Bloom is a new investment app that offers automated investing portfolios. As a fintech startup, questions around the safety and security of bloom investing are understandable. This article will analyze key factors like bloom’s regulatory status, account protection, and investment strategy to evaluate if bloom investing is safe for your money.
Bloom is regulated and SIPC insured providing account protection
One of the biggest reasons bloom investing can be considered safe is because it is regulated by SEC and FINRA as a registered investment advisor. This means they have fiduciary duty and must put client interests first. Additionally, cash in bloom investment accounts is SIPC insured up to $500,000 per account holder. The combination of being a regulated fiduciary and offering SIPC insurance helps provide investors with account protection if bloom were to go bankrupt.
Bloom offers low-cost diversified portfolios minimising risk
Bloom invests client money in low-cost ETFs and diversified portfolios reducing individual investment risk. The bloom portfolios are allocated across stock and bond index funds minimising exposure to individual companies or sectors. Fees are also low compared to traditional investment managers meaning more money stays invested. Overall the diversified automanaged strategy aligns with modern portfolio theory to maximise returns for a given level of risk.
Bloom has backing from major financial institutions
As a venture-backed fintech startup, bloom has raised over $300 million from top investors including JP Morgan, Citi, Goldman Sachs, and American Express. Having major banks as investors gives additional confidence in bloom’s business model and stability. If any issues were to arise, these financial partners would be highly motivated to ensure clients did not lose money invested through bloom.
While no investment is 100% safe, the combination of regulation, insurance, diversification, and institutional backing means bloom investing offers relatively low risk for investors. For hands-off investing in low-cost diversified portfolios, bloom provides a safe option compared to picking individual stocks.