Alternative Investing: A Conversation with Finny
On this episode of Alternative Investing, we’re talking to Milan Kovacevic, financial educator and founder of Finny.
Milan tells us how he started investing, the importance of making investing fun, and why educating yourself on personal finance could be the best thing for your future in 2021.
Please give it a listen using the Spotify link below, or if you haven’t got time, check out the transcript.
You can also listen on Apple Podcasts, Deezer, Spreaker, and Podcast Addict.
Remember: All investing involves risk. The content of the podcast is for informational purposes only and is not investment advice. Please always use caution and diversify.
Hi and welcome to the fourth episode of Alternative Investing with MyConstant. I’m Chris Roper, head of communications.
And I’m Peter, community manager at MyConstant.
I hope you had a really great Christmas. And with us today, we have a very special guest. His name is Milan Kovacevic. Is that how I pronounce your name, Milan?
That’s exactly right, Chris. Fantastic. Thank you.
Milan joins us today from the platform, Ask Finny, which is a personal finance education platform. It’s really great to have you on the show Milan.
How was your Christmas?
My Christmas was great! I spent it with my family, with the grandparents, with the kids.
We have a couple of kids at home and they got a lot of presents. So it was definitely a lot of fun for them, but it was definitely a lot of fun for all of us to get together.
And, you know, particularly in these times, it’s nice to have a really good meal, a couple of drinks — that kind of stuff.
Yeah, it’s nice to have an excuse to overindulge a little bit this time of year, especially with the pandemic and everything.
Without any further ado, let’s let’s ask you a few questions and get to know a little bit more about how you’re helping people learn about personal finance.
So just to start, could you just tell us a little bit about yourself, maybe a bit about your background, your history, how you got to where you are today?
Sure. For those of you who don’t know, Finny is a financial education platform that we started about a year ago.
Before starting Finny, I had a number of jobs. And all along the way, I was thinking about what it is that I really want to do now that I’m 40 plus years old and I wanted to actually work on something that’s highly meaningful to me.
So my wife and I had that conversation at home and we decided to focus on personal finance education.
Just for a little background, I came to the United States about twenty years ago. I’m an immigrant from Serbia and that was back in 1999 during the bombing of Serbia.
I had about $2,000 in my pocket, a little bit of money that I had to manage really tightly. It was challenging to get by, but I had a job and I made some money along the way.
And then I learned that in this country (the US) if you have money and you put it in the bank, it’s not going to go very far. So what I wound up doing is putting the money into stocks. And at the time I didn’t know anything about stocks.
So I turned on the T.V. and there’s a very popular guy by the name of Jim Cramer on CNBC that had a lot of stock recommendations. Actually, I shouldn’t call them recommendations because they are really his opinions about what stocks could potentially do well in the future.
So I listened to him a lot. I actually wound up putting a lot of money that I saved into some of the stocks that he recommended, and that was at the peak of the market in 2000.
What happened next is that all my investments were gone within a year. Mostly because I didn’t know anything about investing. Naturally, panic struck me and I didn’t know how to move forward.
So I wound up divesting everything I had at the bottom of the market, which is the worst possible thing to do. And that’s really how I started with investing.
Obviously, I learned a lot along the way. I learned to manage my emotions and control myself. I also learned about what is good investing versus bad investing.
And I learned in general about what a good approach investing should be as opposed to, you know, investing in individual stocks and hoping for the best. And all of these lessons are something that I’ve learned over time.
I’ve discussed this with my wife, but there was a point in time when we went to graduate school and we had student loans between the two of us. We had a combined $250,000 of student debt. So we wound up having to manage our pennies very tightly because we wanted to pay off debt, start a family.
And of course, when you start to practice personal finance, there is a point where you start teaching other people how to do it. People around us, people who are swimming in debt, people who didn’t know what to do with their spare money, with their investments and how to invest.
And there were so many lessons that we’ve learned along the way. Last year in 2019, we sat down and talked about how we wanted to establish Finny as a company to really help other people with their personal finance decisions.
Finny is a game based personal finance education platform. We’re also a community of people who want to do better financially and who want to really learn with Finny.
We encourage customers to ask questions, pick up a few things here and there, and really form a habit around learning all things personal finance.
Yeah, I mean, I’ve been having a look at your website and it’s really clean, really user friendly. And you could tell you’ve thought a lot about making investing less of this big, scary, complicated topic and more about something you can approach in your own way and in your own time.
