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Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

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Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#391

Post by thanksgiving »

ddulaney wrote: post #7
agsqwe wrote: post #3

How are you going to make money?

Presumably a combination of a flat-rate fee ($1/user/month) and payment for order flow. PFOF is a big moneymaker for Robinhood, but you get paid the more your users trade so people doing buy-and-hold index funds probably earn you less that way. If you can keep expenses super low maybe this can work. But my sense is that costs are pretty flat regardless of how many users you have, so this probably needs to get pretty…

PFOF is so incredibly dirty that I can't believe it is legal. If you could explain it to all the voters without putting them to sleep, I am convinced most people would not support it. It may be legal but it is definitely unethical. That being said I can't see how else OP can payback YC without doing these shady things. At a dollar per user per month, even if every adult in the US joined, YC will probably shut down OP without a second thought if that was the only revenue possible.

> so people doing buy-and-hold index funds probably earn you less that way.

You will be constantly buying and selling because you need to rebalance your "index" every time the market moves... Once you go down this unethical rabbit hole, there are endless possibilities.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#392

Post by datavirtue »

yottathrow wrote: post #306
jjmaxwell4 wrote: post #291

Earlier quoted context omitted.

I'd argue the specifics are quite a bit different than Yotta/Synapse. We do not hold any funds ourselves. You connect your bank and ach/wire money to an Apex bank account. You can verify your holdings via apex anytime (see: https://help.double.finance/en/articles/10262406-how-can-i-v... )

Yotta does not hold any funds themselves. You connect your bank and ach/wire money into an Evolve bank account. The problem is that unbeknownst to users, Evolve had no record of what belonged to which user—it all came via Synapse on behalf of Yotta. And when Synapse went bankrupt, everyone pointed fingers about where the money is and who it belongs to.

Yep. The bank has to require reconciliation of the accounts that are active in the FBO. Oddly enough, there is zero standardization in banking regulations and recon is an afterthought and rarely done. Doubly so if you are talking B2B.

Reconciliation costs a lot of money. They typically just watch the balance and and bark at the fintech for more money when it runs out. There are people at every bank calling partners every day demanding wires for overdrawn FBO accounts. Buyer beware.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#393

Post by datavirtue »

morgante wrote: post #375
yottathrow wrote: post #306

Earlier quoted context omitted.

Yotta does not hold any funds themselves. You connect your bank and ach/wire money into an Evolve bank account. The problem is that unbeknownst to users, Evolve had no record of what belonged to which user—it all came via Synapse on behalf of Yotta. And when Synapse went bankrupt, everyone pointed fingers about where the money is and who it belongs to.

https://help.double.finance/en/articles/10262406-how-can-i-v... makes a big difference, since it sounds like Apex does have their own ledger of accounts, independent of Double. Evolve not having their own ledge was exactly the problem.

Surprisingly common for fintechs to be ledgerless. They will always end up with one if they last long enough.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#396

Post by maest »

dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

PFOF is good for the customer.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#397

Post by rafram »

toolz wrote: post #149
rafram wrote: post #129

Your site touts that you're "Technologists, not bankers". People entrusting you with thousands of dollars of their savings might want some actual bankers involved in the operation. Something like "Security first" might get the point across without raising as many red flags.

As far as marketing goes, I'm not so sure that bankers hold more public trust than techies. It's basically every day a big bank is getting fined as the "cost of doing business" and often for things like laundering money etc.. There's probably a case to be made that techies do more to harm their trust, but probably not from multinational organizations.

I’m not sure either one sounds warm and cuddly, but a banker probably knows how to avoid misplacing my money more than a “technologist” does.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#399

Post by wrsh07 »

lldb wrote: post #255
wrsh07 wrote: post #25

Earlier quoted context omitted.

Pfof is woefully misunderstood In general, citadel wants to pay to trade with retail investors because it knows it isn't going to face adverse selection. So it will give them tighter bid/ask ratios (this is better for the customer) than they would get if they were trading in the open market, citadel isn't going to get hosed by one of them (because there's no adverse selection) It's win win win

It is not a win. In a recent study, Robinhood with Citadel has the worst price improvement (execution quality) of any brokerage on the market. I’ve personally observed this - Robinhood might “improve” by 1/10 of a cent from NBBO while Fidelity is frequently closer to the mid.

This is just noting that different brokers give different performance

That doesn't really have anything to do with pfof (TD Ameritrade gives better execution and receives pfof)

https://news.ycombinator.com/item?id=42378516

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#400

Post by matwood »

arcticbull wrote: post #355
matwood wrote: post #300

Earlier quoted context omitted.

Open a brokerage account and buy SGOV with your cash savings. Done.

IBKR just pays you like 4-5% on idle cash, so do a few other brokerages. Don't even have to buy anything.

Sure, but you’re back to moving to a brokerage who gives a good rate. If someone doesn’t already have a brokerage then IBKR is a fine choice. SGOV works with any brokerage and is mostly state tax free as a nice bonus.
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