You Can Now Invest in US Market With Just $100 Through This App

Many countries worldwide are moving to Yuan or Ruble for a ‘de-dollarized’ trade, but the US Dollar is still king if you want to make the big bucks with as little as $100.

In a conversation with ProPakistani, founder and Chief Executive Officer of Elphinstone Farooq Tirmizi said the startup – a robo-advisory platform that provides automated, algorithm-driven investment services – offers a fail-safe investment service to Pakistanis who want to “protect their US Dollars from Finance Minister Ishaq Dar”.

“Our goal is to develop the Pakistani market. We think that Pakistan can become a nation of investors. The country’s regulations are uniquely positioned to get us there,” he stated.

Investment Philosophy

Tirmizi explained that Elphinstone’s aim is providing Pakistanis with access to high-quality investment services without asking them to understand finance or investing themselves. “Basically, anything that you would want to invest in, we want to be able to offer, whether it’s the domestic Pakistani market either through mutual funds or direct investing in stocks which we can provide, or investing your provident fund, which we are already offering to companies in Pakistan,” he said.

Besides US equities and Exchange-Traded Funds (ETFs), Elphinstone offers to invest US Dollars in foreign markets as well.

There are over 1.5 million people in Pakistan who do freelance work and earn dollars, but most financial institutions will turn them down if they want to invest in the United States. “This is where we step in and open your accounts, and give you the opportunity to invest in the US. You can make any trade if you know what you’re doing,” he said.

Islamic Options in a Thriving US Stock Market

“We also offer Islamic alternatives, which is critical. Loads of people seem to believe that because they live in the United States, there are no Islamic options, but there are plenty, and we do provide them,” said Tirmizi.

According to the Elphinstone founder, the S&P 500 is an ensemble of 500 companies, 259 of which are Shariah-compliant. “We offer investment-grade Sukuks denominated entirely in US dollars. So you can have full Shariah-compliant investments in the United States,” he added.

Elphinstone for Pakistani Americans?

Tirmizi said the company is starting off with just Pakistanis for now since Pakistani Americans do not need such services. “For local Pakistanis, our value proposition is that we are providing them with something that is not easily accessible to them,” he added.

“Every investment account in the United States is protected by the Securities Investor Protection Corporation (SIPC). Likewise, Elphinstone offers Pakistani investors the highest quality of investment service with full legal protection. Everyone gets paid,” he stated.

Why Just Dollar Accounts and Not PKR?

“We have to be realistic. There is a lot in US dollar accounts. At its peak, Pakistani banks had $8 billion in reserves. This number has come down since Pakistanis moved their greenback out of the country for various reasons, while we estimate that the freelancer cash is somewhere between $2-3 billion in apps like Payoneer, Wise, and other e-wallets. This is a $10 billion market on its own. We charge a 1 percent fee on assets in our management, so that in itself is a $100 million revenue opportunity for us in just this market,” he remarked.

“We manage $1.5 million in client assets and expect the amount to grow exponentially in the coming few months”.

Number of Accounts Opened so far, Plans for Expansion

“We are just shy of 200 and our focus right now is to get more people onboard. Surprisingly, conventional stocks are more popular than Islamic stocks among Pakistani investors,” Tirmizi mentioned.

On Elphinstone’s expansion plans in the near term, the top executive hinted at exploring deeper into other South Asian markets.

Relationship With Clients

Corporate retirement plans are a big thing in Pakistani companies and many retirees seek investment opportunities to protect their finances.

“Provident fund is very tightly controlled in most countries. In Pakistan, it is controlled the same but can be converted into an individualized account. And I think that is the way we can persuade Pakistanis to invest,” he commented.

However, he also admitted, “It is still very tough to persuade someone in the Pakistani market to invest but if you tell someone they can put their dollars in America, things change. So far, people onboard have trusted us with their investments and it has been great”.

Tirmizi said people are convinced that Elphinstone is something that they need. “Most of the users first rushed to check whether they were able to withdraw their investments because frankly, they couldn’t believe it was possible, given how Pakistani investors are typically treated when they try to trade securities abroad. The withdrawal function helped us with our retention rate and many customers are getting involved because they now see their investments are worth it,” he added.

“It takes 2-4 days to process transactions, so that’s the only downside, but the money does end up in your bank accounts,” he said.

Elphinstone: Broker or Advisor?

Tirmizi said the custody of client assets invested in US-listed securities is maintained by Alpaca Securities, LLC.

To the extent that Elphinstone takes custody of client funds, those are maintained at JPMorgan Chase Bank. These funds are passed through within one business day to an Alpaca Securities custodial account unless there is a technical error, for which clients would be notified as soon as Elphinstone becomes aware of the delay.

Elphinstone-Abhi Credit Line

The credit-line discussion with Abhi is currently on hold, according to Tirmizi.

“No problem on Abhi’s side; for now, we’re more focused on our existing provident fund clients like Bykea, and Markaz Technologies, and some Engro employees (on a non-exclusive basis) who have also signed up with us,” he added.

Corporate Retirement Plan – Similar to 401k Contributions?

“There are three types of plans everyone plays around with: Gratuity which is a default in the law, provident fund, and Voluntary Pension Schemes. If you look at Pakistani regulations, you realize that our retirement savings or provident funds can be structured like 401k. At Elphinstone, we are offering such a service,” he said.

How to Open an Account With Elphinstone

It’s a very simple process for both iOS and Android users.

• You need your CNIC for registration
• Front and Back CNIC pictures (scanned)
• A PDF of your bank statement saved on your phone (without password). The statement is only used to confirm the user’s billing address
• When filling in your information on the registration page, make sure to set your tax residency to Pakistan

The minimum amount to invest is $100 dollars.

NOTE: Elphinstone is officially registered with the Securities and Exchange Commission (SEC) in the United States and also with the Securities and Exchange Commission of Pakistan (SECP).

Tirmizi observed that Pakistanis are understandably wary of banking institutions, but in fact, the real villain is the government. “They want to keep the dollar under control so badly that they tell banks to limit outflows as much as possible,” he said.

“At Elphinstone, we are not encouraging capital flight, but asking Pakistanis to participate in global capital markets. We ask them to be smart and protect their US Dollars from Finance Minister Ishaq Dar,” he concluded.