And it’s interesting to hear about you getting into investing in personal finance because you got your fingers burnt when you first started trading, because I think Peter and I both have our own stories, which are very similar.
You know, I followed another friend’s advice and invested quite a lot of money and then lost it. But I didn’t do any research. It was my first investment. I didn’t think carefully about it. Just a friend I knew who was an investor said, hey, this is a really good thing to get into. So I did and then I lost money.
But having said that, it was a good experience and something that I’m glad I had because it has made me become a better investor as a result.
I also love the community aspect of your website. You have that discussion part of your site where people can sit and sort of ask each of the questions, talk about things that matter to them and help each other out.
So you’ve got a really thriving community there — that’s really great to see. You’ve explained a little bit about how Finny began and its purpose. What are some of the more common questions about investing you get from people who use your website?
Well, first of all, Chris, we have a lot of questions about investing and investments. People come to Finny and they’re asking questions about this versus that. Or, for example, in today’s world, they’re trying to figure out where they could get a good return.
That’s the name of the game — that’s what everybody’s looking for. And specifically, they’re trying to compare investments. They’re trying to find an alternative for their investments.
They’re also trying to find those stocks, ETFs and mutual funds that have high potential. And that high potential means high potential for return. So, a year ago when we started, we tackled all of these questions very seriously.
And so we decided to build the tools to help people answer those questions in a very simple manner. For example, if they’re interested in investing in individual stocks, let’s say — Apple. What’s the case for versus against investing in Apple?
What’s the bull case and what’s the bear case? Those are some of the questions that our tools try to answer. And through that, we developed a methodology which is rules based.
It’s a rules based methodology that’s applied to pretty much any single security you could potentially imagine to come up with that assessment of whether an investment is a good one or not.
Of course, it’s hard to predict what will perform well in the future. But we’re essentially providing a rules based, simple methodology to give people an insight around what’s good or what’s bad about a particular investment.
So those are some basic questions that are now available under Finnyvest. That’s Finny investing. Those tools are now answering most of the questions that people come to Finny and want answered about their stocks, ETFs and mutual funds.
Beyond that, as we’re diversifying and growing as a company, we’re trying to tackle a lot more questions. For example, recently there were some questions about alternative investing and specifically, MyConstant as an alternative investment vehicle.
And oftentimes people wonder when they come across an alternative investment, is whether that alternative investment is risky or not. And the way that our members like to phrase it is, okay, is this tool or is this application legit or not?
So we see those questions often, and I think those are excellent questions. This is when I look to you, Chris, to help me answer and help us answer some of the questions about MyConstant compared to other alternative investments our there.
So what do you tell your community about alternative investing platforms like our own? What’s the Finny stance on it?
That’s an excellent question, Peter. So the first thing we tell them is, look, there’s so much that we don’t know today, we’re learning about investments and alternative investments. That’s why we bring in experts like yourself.
But as we think about alternate investing, oftentimes what people are looking for is a better or a different way to get something out of an investment. Most of the time, our members are looking for a return.
So imagine this low yield environment in the United States where if you invest money into government bonds, your return is close to zero. Your returns in a high yield savings account are roughly 0.5%.
So you have a plethora of these safe investment choices, FDIC insured, that doesn’t bring you a lot of yields. And I think people are really tired of that.
They want to do something different. Potentially do some riskier investment options to get a higher yield. So when we see those questions, we remind our members to really look at the risk return profile of every single investment and decide for themselves whether an investment like MyConstant is a good one for them or not.
And, you know, specifically, as you look at sort of your offering and the 4% yield that you’re promising to potential investors, that’s eight times higher than what they would normally get out of a high yield savings account.
So of course, it comes with a different risk profile, and that’s very important to understand. But every one of those decisions requires a lot of attention. And, of course, we need to bring in experts like yourselves to help us come and help us answer some of those more difficult questions.
Yeah, I think with alternative investing, because a lot of these platforms, including our own, are quite new. The natural reaction by a lot of people who encounter it for the first time is to be skeptical. But I’m totally okay with that because it’s good that people are skeptical before they go in and start investing.
And indeed, I believe that investing — diversification is probably one of the biggest things you could do to ensure you’re getting consistent returns. And we always encourage people to split up their investments and not put all of their money in MyConstant. Maybe put a little bit here, some in stocks, some in some other investment vehicles.
