Revolutionizing Investing for Millennials: Wesley Belden’s Innovative Approach with Raise Financial
A Peak Behind The Scenes of Raise Financial
Wesley Belden, founder of Raise Financial, discusses innovative investing strategies for millennials on the Software Spotlight podcast. He explains how his company addresses unique financial challenges faced by younger generations, offering solutions for college savings and long-term wealth building through creative use of technology and market strategies.
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A New Approach to Millennial Investing
In a world where traditional financial strategies often fall short for younger generations, Wesley Belden and his company, Raise Financial, are paving the way for a revolutionary approach to investing. On a recent episode of the Software Spotlight podcast, hosted by Michael Bernzweig of Software Oasis, Belden shared insights into how his company is tackling the unique financial challenges faced by millennials and Gen Z.
The Birth of an Innovative Idea
Belden's journey began with a simple observation: many of his friends, new parents in their late 20s and early 30s, were struggling to save for their children's college education. “We were realizing that young first-time parents wanted to save for college, but they weren't using this plan because when they were looking at their more immediate financial stack, whether that was paying off their student loans, hitting their employer's match, saving a down payment for a home, they didn't have the discretionary income to fund these plans,” Belden explained.
This realization led to the creation of a shareable college savings fund, which allowed friends and family to contribute to a child's education savings. The idea took off, with Belden noting, “We quickly discovered that our plans had 10 times the amount of gifted contributions than those regular college savings plans”.
Expanding the Vision: From College Savings to Retirement Planning
As Raise Financial grew, Belden and his team identified broader financial concerns among millennials. “We kept kind of hearing you know the two consistent refrains that I'm not on track for retirement you know I'm investing what I can every month I'm not on track for retirement and the other one being I don't have a clear path to home ownership,” Belden shared.
This insight led to a pivot in their business model. Instead of focusing solely on college savings, Raise Financial expanded its mission to address the larger financial challenges faced by millennials and Gen Z.
The Innovative Investment Strategy
Raise Financial's approach is based on a simple yet powerful concept. Belden explains, “Essentially, we allow our customer to be the $100 investor, but on today's $10 budget”. Here's how it works:
- The company invests a large lump sum on behalf of the customer.
- The customer makes comfortable monthly payments.
- The customer is entitled to the returns on the larger investment over time.
This strategy aims to produce significantly better returns for customers in the long term compared to traditional monthly investing. “It was producing two and a half times more return for that customer in the long term than they could achieve if they were just investing their monthly membership directly into the market,” Belden stated[1].
Addressing Risk and Stability
One of the key concerns for any investor is risk management. Raise Financial addresses this by investing in the S&P 500 index and using options strategies to protect against market volatility. “We use a series of put call options to make sure that if we take out this position for you today and the market decreases by 20%, percent, we stay static,” Belden explained.
This approach allows the company to offer its product to a wide range of people, regardless of credit status or underwriting ability, as both the company and the customers are protected, and the asset remains liquid.
The Target Audience: Millennials and Gen Z
Raise Financial's ideal customer is typically between 24 and 40 years old, renting rather than owning a home, and has about $300 in discretionary income per month. Belden emphasizes the importance of time in the market, stating, “Our ideal sweet spot is the place where we can provide the most value. as an investor roughly 24 to 40 years of age. And the reason for that is you have to have time in this space”.
The Changing Financial Landscape for Young Investors
Belden points out several factors that have changed the financial landscape for younger generations:
- Difficulty in obtaining mortgages
- Rising housing costs
- Stagnant wages compared to increasing expenses
- New recurring expenses (e.g., cell phones, internet) not factored into wage appreciation
These factors have made it harder for millennials and Gen Z to build wealth through traditional means, necessitating new approaches like those offered by Raise Financial.
The Role of Financial Education
While Raise Financial doesn't position itself as a financial education company, Belden acknowledges the importance of understanding basic financial concepts. He encourages people to seek out information, stating, “If you want to learn about these things, if you want to educate yourself about best practices for budgeting, conservative investing, things like that, all that information is out there”[1].
The Future of Investing: Democratizing Outcomes
Belden sees Raise Financial's approach as part of a larger trend towards democratizing investing outcomes, rather than just access. “We're democratizing outcomes as opposed to democratizing access, which has already been done,” he explains[1]. By providing tools that give investors leverage in the marketplace, Raise Financial aims to address wealth inequality and help more people achieve their long-term financial goals.
Conclusion: A New Path to Financial Security
Wesley Belden and Raise Financial are at the forefront of a new wave of financial innovation, tailored to the unique needs and constraints of younger generations. By reimagining traditional investment strategies and leveraging technology, they're offering a promising path to long-term financial security for millennials and Gen Z.
As the financial landscape continues to evolve, companies like Raise Financial will play a crucial role in helping younger generations navigate the complexities of investing and wealth-building in the 21st century.
FAQ
What is Raise Financial's main investment strategy?
Raise Financial invests a large sum upfront for customers who make monthly payments, aiming for higher long-term returns.
Who is the target audience for Raise Financial?
Raise Financial primarily targets millennials and Gen Z investors aged 24-40 who are renting and have some discretionary inc
How does Raise Financial manage investment risk?
They invest in the S&P 500 index and use options strategies to protect against market volatility.
Can anyone invest with Raise Financial?
While they aim to be inclusive, their ideal customer is typically a younger investor with time to grow their investment.
Does Raise Financial offer financial education?
While not their primary focus, they provide resources and encourage customers to educate themselves about investing basics.
