In this review, we’ll tell you about the Slovak investment platform Finax, which works in 5 European countries, including the Czech Republic. Let’s find out how Finax works, how much it costs, and what kind of returns investors can expect. And most importantly, how does Finax compare to its Czech rivals?
Finax review at a glance
Finax is an investment platform in Slovakia that lets you buy stocks and bonds without a lot of hassle or high fees. From CZK 500, you can invest once or regularly. You can also stop or end the investment at any time, so you can get your money back within a few days.
Finax is a platform for what is called “robo-advisors.” This means that most investments happen on their own. Users only have to do three things: fill out an investment questionnaire, choose one of 11 portfolios, and send money. Finax will take care of everything else, such as buying securities and rebalancing the portfolio.
Your money is put into exchange-traded funds (ETFs), which hold a lot of different stocks and bonds. The range of expected returns is from 2% (for a portfolio of only bonds) to 8% per year (stock portfolio).
What about costs? Finax has a management fee of 1.2% per year. If you deposit less than 1,000 euros, you have to pay an extra 1.2%. The costs also include a small fund fee, which is usually between 0.1% and 0.4% per year.
Advantages:
- Clear investment platform
- Simple, fast, online
- Transparent fees
- Regular portfolio rebalancing
Disadvantages:
- Purchases and sales only once a week
- The mobile app is missing
- You cannot build your own portfolio
Finax – Basic Information
Finax is operated by Finax, OCP,, and is licensed by the NBS. The platform was founded in 2017 in Bratislava, Slovakia, and is available in Czech. It offers 11 portfolios, composed of ETFs in stocks and bonds, with processing instructions once a week on Tuesdays and portfolio rebalancing. Expected appreciation is approximately 2% to 8% per year.
Finax supports 5 currencies, including CZK, EUR, HUF, PLN, and HRK, but does not provide hedging against currency risk. The minimal investment required is 500 CZK, and payment methods include bank transfers. An administration fee of 1.20% per year (1% + VAT) is charged, with additional charges for deposits under €1,000. Finax offers discounted fees.
How does Finax work?
Finax works the same way as other places to invest. The user sets up an account, chooses a portfolio, and then sends money to that portfolio. Through exchange-traded funds, Finax puts the money of its clients into stocks and bonds (ETFs).
What are ETFs? ETFs are a type of investment fund whose shares are traded on a stock exchange. ETFs are similar to mutual funds in that they hold tens to hundreds of different stocks or bonds. This gives them a lot of diversity. On the other hand, they are much cheaper than mutual funds.
Finax lets you invest once or regularly, and the smallest amount you can put in is 500 crowns.
When you invest regularly, you don’t have to worry about when to buy, so you don’t have to worry about buying at the worst time. You can change the amount you put in at any time, and it doesn’t matter if you stop putting money in every month. Even if the money is taken out before the end of the investment horizon, there are no penalties.
Finax buys and sells stocks and bonds on the stock exchange once a week, usually on Tuesdays. This can be a bad thing if you need to buy or sell quickly. Finax does allow portfolio sales on days other than investment days, but it charges a lot of money to do this.
INVESTMENT PORTFOLIOS
There are 11 investment portfolios to choose from, each with a different level of risk. The portfolio with the least risk is made up of only bond funds, so it will offer a low but stable return of about 2% per year. On the other end of the spectrum is a pure stock portfolio that earns an average of about 8% per year.
Each portfolio is made up of four to ten carefully chosen funds, which ensures a high level of diversity. Investors can also open more than one account, so it’s not a problem to put money in both a safe and a risky portfolio at the same time.
You choose a portfolio when you sign up, and you can change it while you are investing. You can make one change per year for free, but you’ll have to pay a high fee (€200 + DHP) for every other change.
PORTFOLIO REBALANCING
Each portfolio is made up of a number of ETF funds, the value of which changes all the time. Some ETFs’ prices will go up, while others will go down. After just a few days, the portfolio’s mix of stocks and bonds will start to change. In turn, this will change the expected return and the overall risk.