That way, they have a diversified portfolio. They’re getting a steady yield from us and they’re getting returns on their stocks and what have you. So financial education is extremely important, especially now more than ever, because, as you say, the yields you get from savings accounts, CDs and bonds are very low.
I mean, they don’t even cover inflation. So I agree that investing is very important if you want to actually achieve your financial goals.
That’s right. And just one thing to add here. So what we’re seeing now, there’s a lot of products on the market and consumers are trying to make sense of what those products mean to them. So that’s where this education first approach really becomes important.
Because what consumers are now faced with is a lot of products that they don’t really know how to interpret or they just don’t have the time to study every individual product. So they’re looking for some guidance. They’re looking for expert opinions.
They want somebody else to boil it down to the essentials for them so that they know whether something is a good investment or not. And we kind of take a bit of a different approach. We turn that entire situation upside down and we start with a thin layer of education that spans across different products.
And we start teaching people some fundamental things around budgeting, debt management, credit and all the way up to insurance investing and retirement planning.
After we do that, then we can talk about individual products. I think it really matters that you fundamentally understand that alternative investing is really important. But you need to know if that product is good for you or not.
Yeah, absolutely. Because I think in the past, people probably gave up responsibility for managing their finances to a bank. And, you know, for a long time, banks were giving a decent rate of return and it’s just not possible nowadays.
Nowadays, if you want to grow your money, you have to take back more control and take a bit more responsibility, I suppose, for learning about investing and personal finance.
And, you know, it doesn’t mean you have to go and get a degree. Just get a basic understanding of the fundamentals, and then you’re already miles ahead of lots of other people just by doing that.
And it’s a little bit of work, but the rewards are huge. And it’s great that we have websites like Finny and MyConstant, because we have a strong focus on education as well. Because we make it easier and sort of more friendly, more interactive.
People generally respond well to that kind of learning as opposed to something that’s very technical or very complex.
Absolutely. And I think that’s really the key to make finance a little more approachable. We say at Finny our mission is to make personal finance and investment education easy and fun. So that’s why we use a game based approach to learning. So every lesson that we teach is divided into bite sized chunks.
So we make quizzes. And we hope that consumers will like the format and really engage and try to answer the questions correctly. Now, for each of the questions, we’ll give them the full scoop and really tell them here’s what you really need to know about, let’s say, investing in cryptocurrency or peer-to-peer loans, stuff like that.
So that to us, that game-based, bite-sized approach, is really fundamental because otherwise it’s very hard to to engage consumers and get their attention for an extended period of time.
What excites you about finance today? Where the market’s going? Things like that. Also, I know you’re from Serbia. How about the global market as well?
If you look at the situation in the last 10 years — this is probably universally true — we’ve had periods of long-term growth. The US’s GDP has grown tremendously.
But what’s really happening underneath the service surface is that rich people are getting richer and poor people are getting poorer. So I think that the gap is getting bigger.
And one of the biggest things that you can do as an entrepreneur is help educate everybody. And I think everybody needs to get an education regarding managing their own cash flow.
And once you have a little bit of money to invest, then you really need to learn how to invest and how to look at investment alternatives. So that really excites me, because when I think about personal finance, education as a journey, we’re just at the beginning of that journey. We’re just scratching the surface and there’s so much more to do.
Frankly, I feel there is so much work that we need to do to simplify, to make finance and finance education more approachable, to make it more understandable. I feel like all the terms that we’re using are really, you know, a relic of the past.
So they’re really hard to understand. Why would somebody use mortgage as a separate word for a loan, for example. And why do we have to have such a complex vocabulary?
And it’s maybe pronounced a little more in the United States, but it’s also present in all other countries. If I think about the journey ahead of us, I think there’s a long way to go to educate everybody about finance and investments.
And as we’re starting this journey, I’m really looking forward to the next 10 years to build a company that will help people understand better investing, personal finance and generally everything related to money.
We’ve spoken a lot about financial education as a barrier to new entrants and new people coming to the investment market and investing for the first time. What would you say? Are there any other big obstacles that you’ve encountered? And I’m just wondering if education is just one aspect of the issue or if it’s the only aspect or if there are actually some other obstacles, too.
Yeah, I know. I think you’re absolutely right, Chris, because we’re seeing that culturally we’re not a society that welcomes money conversations. I think talking about money is — at least in the United States — is a bit awkward. And I think even globally, that phenomenon is true up to a certain degree.
But in particular in America, people really don’t like talking about money. And oftentimes it’s because managing money is really hard for many people. Many people are just having difficulties with their cash flow and personal situations. So then they don’t like to talk about the things that they don’t do very well in.
