Meet Jeremy Schneider, the passionate financial educator behind Personal Finance Club and Nectarine. He delves into the value of robo-advisors, constructing a portfolio, his views on cryptocurrency, and common financial mistakes. Jeremy's new venture democratizes access to financial advice and he encourages simplicity, avoiding lifestyle creep and complex investing.
Investing doesn't need to be complex; target date index funds provide a simple, diversified portfolio.
Robo-advisors automate investing based on risk tolerance and goals, offering diversified portfolios and tax-loss harvesting services.
When working with financial advisors, seek advice-only professionals to avoid high fees and conflicts of interest.
Deep dives
Simplicity and Target Date Index Funds
Investing doesn't need to be complex. Target date index funds, like the ones offered by Vanguard, provide a simple, diversified portfolio in a single fund. These funds automatically adjust your asset allocation based on your target retirement year, gradually shifting to a more conservative mix of stocks and bonds as you approach retirement. This simple approach avoids the pitfalls of trying to time the market or pick individual stocks, and instead focuses on consistent, long-term investing.
The Benefits of Robo-Advisors
Robo-advisors can be a valuable tool for many investors, especially those who are new to investing or prefer a hands-off approach. These digital platforms use technology to automate investing based on your risk tolerance and goals. They typically offer diversified portfolios of low-cost index funds and automatically rebalance your holdings. While some critics argue that robo-advisors can introduce unnecessary complexity, they can be a helpful option for those who want a hassle-free way to invest and may benefit from automated tax-loss harvesting services.
Tax-Loss Harvesting and Its Prospects
Tax-loss harvesting is a strategy employed by some robo-advisors to minimize taxable gains by selling investments that have experienced losses and using those losses to offset gains. The idea is to take advantage of market downturns to harvest losses that can be used to reduce tax liabilities. While tax-loss harvesting may be beneficial in certain circumstances, it's important to understand the potential limitations and consider the tax implications before implementing this strategy. Additionally, tax-loss harvesting may be more relevant for taxable investment accounts rather than tax-advantaged accounts like IRAs or 401(k)s.
Investing in Robo Advisors
The speaker shares their thoughts on tax-loss harvesting and the use of robo advisors. They believe that the marketing around tax-loss harvesting is overstated and that the complexity it adds is not worth the potential benefits. However, they suggest that for individuals who prefer a hands-off approach and are looking for simplicity, Betterment and Wealthfront are good options. They explain that these robo advisors focus solely on investing and offer easy-to-use apps.
Finding a Financial Advisor
The speaker discusses the advantages and disadvantages of working with a live financial advisor. They note that human advisors can provide personalized advice, respond to individual situations, and instill confidence in decision-making. However, they highlight the issue of high fees associated with some advisors, such as strip mall advisors who may sell products with loads and high fees. They also mention the assets under management model, where advisors charge a percentage of managed assets. To overcome these challenges, the speaker recommends seeking advice-only financial advisors who do not sell products or manage money, but instead provide professional advice. They introduce their own platform, Nectarine, which connects individuals with advice-only financial advisors.
Jeremy Schneider is the passionate financial educator behind Personal Finance Club and the innovative platform Nectarine. Jeremy shares his unique perspective on the simplicity of financial success, underscored by his simple rules - 'live below your means' and 'invest early and often.'
We delve into the value of robo-advisors versus human advisors, Jeremy’s thoughtful approach to constructing a portfolio, his views on cryptocurrency, and the common financial mistakes he witnessed over the years. Plus, you'll hear about Jeremy's newest venture that democratizes access to financial advice and his clear stance on avoiding the pitfalls of lifestyle creep and complex investing.