Finax does something called “rebalancing” to make sure that the portfolio is still spread out in the same way.
The goal of rebalancing, as its name suggests, is to keep the portfolio in balance. The algorithm watches how the portfolio is put together, and if the way an ETF is used starts to go against the original plan, the ETF is bought back or sold in parts.
At first glance, rebalancing doesn’t make sense. The algorithm sells the funds that did well and buy back the funds that did not. What most investors would do the exact opposite of. But we can’t forget that the point of trading is to buy cheap and sell high. And that’s exactly what rebalancing does: it sells funds that are too expensive and buys funds that are “on sale.”
Finax says that rebalancing can boost long-term returns by as much as 0.66 percent per year. This is a very interesting result, but it can’t be checked. Rebalancing rules are not written down by Finax.
INSTRUCTIONS ON HOW TO INVEST THROUGH FINAL
- First, you choose one of Finax’s six investment goals:
- The next step is to answer a few easy questions. For example, how long you plan to invest, how much money you plan to invest, and how much experience you have with investing.
- Finax will come up with a plan for each person based on the answers to the questionnaire. You can still make changes to the plan if you don’t like it.
- If you agree with the plan for investing, you can move on to signing up. It’s very easy to sign up. All you have to do is fill in your name and contact information or scan both sides of your ID card. Finax will use a numerical code to check the email address and phone number right away.
- At the end of the registration process, Finax will make you an electronic contract that you can sign.
- After you sign up, you make a payment to confirm your account, and then you can start investing. You will pay in money through a bank transfer (for regular investments we recommend a standing order).
- On your account, you can see how the investment is doing. Finax will rebalance the portfolio so that the amount of stocks and bonds stays the same.
- You can pull out of the deal at any time. Finax only does transactions once a week, so the sale of securities and the transfer of money to the client’s bank account takes 3 to 10 working days from the time the instruction to close the investment is sent.
Expected returns
Last, we’ll talk about returns, which are very important for investors.
At the start, it’s important to note that all data is based on data from the past. What Finax reports as the expected return is actually the return on that portfolio over the past 30 years. So, don’t put too much stock in the data because it’s about the past, not the future.
In general, stocks make more money than bonds, but they also carry more risk.
IT’S EVEN WITHOUT TAXES
Taxes must be paid on money made from trading stocks. Both income from selling securities and income from capital assets (dividends, interest).
The tax rate for people is 15%, which is not a very low number. We have good news, though. If you meet at least one of the following two conditions, the law lets you avoid paying taxes:
A three-year time test is the first requirement for tax exemption. Simply put, the sale income will not be taxed if it has been at least 3 years since the security was bought.
People don’t have to pay taxes if the money they make from selling CP in a given calendar year is less than 100,000 crowns. We need to stress that the limit is on sales, not on profits. So what matters is not how much money you make, but how much the shares you sold were worth.
Finax makes changes to the portfolio so that there are no taxes to pay. During rebalancing, which can happen several times a year, clients will appreciate this the most. If the client makes changes to the portfolio, Finax will let him know if there is a tax bill (for example, upon the termination of the investment).
Dividend income doesn’t get a tax break, but Finax has a solution for that, too.
Finax invests in accumulation ETFs, which don’t pay dividends but put the money back into the fund, which makes it worth more. This means that clients of Finax do not have to pay taxes on dividends.
WOULDN’T IT BE BETTER TO INVEST INDIVIDUALLY?
Investment platforms have one big benefit: almost anyone can invest, no matter how much money they have or how much experience they have. You only have to fill out a short survey and put money down. After that, you don’t have to worry about anything else.
It’s not free, though.
Finax charges a management fee every year, no matter how much your portfolio earns. Even though it’s not a lot (about 1.2% per year), it will still have a big impact on the final score. Even more so if you plan to invest for a long time.
So, it makes sense to ask: wouldn’t it be better to invest separately?