On the other hand, if you do have lots of money, you don’t talk about it because you feel guilty.
So I think about where the society is going and what’s changing, I see a lot more financial transparency on the rise. Nowadays you’ll find a few Instagrammers who are talking about their journey to financial independence. Or, you know, new grads who are talking about getting rid of any loans, including student loans and credit card loans.
So I think as financial transparency is on the rise and people are generally more open to talk about their path to freedom, I see a lot of opportunities because people are finally coming to Finny and trying to ask the right questions.
It’s not just about what hypothetically will happen to you if you invest in a specific investing vehicle. But it’s also about your situation, everything about your family that surrounds you and makes your situation easy or complicated.
And people are really chiming in, asking all those difficult questions, hoping that somebody will help them. And we have a number of financial consultants on Finny — we call them coaches. who are essentially people who come from various walks of life.
Some of them are wealth managers. Some of them are cash flow coaches. Some of them are tax or insurance people. And they really help our members answer some of those difficult questions that are being asked.
But I think financial transparency is a really big trend, and I think it’s really healthy for everybody to start talking about money.
Whether somebody has questions about their own situation or any concerns, it’s a healthy conversation and we definitely encourage it.
Going back to what you’re talking about, how more people are talking about financial health on social media. I know that, like you are saying, it’s good that people are talking about. Would you say that maybe there’s some incorrect information going around from some sources on social media or unrealistic expectations?
Candidly, I don’t have that much time to spend on social media to understand the details of everything. But I’m sure there’s lots of incorrect information and sometimes it’s done unintentionally. Actually, I’m convinced that most of the time it’s done just because people don’t have the correct answer. But I think now that everybody’s chiming in and the dialogue is getting to be healthy and productive — or confrontational at certain points in time — we have a better chance to surface different opinions and really let everybody be heard.
And that particularly is true of cryptocurrency. If you think about our journey, the bubble of 2018, the fall, and now cryptos are up again. People are asking some really intelligent questions. I think it’s productive and healthy to have those kinds of conversations on social media.
Yeah, that’s a good point. I think the general advice is just take what you read with a pinch of salt and don’t take anything too literally unless you know it’s a reputable source.
I mean, this is the thing about investing. There’s so many people talking about it and you have experts talking about it. But, you know, we can’t predict the future. So you just have to use caution and make sure you’re diversified.
We’re actually running out of time just a bit. So just to round off the podcast, could you give three big takeaways for people listening who perhaps are just about to embark on their investing journey?
Absolutely. So the number one for me would be to make a plan to get educated on personal finance and investing. Just how some people go to a gym every day or they like working out or running or whatnot. Make a plan, make personal finance a priority.
So once you take care of that, then make it a habit. Maybe every Saturday morning after breakfast or after your morning coffee, you could spend a little bit of time thinking about your personal finance and asking the questions that you haven’t asked before. Asking for help where you need help. Not necessarily on Finny, but any other place that you find and think is a credible source. Try to educate yourself a bit and make it a habit.
Then, the third takeaway for me would be, when in doubt, feel free to ask questions. You know, I think it’s really important. None of us understands everything. So it’s good to reach out when you have a question.
You could do it on Finny or elsewhere. Don’t be afraid to share information because that’s really the key. You will get better if you share more about yourself, your situation, what you’re trying to answer and your goals. And then other people will be more than happy to help you figure out your path and your journey.
That’s great. Setting goals is something that came up in a previous podcast. And we were talking about how a lot of people just don’t set financial goals. They just think, oh, I want to make as much money as I can and as short a time as possible.
And it’s very difficult to make a plan from that kind of vague aspiration. So, it’s much better to set realistic financial goals. And then that way, you know, you have these sort of smaller milestones that you hit which then encourage you to invest more and learn more.
So, yeah, that’s great. Well, thank you very much indeed, Milan, for appearing on our podcast. I really appreciate that. We will add a link to your website on our show notes. Any final words?
Final words from me? Look forward to 2021. Make some concrete financial goals.
Don’t forget about educating yourself. When you educate yourself you’re going to make better decisions. Also, use the resources around you. Use them on Finny, use them elsewhere.
Ask people who know more about you to help you with your planning and investing goals.
That’s great. It was great talking to you Milan.
It’s great talking to you guys. Totally appreciate this one. Talk to you later.
Yeah, no problem. Thank you.
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