Instavest – Innovative and Potentially Lucrative

by Darwin on May 29, 2015

With all the different trading platforms and startups that I’ve seen over the years, Instavest has a model I haven’t come across before and I find to be quite interesting.  Essentially, it enforces a paradigm where lead investors (and investing bloggers) have to actually put their money where their mouth is and followers/investors can profit if they are actually performing the way they are projecting.  At a high level, if you are following a successful lead investor, you can profit from their trades, in virtual real time, as opposed to waiting until they write a blog post about a particular stock, you make a trade, and they’ve essentially traded back out of the position already.  Here’s some more on how it works and why I find this to be so unique:

How Instavest Works:

  • Instavest is another Y Combinator backed company, which lends some legitimacy, backing, and staying power.  Shortly after launch they had already attracted several traders with well over $1Million in trading funds – and growing quickly.
  • The basics are as follows:
    • Lead investors have their trades tracked and published on Instavest which draws the attention of followers who are watching their performance.
    • If interested in following a lead investors, a new investor can invest in the same trades, with the suggestion that a small portion of profits (not actual trade value, but just profit portion) be blocked out. Some goes to lead investor, some to Instavest – hence, everyone wins.
    • As a winning lead investors, you can make money not only from your own profitable trades but from that of your followers as well.
    • Trades are only $3.49 (additional fees may apply) through Tradier Brokerage, Inc.
    • Tradier is a member of FINRA which is a key criteria for any investor to look for.

So, aside from understanding the basics of how it works, think about the implications.  You could start as an individual investor and follow some highly successful lead investors and eventually become one yourself.  Given the reasonable trading fees and share of profits, I don’t really see much downside here compared to going it alone or using the traditional indexing approach.  I’d love to hear from folks who have already tried it out!

You can check out the website here for more details and lead investor performance.

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