When you buy shares and ETFs directly from a broker, you don’t have to pay a management fee, you have complete freedom in building your portfolio, and you can make changes whenever you want. But you are in charge of everything yourself: building a portfolio, buying and selling stocks, rebalancing, and maybe even changing currencies. You also need to watch out for brokerage fees so you don’t end up paying more than you would with Finax.
You want to invest “on your own,” but you don’t know what to put your money in. ETFs are the easiest way, and Finax also puts money into them. Popular index ETFs earn an average of about 10% per year, so it’s not impossible to beat Finax. They can be bought from brokers like XTB and Degiro.
In short, you can get better returns or pay less in fees if you invest separately and directly through a broker. But it’s more work, and you’ll need more than $500 a month to do it.
Finax and fees
The fees for Finax are about the same as those of other platforms, but there is one big difference. Most competitors only charge an annual administration fee, but Finax also charges a fee for each deposit. If you deposit at least €1,000, you can avoid the fee, but most investors probably won’t meet this requirement. Even more so if they plan to invest often.
There is no exit fee or performance fee. Even if you pull out of the investment before the end of the chosen investment horizon.
Portfolio management fee
The basic annual rate is 1% plus VAT, which comes to 1.20% of the property invested. If the value of your property in your Finax account is more than 100,000 euros, you join Finax Elite and get a better rate. Finax bills the fee once a month, so each month it charges 1/12 of the annual rate.
Pay for operating costs (TER)
This fee is charged by the managers of the ETFs, not by Finax, so you will have to pay it even if you invest in different funds. Finax invests in funds that cost between 0.07% and 0.47% per year (on average, 0.18% per year). The fee is taken out of the fund’s assets, not from the client’s account, so the price of the ETF on the stock exchange goes down a little bit.
Fee deposit
If you deposit more than 1,000 euros, it’s free. But if you put in less than that, you’ll have to pay a 1.20% fee. This is a big problem with Finax since most other platforms don’t charge fees to join. But it’s still cheaper than fees to get into a mutual fund, which is often more than 3%.
Charges on top of that
Finax also charges fees for transferring securities to another company (1%, minimum €100), making changes to the portfolio more than once (€200 + VAT), selling the portfolio on a day other than the investment day (€200 + VAT), and other similar things. Here is where you can find the full-price list.
COMPARISON OF FEES
Is Finax less expensive than the competition or more expensive?
Deposits and withdrawals
Bank transfers are used to deposit and withdraw money. Finax has an account with eská spoitelna that lets you send money in CZK.
Usually, it takes one business day to process a deposit. But this doesn’t mean Finax will invest the money you put in on Monday on Tuesday. Payment must be processed by Friday of the week before funds can be invested.
It takes between 3 and 10 business days to sell the investment. It depends on when you ask to get your money back. Finax will only sell your portfolio if you send a withdrawal request by 12 p.m. on the business day before the investment day (i.e. by 12:00 on Monday). After that, it takes the exchange two business days to put the money in Finax’s account. The money won’t be in the client’s bank account for another 1–2 business days.
CURRENCY RISK
Finax buys ETFs that are connected to markets in other countries (for example, a US stock fund). Also, all trades happen on the German exchange Xetra, so all the money is in EUR. This means that investors will be exposed to currency risk, which is not always bad.
Currency hedging is an option on some investment platforms, such as Portu. Currency hedging, which means buying derivative contracts, is a way to do this.
Hedging is not something that Finax does. The only exception is bond ETFs, whose currency risk is protected against the euro by Finax. But Finax doesn’t offer currency protection against the crown, so Czech investors must take the risk of the exchange rate.
We should stress that currency risk can affect the outcome of an investment in both good and bad ways. It’s also a way to diversify currencies, so the return on the investment isn’t just tied to one currency. To give you an idea, Finax’s funds invest in assets that are held in almost 40 different currencies.
Who is behind the project?
Juraj Hrbat and Radoslav Kask came up with the idea for the project because they were unhappy with the financial products on the Slovak market. So, in 2017, they decided to build a platform that would make it easy and smart for people to invest.
