Five financial tips from Robo-advisor CEOs
If one of your goals for聽2016 is to get your financial house in order, you鈥檙e not alone. That type聽of new year鈥檚 resolution is so common it frequently shows up on聽.
You鈥檙e much more likely to meet your goals if you make them specific. Unfortunately, many people don鈥檛 know where to start. They need concrete聽advice about how to do better with聽their money.
Who better to offer that than the people who revolutionized the financial advice industry,聽the leaders of some of the most successful聽聽Here, five tips from robo-advisor CEOs to make next year a more prosperous one:
Jon Stein, Betterment
Stein, who founded聽聽in 2008, says his advice is to make the most of what you have.
鈥淲e鈥檙e all subject to many constraints, not just economic but also time constraints, limited capabilities, relationships and, of course, capital,鈥� he says. 鈥淲hat鈥檚 important is to maximize our lifetime happiness based on these constraints.鈥�
That may mean聽that spending time with family and friends is more valuable to you than making more money, or that you鈥檇 rather invest in experiences or in yourself 鈥� through education 鈥� than invest more of your paycheck.
Many of Betterment鈥檚 tools have a behavioral finance tilt, so this thoughtful take from Stein isn鈥檛 a surprise.
鈥淓ducation is a great way to invest in another form,鈥� Stein says. 鈥淭o me, the most important thing is to do what makes you long-term happy, what will help you build the future you want.鈥�
Adam Nash, Wealthfront
Nash is the CEO of聽, which sets itself apart from the competition by managing the first $10,000 completely free. His advice is a simple but important reminder: Spend less than you make.
鈥淲hen you get a bonus or annual raise, the best gift you can give yourself is to save that extra income; don鈥檛 spend it,鈥� Nash says.
That鈥檚 a strategy that鈥檚 particularly applicable this time of year, when bonuses tend to be paid out. If you immediately save increases in income, you鈥檒l avoid聽lifestyle inflation. And, as Nash notes, 鈥淥nce you raise your spending, it can become incredibly hard to jump off the treadmill. The only reliable path to long-term financial success is to live within your means.鈥�
Bill Harris, Personal Capital
You might know Harris from his former roles 鈥� he鈥檚 served as the CEO of both Intuit and PayPal. He founded聽, which combines robo-advisor algorithms with dedicated human financial advisors, in 2011. His tip? Diversify.
鈥淲hether you鈥檙e just starting your financial journey or reviewing your current investments for the year ahead, maintaining a diversified portfolio may be the single most important driver of your investment success,鈥� Harris says.
Maintaining diversification may mean giving your portfolio a much-needed聽, if you haven鈥檛 already, and keeping perspective when making investment selections. Harris notes, 鈥淪tocks that may be hot right now won鈥檛 stay that way forever, so it鈥檚 important to hedge your bets and maintain a diversified portfolio that isn鈥檛 dependent on the whims of a single group or industry.鈥�
Bo Lu, FutureAdvisor
Lu, who serves as the CEO of聽聽after co-founding the company, says his best year-end advice is to take a moment to reflect. 鈥淵ou can鈥檛 know how to get to where you need to be if you don鈥檛 know where you are,鈥� he says.聽Take a look at how many accounts you have, where those accounts are held, and what your investments within those accounts look like.
鈥淭hese days, it鈥檚 quick and easy to see all of your accounts in one place, get a holistic analysis of your current portfolio and see how much you鈥檙e on track to have at retirement,鈥� Lu adds.
You can, of course, take that kind of stock at FutureAdvisor, which was聽聽in August. The company analyzes your portfolio and makes recommendations for free. Looking over your financial life from the past year will help you create a road map for the future.
Rich Hagen, TradeKing Advisors
Hagen is president and co-founder of online broker聽, and serves as the CEO of its robo-advisory arm,聽, which launched in 2014. Hagen鈥檚 No. 1 piece of financial advice heading into 2016: Embrace healthy financial habits.
鈥淭his means paying yourself first when you sit down to pay your monthly bills, by consistently putting aside an amount of money you can deposit into a brokerage or financial advisory account,鈥� Hagen says. He notes that investors can quickly make this a habit that sticks by setting up recurring monthly deposits.
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