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New Financial Apps Demystifying Stocks And Bonds For Hispanics

financial-tech startups aimed at Latinos have focused on immediate financial needs

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Fliers offering financial advising services to clients hang in a cubicle at the Neighborhood Trust Federal Credit Union in Washington Heights in New York, May 24, 2018.
Fliers offering financial advising services to clients hang in a cubicle at the Neighborhood Trust Federal Credit Union in Washington Heights in New York, May 24, 2018. VOA
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Carlos Garcia was three years into his first job in technology at Merrill Lynch when he first learned what a 401K retirement savings account was. He was floored when he learned that a colleague had already saved $30,000 in three years, and the company had matched it.

The concept of making money off money was foreign to Garcia, an MIT graduate who was born in Texas to immigrants from Mexico. His story is not uncommon among U.S. Hispanics, who lag behind other demographic groups when it comes to saving for retirement. But for Garcia, the episode became the inspiration many years later for Finhabits, a bilingual digital platform designed to make savings and investment accessible for Latinos.

Finhabits launched last year into a crowded world of robo-advisers, savings apps, online lending platforms and other financial-technology companies.

But it is one of the few aimed at demystifying stocks and bonds for Hispanics, particularly young professionals who have the means to start investing but may have inherited a fuzzy understanding of the financial system from their immigrant parents.

“Hispanics are very hard workers and we are able to generate quick income for our families. Sometimes we are good at savings but we put the money under the mattress,” said Garcia, who previously founded two other companies, including an internet analytics service for hedge funds.

Other financial-tech startups aimed at Latinos have focused on immediate financial needs: paying off debt, building credit and gaining access to loans. Few besides Finhabits are dedicated to encouraging investing and long-term financial planning.

Another is Mi Dinero Mi Futuro, a personal financial planning platform started by Ramona Ortega, a former New York corporate attorney who became preoccupied with the lack of financial literacy among Latinos while working in bankruptcy and securities litigation.

“No one talked to me about money,” said Ortega, the daughter of Napa Valley farm worker and the first in her family to go to college. “The fact is that our communities have not had a legacy of talking about money.”

Carlos Garcia, founder and CEO of Finhabits, speaks during an interview with The Associated Press in New York, May 22, 2018.
Carlos Garcia, founder and CEO of Finhabits, speaks during an interview with The Associated Press in New York, May 22, 2018. VOA

Finhabits follows in the footsteps of robo-advisors Betterment, Wealthfront and Acorn, which use computer algorithms instead of a traditional wealth adviser to manage customer funds across various types of investments. Ortega’s platform is similar to more well-known personal finance apps Mint and Credit Karma; it offers personalized budgeting tools and recommendations for affiliated financial products.

More than competing with established players, the founders of Finhabits and Mi Dinero Mi Future see themselves as creating a new market among Latinos, who they believe are overlooked by traditional financial institutions and even many of the digital newcomers.

It is not an easy market to penetrate, however.

According to a 2014 Prudential Research study, just 19 percent of Latinos had individual retirement accounts and less than 10 percent had investments in individual stocks, bonds of mutual funds. Only about 60 percent of Hispanics had a savings account, compared to 80 percent of the general population. The study cited various factors, including uncertainty among immigrants about what will happen to investments if they leave the country, distrust of financial institutions and difficulty understanding products.

Another study, done in 2016 by the Pew Charitable Trusts, found that more than 60 percent of Latino workers lacked access to an employer-sponsored retirement plan, compared to 40 percent for white workers.

“This demographic has been very tough to crack historically,” said William Trout, head of wealth management research at Celent, a consulting firm focused on financial services technology. “Will that second generation look for a platform that is speaking to a Hispanic population? Well, somebody has to test it. I think it’s worth a shot.”

With Finhabits, beginner investors can start with $5 weekly contributions into traditional IRA, Roth IRAs or taxable investment accounts for shorter-term goals. Finhabits asks users about their priorities and risk tolerance and then recommends investment portfolios. The money goes into low-fee exchange trade funds from Vanguard and BlackRock.

Through its app, blogs and text-messaging services, Finhabits explains financial concepts (portfolio diversification? It’s like ordering different types of tacos) and compound interest to persuade people that investing their money is safer and wiser than trying to “hit the fat one,” as Latinos refer to the lottery jackpot.

Crucial to the Latino community, Finhabits lets users open an account with an Individual Taxpayer Identification Number, a processing number issued by the Internal Revenue Service for people who are required to pay taxes but do not have Social Security numbers. That makes the service accessible to immigrants who are not legal residents but still pay federal taxes.

Savvier investors can simply set up accounts directly with Vanguard or BlackRock, which require more active knowledge of investing. But most often, those big players don’t have formal marketing strategies for Hispanics.

Garcia said Finhabits has about 10,000 active clients who invest an average of $40 a week. It is signing up about 1,000 new clients each week and aiming for 50,000 by the end of the year.

One challenge for financial start-ups is earning the public’s trust. Finhabits and Mi Dinero Mi Futuro are trying to that through partnerships with institutions already targeting minority and underserved communities.

Finhabits is a provider in Washington state’s newly established Retirement Marketplace, which helps individuals and small businesses find low-cost retirement saving plans. Nearly 80 percent of the West Coast state’s 385,500 Hispanic workers are not covered by an employer-sponsored plan, said marketplace director Carolyn McKinnon.

