I'm thinking that they'll hide the brokerage fees by buying low-cost S&P index funds themselves in "large" chunks then breaking them off for users. The index funds still have brokerage fees tied into the cost of the fund, but the app itself won't charge users for entering or leaving the fund of funds.

If they're only buying additional index stock on a weekly/monthly basis they could potentially make that back in advertising revenue. Alternatively, by just paying out of pocket, if they get enough users they can now claim they've run a x $ amount mutual fund -- good resume padding.

My guess: they are eating the management fees on an indexed fund that they are just managing themselves. With enough volume they can offer other fee-ful funds like the other guys and cover the costs. It's just a loss leader.

I'm assuming it's not a Ponzi scheme, but obviously could be wrong.

If everything is up-and-up this is actually kind of cool. I've been disappointed at the lack of decent investment options for low-income savers.

Some Vanguard index funds have a $1000 minimum and you don't have to risk your money with a (frankly) sketchy investment like this.

You can also buy them on the stock exchange for less than $10 in transaction fee, and I think the minimum there is a lot less than $1000.

Good point. IIRC, if you buy the ETFs directly from Vanguard, there is no transaction fee, making it even less expensive.

If it's not too private, what would be an ideal amount (min-max) for you to invest as a low-income saver?

Furthermore, maybe it would be better to handle immediate expenses instead of trying to save every penny which wouldn't have any tangible returns anyway?

I'm not a low-income saver myself, but I see lots of low-income savers that just can't hit the minimums. I really would love to see a fee-free option for them that they can drop $5 into here and there and have it add up.