transforming the way individuals access investment services, strategies, and products. We are democratizing access, bringing Wall Street to Main Street.”
By democratizing access to “the best financial professionals and services,” Huddl are seeking to address the imbalance between the 1% and the rest of us. And that's something that's intrigued us.
And when you've got former Blackrock, Deloitte, Morgan Stanley and Mastercard people at the helm, the likelihood is they know their stuff.
But how can the mainstream investor get access to the lower fees, products and investment managers of the wealthy? By pooling their money in 'pods' of course.
The Huddl platform aims to allow retail investors across the globe to form pods that can pool their money together and use their collective buying power to obtain access to these investment options. This idea of social investing is relatively new, but it's a very cool one.
By making investing as easy to do as open and maintain a savings account, Huddl is hoping to grab a sizeable portion of that under 35 market that is currently investment averse.
By educating their target market on the proven benefits of investing money, and by providing access to a range of experts, products, and services that can allow the average investor to compete with the super-wealthy, we think they've got a great shot at doing that.
While most cryptocurrency companies started with ICOs, Huddl has put utility first and focused on building a platform before they list their token. Huddl has launched a global social campaign to reward early adopters.
Signing up to Huddl (and earning some tokens) costs you nothing more than your email address. And there are ways to earn more tokens via community engagement and sharing. It's quite a different strategy to the ICO craze we saw in 2017 that saw so many companies raise obscene amounts of money.
There's a reason for this approach too. As they put it, “applying this tactical strategy during the initial release of the platform enables Huddl to greatly mitigate risks while we await regulatory clarity from global lawmakers as to the treatment and status of pure utility tokens like Huddl.”
It's widely thought that most ICOs will end up having their tokens declared as securities, which will bring with it its own implications for those that raised billions of dollars over the last few years.
Huddl believes that “if crypto is to be taken seriously and progress as an industry, tokens must not only be a source of capital, they also need to provide real utility and, ideally, be launched alongside a working version of the intended product or service.”
That's an opinion we've held and shared for a long time now, and it’s great to see more and more companies in this exciting space take a stance like this for the long-term benefit of the industry.
While it is no small task to educate the masses on the benefits of investment and provide retail investors with access to the same opportunities that the super-wealthy enjoy, there is plenty of opportunity for anyone who wants to attempt it.
And it seems there is at least one company that is ready to pick up the gauntlet and show us all why we should be investing more.
What are your thoughts on the widening of the wealth gap and the lack of understanding around investment? Do you think companies like Huddl will be successful in their mission to create a fairer financial world? We'd love to hear your thoughts below.