Who Started FINAX?
Juraj Hrbat helped build the Slovak securities trader CAPITAL MARKETS for 10 years and was one of the people who made the first European online trader possible. He is a member of the Securities Dealers Association’s Executive Committee and is the CEO of Finax.
Radoslav Kask went to the University of Economics in Bratislava to learn about financial management and corporate finance. He mostly worked as a portfolio manager for Across Wealth Management for 9 years. He works at Finax as both the financial director and the investment strategist.
Finax, OCP, a.s., a company in Slovakia, is in charge of running the platform. The letters “a.s.” and “ocp” hide the fact that the company is a joint-stock company, while “OCP” means that it is a licensed securities trader.
In 2019, the investment holding LRJ Capital, which is a major owner of the venture fund GROWWS SICAV, put money into the Finax project. The fund put 1.5 million euros (37.5 million crowns) into Finax, which Finax says is the biggest investment Slovakia has ever made in a fintech startup.
DEPOSIT INSURANCE
The company is reliable and safe to invest in because of the following:
- The National Bank of Slovakia keeps an eye on everything Finax does.
- As part of the Investment Guarantee Fund, each client’s property is insured for up to 50,000 euros.
- Money from clients is kept separate from money from Finax. So, the clients still own the securities and cash that they have deposited.
- Money can only be sent to a bank account in your name that has been checked out.
- Finax trades through Linear Investments, an English prime broker that only works with licensed traders, banks, and funds.
Experience with Finax
Finax is not the only platform for the general public that lets people invest in ETFs. For example, the Czech projects Portu, Fondee, and Indigo all offer services that are almost the same. They also have the same fees, portfolios, and expected returns.
But there are a few things that are different.
- Portu is the only one that lets you build your own strategy and buy insurance against currency risk.
- Fondee has an investment day five times a week, while competitors only trade once a week.
- The smallest deposit you can make at Indigo is 100 CZK, which is 10 times less than at Port and Fondee.
And what is different about Finax?
Finax has the most portfolios (11), accepts deposits as low as $500, and will let you know if you need to pay taxes. The Intelligent Annuity feature is also worth mentioning. It will automatically pay you a portion of the money you save.
We don’t like that there is a fee to make a deposit and that instructions take a long time to process. Only once a week is investment day, and for Finax to follow your instructions, you have to put them in ahead of time.
What clients appreciate:
- Transparent fees
- Simple even for beginners
- Investment from 500 CZK per month
- Regular rebalancing
- Automatic check and, if necessary, notification of the emergence of tax liability during withdrawal
- Free educational materials
What clients criticize:
- A fee of 1.2% for deposits of less than 1,000 euros
- A business day is only once a week
- You cannot build your own portfolio
WHAT TO WATCH OUT FOR?
- You won’t make hundreds of percent a year with Finax. But it has a better chance of making money than savings accounts and time deposits.
- If you want to buy an investment or sell one, it could take several days. Stocks and bonds can only be bought and sold once a week. Finax cuts down on the costs of trading on the stock exchange in this way.
- ETFs are good for investments that will be held for at least 10 years. With short-term investments, there is a greater chance of bad timing.
- The average annual performance of the portfolios is between 2% and 8%. The stated returns do not take inflation or taxes into account.
Final summary
Finax is a great project that has a lot to offer investors. Finax is cheaper, easier to use, and, in our opinion, better than traditional mutual funds.
Want to see how investing with Finax actually works? Check out what Dominik Hrbaté, a former pro tennis player, has done with his money.
Beginners and small investors who don’t have the time or desire to invest on their own will like the platform the most. The system gives clients a portfolio to choose from, buys securities for them, and makes sure that the portfolio doesn’t change in any way. All of this for a fee of 1.20 percent per year, which isn’t too bad.
But compared to other platforms for investing, Finax’s offer is pretty average. The main problem is the fee for smaller deposits, which won’t be charged anywhere else (see Portu or Fondee ).
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