BUX: Stock broker and game combined
Many young people consider the stock market as boring, and as ‘mainly for older people’. BUX is a new smartphone application, available in Dutch, English and German, which is aiming to combine investing with a game. BUX believes that the stock market is the biggest and best game in the world. They aim to give access to the stock market for everyone, not just the ‘big boy bankers’.
How is BUX different from traditional stock brokers?
BUX picked a few popular listed companies (including Heineken, Facebook, Twitter, Tesla, etc.). Therefore, it is not possible to invest in any listed company you want, just the ones that were selected by BUX. Also, while using BUX, you do not actually purchase the stocks. The application works with derivatives, which are securities with a price that is dependent on the underlying asset (in this case: the stock)(Investopedia, 2015). You actually sign a ‘contract of difference’ (CFD), which is an arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities (Investopedia, 2015) with Ayondo Markets, the stock broker BUX works with, for every transaction you make. To summarize: you pick one of the selected companies, estimate if the stock price will rise or fall, and make a profit of loss with your CFD based on the actual stock price.
Stock broker or game app?
After hearing about BUX, I was instantly interested; I wondered if BUX was really about investing. After some research I found out that the answer is rather simple; BUX is more a gambling game than a stock broker. Investing is about making sure that your savings have a better return compared to a savings account at a bank. An extensive risk profile should be made and companies should be evaluated on their fundamentals. BUX on the other side, is about short term ‘investing’, which makes evaluating the fundamentals of the company useless. Therefore, BUX is, in my opinion, more a gambling game than a stock broker.
BUX as a game
Even though BUX cannot be seen as a real stock broker, BUX still has the potential to grow a lot larger. There are many people interested in the stock market and BUX could be an easy way to learn the basics of stock trading. However, commercials by BUX stating that you can play with the ‘big boy bankers’ and get rich are misleading and incorrect. BUX is fun, but only works with small cash amounts and over a short period of time.
Niels van der Wolf
Van der Vliet, H (2014) Hoe ik niet rijk werd van beleggen op mijn telefoon, NRCQ, 03-10-2014, Available at http://www.nrcq.nl/2014/10/03/hoe-ik-niet-rijk-werd-van-beleggen-op-mijn-telefoon, last reviewed on 22-09-2015
Spelier, P. (2014) BUX maakt aandelenhandel toegankelijker en leuker, Emerce Innovatie, 06-10-2014, Available at http://www.emerce.nl/achtergrond/bux-maakt-aandelenhandel-toegankelijker-vooral-leuker, last reviewed at 22-09-2015
Investopedia (2015), Derivative, Available at http://www.investopedia.com/terms/d/derivative.asp, last reviewed at 22-09-2015
Investopedia (2015), CFD, Available at http://www.investopedia.com/terms/c/contractfordifferences.asp, last reviewed at 22-09-2015