Rosa Franco, director of lending at Neighborhood Trust Federal Credit Union talks with employees at the bank in New York, May 24, 2018.
Rosa Franco, director of lending at Neighborhood Trust Federal Credit Union talks with employees at the bank in New York, May 24, 2018. VOA

Finhabits also has partnerships with credit unions, including Neighborhood Federal Credit Union, which serves New York City’s predominantly Latino neighborhoods of West Harlem, Washington Heights and Inwood.

Rosa Franco, director of lending at the credit union, said the partnership is still in development. She anticipates a challenge in marketing the service to her clients, many of whom are consumed by pressing concerns like debt repayment and or sending money to relatives abroad.

“It’s difficult for many people to think about the future. They live paycheck to paycheck. Many people just think Social Security is their only option for retirement,” said Franco, who used the Finhabits app herself to open a Roth IRA.

Ortega, who recently received a new round of investment from venture fund Backstage Capital for Mi Dinero Mi Futuro, crisscrosses the country giving workshops at universities and Hispanic professional organizations.

At a financial boot camp in Los Angeles City Hall, Ortega won over Liliana Aide Monge, who moved to the U.S. from Mexico at age 5 and is now the co-founder of Sabio, web development and cybersecurity training company.

Growing up, Monge said her family was “not part of the formal banking structure at all. The money came in and you pay the rent and you pay for food.”

Now a mother of two boys, Monge has used Mi Dinero Mi Futuro to budget her money, buy life insurance and open a high-yield savings account.

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“It was an eye-opening experience,” she said. (VOA)

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Asian Farms Tackle drug Resistance with Apps and Dictionary

Tackling Drug Resistance on Asian Farms with Apps and a Dictionary

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A Bangladeshi vendor carries chickens on a rickshaw to a market in Dhaka, March 29, 2007. The United Nations is educating farmers on the growing resistance of deadly diseases to antimicrobial drugs such as antibiotics. (VOA)

In his first 12 years working as a vet in Bangladesh farms, Bikash Chandra Saha routinely prescribed antibiotics. Then he learned of the devastating impact of antimicrobial resistance on human health — and it revolutionized his treatment choices.

The growing resistance of deadly diseases to antimicrobial drugs such as antibiotics is seen as one of the biggest threats to human health, but awareness of the dangers of overuse remains low, particularly in developing countries.

Now the United Nations is educating workers on the front lines of the battle against this global scourge — among them Saha, who works for one of Bangladesh’s biggest poultry companies.

“It definitely changed my attitude and my antibiotic selection,” Saha, who attended a recent training course, told Reuters by phone.

“Before, my focus was on what is the best option [for the animal]. After the training, I know the threat of antimicrobial resistance, even for my family, for my children. This is a new thing.”

Lethal bacteria are showing more and more resistance to antimicrobials, and a 2016 report found drug-resistant infections could kill 10 million people a year by 2050.

Livestock is a large part of the problem — especially in Asia, where rising incomes have led to a growth in the consumption of fish and meat.

Most countries require prescriptions for antibiotics in humans, but less than half limit their use to promote growth in agriculture, according to a report published last month.

Phone app

Saha said colistin, once a livestock-specific antibiotic but now a drug of last resort that can save human lives when others have failed, was commonly used on animals in Bangladesh but since the training he and the other vets were more careful about using it.

The course was run by the U.N. Food and Agriculture Organization (FAO), which has trained nearly 150 vets and doctors in Bangladesh since February on the globally accepted guidelines for antibiotic use.

Those guidelines are now available as mobile phone app — one of a number of innovative ways in which international organizations are seeking to educate people working with antimicrobial drugs about the dangers of overuse.

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A pig farmer checks his herd at his farm in Cam Thuong village, about 60 kilometers (37 miles) northwest of Hanoi, Vietnam, May 5, 2017. The U.N. is working with farmers to limit the use of antibiotics in livestock. (VOA)

Thailand, where antimicrobial resistance causes 19,000 additional deaths a year, is working on an online dictionary in English, Thai, Vietnamese, Lao and Burmese to cut through the jargon surrounding the issue.

“In the Mekong region, people don’t clearly understand the difference between bacteria and virus,” said Direk Limmathurotsakul, assistant professor at Bangkok’s Mahidol University, who is leading the project.

“People still commonly use antibiotics for common cold, which is caused by virus,” he added. “Even the word antibiotic can be called different ways. In Thailand, sometimes it is called anti-inflammatory or antiseptic drug.”

Blanket bans

Simply banning antibiotics would not work, experts say, with farmers unlikely to comply.

Instead, they hope improved knowledge of drugs will help reduce antimicrobial use on Asian farms — seen as the low-hanging fruit because it is currently so high.

In Vietnam, 120 poultry farmers are to receive training on how to prevent and control diseases as well as free veterinary advice as part of a pilot project aimed at reducing drug use.

“We’re improving the knowledge base of farmers and vets rather than a ban on antibiotics, which would be unlikely to be complied with,” said Juan Carrique-Mas, the project’s principal investigator.

“The baseline shows very high level of usage, so I think it would be relatively easy to reduce it by 30 to 50 percent with even better productivity and health,” added Carrique-Mas, of the Oxford University Clinical Research Unit in Ho Chi Minh City.

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Data on antibiotic use on farms in the region remains sparse, but is starting to be collected, said Suzanne Eckford, a British specialist who works with the FAO.

Eckford advocated against blanket bans on antibiotics — not least because they could have unintended consequences on food production.

“You can’t just say, ‘don’t do something,'” she said. “You have to say, ‘this is what you need to do instead and you’ll be still able to have a productive, economically viable system.'” (VOA)