Tag Archives: young investors


Missing the Obvious on Fees

I have a personal confession. For nearly 50 years, I’ve missed the “obvious” reality: Fees for investment management are not low. They are high; very high. When investors recognize this “new reality” — that fees are not trivial but are crucial — the beautiful “inside” world of fund management will experience a powerfully disruptive revolution. It may not be sudden, but it is inevitable. Investors are not captives of the conventional practices of “performance” investing. They have proven alternatives. The process of getting to the “Ah ha!” moment can come through a few examples of how easy it is to miss (or misinterpret) reality. Missing the obvious Sometimes it’s due to deliberate deception — as when a magician has you […]

Meir Statman on What Investors Really Want

Meir Statman, a member of Wealthfront’s investment advisory board, is a leader in the field of behavioral finance. He has researched and written much about investor behavior and its reflection in capital markets. We asked him to talk to us about what investors really want, how they can make smarter financial decisions, and what brought him to Wealthfront. What Investors Really Want was your first book for the general public. What inspired you to write it? I wanted to share important lessons about investments others and I have been learning for three decades, lessons that are obvious in hindsight but were not obvious in foresight. We did not know that we were at the beginning of behavioral finance. That realization […]

Burt Malkiel’s Rule for Young Investors: Save Regularly

Wealthfront CIO and Princeton emeritus economics professor Burt Malkiel sat down with us a few weeks ago to talk about two of his favorite topics: perseverance and patience. In other words, invest regularly, and stay invested. Burt cites a famous essay by Warren Buffett. Buffett uses it in part to explain his practice of placing big bets in good companies when the market is headed down, and then waiting for the stock prices to turn around. That’s beyond the scope of non-professionals. But there is a way young investors can benefit from the same idea. If you persevere by investing regularly, even in markets that don’t look promising, you are more likely to reap a large reward over time than […]

Advice On Angel Investing … and Other Advice, Too

Everywhere I go in Silicon Valley I hear people discussing their angel investments. The conversations remind me of fish stories. People love recounting the one time they caught a big fish, not the many futile hours they spent waiting for a bite. That’s how Andy Rachleff, Wealthfront’s president & CEO, began a recent post on TechCrunch about whether or not becoming an angel investor is a good idea. Andy, a co-founder of Benchmark Capital and a faculty member at Stanford University Graduate School of Business, used his knowledge of the venture capital business and seed investing to make the case that it’s terrifically difficult for an angel investor to make money because seed investments are so risky. His advice: My […]

Preventive Medicine for One Young Doctor’s Growing Portfolio

Amy Batterstein, 25, has a one-word refrain: Save! Though the West Coast medical student has adopted a few other choice philosophies that govern her financial life, the one at the top of the list is simple: Don’t spend it all. Ms. Batterstein only earns about $25,000 a year from a part-time job and as a medical student, but she still manages to invest $1,000 a month – which she puts into a Vanguard S&P 500 index fund. “I do not check my balances frequently. I do not want to convince myself to make frantic decisions,” says Ms. Batterstein, who also established a $50,000 cash account for herself during the two years before medical school, when she worked as a consultant. […]

People in Their 20s & 30s: Become a Savvy Investor

People in their 20s or 30s, you face some of the biggest challenges and the biggest opportunities of any investor. (See Preventive Medicine for One Young Doctor’s Growing Portfolio). If you have a solid income stream, you face a bewildering array of demands on your money. You may want to save to buy a house; you probably have college loans to pay off; and you’re already thinking about socking money away for “big ticket” items in your future like cars, vacations and kids’ college! One crucial realization you’ll have as a young investor is that different goals will require different investment vehicles. Key Investment Vehicles The Rainy Day Fund There’s no clear consensus among experts as to exactly how much […]

GenY’ers Freeze Up When They Should Be Investing

The extent to which the market’s volatility is contributing to the feeling of uncertainty was clear in a new survey released this week by Guardian, a life insurance company. Some 39% of Americans are overwhelmed by the idea of how to save for retirement, based on the survey of 1,202 people, which also looked at how the different generations view saving, investing and retirement. As you would expect, those closest to retirement are the most likely to be worried about having enough to retire. But Gen Y’ers also are worried and significantly confused about their finances in general. A higher proportion of Gen Y’ers, 75%, said that in light of the last five years they are more likely to park […]

How Much Cash Do You Really Need Before You Start Investing?

The convention wisdom is that you need 3 to 6 months’ worth of cash on hand to cover emergencies BEFORE you start investing. There is no substitute for the reassuring feeling of fast, hard cash on hand. Sounds rational, right? But it’s not quite so simple. A growing number of experts say that there’s more wiggle room in this question of cash reserve than you might think. The latest thinking suggests that there are five things that you should take into account when deciding how much cash you need before investing: your monthly expenses the kinds of crises you want to prepare for your job skills and your industry whether you have equity in your home to be tapped the […]