Without the ability to invest, who knows how long it would take the average joe or jane to reach retirement? Despite the inevitable, at times crushing downturns in the global markets, there are few phenomenons more rewarding than your money working for you. But investing today isn't the same as it was in the 1930s. For that matter, it's not the same as it was in 2008.
These industry insiders have observed the trends taking hold in the investment world. They shared those insights with us, here's what they said:
1. Bill Winterberg, Technology Consultant at FPPad
“The future of investing is in direct, customized indexing using a single, technology-focused brokerage firm. Soon, investors will be able to invest directly in a diversified allocation of assets, including company stocks, bonds, and even cryptocurrency holdings, customized to his or her own individual preferences, all for one flat monthly subscription fee. Investors will be able to bypass mutual fund and ETF managers (and their associated management fees) to invest directly in the opportunities that best align with their individual investment and environmental, social, and governance preferences.”
2. Cheryl Cheng, General Partner at BlueRun Ventures
“Fundamentally, the future of investing is the same as it has always been. Firms seek alpha. How they achieve alpha will be in a range of strategies. Starting a company is getting easier and easier, from the technology stack that is available to developers to the distribution models to attract first users. These lower barriers to entry, combined with a recent increase in venture dollars, creates signal to noise ratio problems. Future investment models will incorporate faster, more data-driven ways to analyze companies, teams, sectors, and trends. But, that is just the picking part of investing.
In venture capital, writing the check is just the beginning of a long relationship with the entrepreneur. Putting in the time to build companies will continue to be an important part of generating outsized returns, especially for early-stage investors. Finally, companies will continue to stay private longer and we will see more layers of private capital. Funds will have larger reserve pools. As an industry, we will need to solve for how to create liquidity for both founders/employees and early investors while companies stay private longer and perhaps indefinitely.”
3. Damien Cabadi, CFO at Spirit Asset Management
“In the investment area, we will probably observe an expansion of the market to the bottom of the customer pyramid. While private bankers are hesitating to serve customers with less $1 million, robo-advisors reduced their threshold to a few thousand dollars and money-saving applications went even lower. This is a trend allowed by the continuous decrease in IT costs, the high scalability of new technologies and the lower acquisition costs of digital channels. ”
4. Yaron Golgher, co-founder and CEO at I Know First Forecasting
“The future of investment is the synergy between expert portfolio managers and AI-based decision-making enhancement tools. As the amount of data we generate daily increases, it becomes difficult for humans to keep up with the trading and monitor thousands of new developments, big and small, that could all send the market to the skies or into a nosedive. The use of AI to process this data will allow the investors to have the best of both worlds, tapping into computers’ unrivalled ability to crunch the numbers as well as into the human insights and knowledge-based, rather than statistically-inferred, cognition.”
5. Adrian Enache, CEO at Angels Den Funding
“When it comes to equity investment, there are two aspects to be considered. On one hand, experienced investors encounter the challenge of identifying both promising early-stage companies and a blend of other alternative investment products. Allocating resources to various investment vehicles is an important component of reaching long-term financial goals. While drastically reducing the risks sounds far-fetched, technology will make this attainable. On the other hand, the future of investing will be more focused on the value that an investor brings to start-ups. As access to capital gets easier, intangible aspects such as mentoring, network and strategy will become essential.”
6. Patricia Russell, CFP, Investment Advisor and founder of FinanceMarvel
“There are some people that believe blockchain technology is the future of investing. Digital currencies will play a big role in tomorrow's economy. More and more companies will become open to the idea of accepting tokens as a mode of payment.
Multi-asset class investing will also become popular as investors look for ways to minimize risk and maximize returns. Artificial intelligence is also being used to help people make investment decisions. This means that in the future, investment methods will become relatively simple for everyone.
There are others that believe the future of investing mimics the past.
Those that are smart with their money will gain the most while those that go with the trend and invest without thinking will lose a lot of money.”
7. Bryan Stolle, founding Partner at Wildcat Venture Capital
“Consumer companies, for all of their brand awareness, are fun and relatable. People know Lyft, Uber, and Tesla — even if they haven’t used a ride-sharing service or driven in an elite electronic car. They can touch and feel these brands. Still, over the past ten years, through a combination of digital transformation and stable, repeatable business models, B2B and B2B2C companies have emerged to be durable, extraordinarily valuable investments, generating outstanding returns that are generally under-recognized in the LP and investor community. We at Wildcat believe that we are just at the beginning of a shift where investor sentiment is growing stronger when it comes to B2B investment opportunities. The disappointment of recent unicorn listings is only going to reinforce what we have bet on for decades: simply that B2B and B2B2C technology companies are a safer play.”
8. Tony D’Amico, CFP, CEO and Senior Wealth Advisor at Fidato Wealth LLC
“The future of investing is going to change significantly, in fact, the change is underway. People place great value on having their investments managed optimally; however, people are looking for more than just investment management. They’re looking to accomplish their financial goals by having someone stress test their total financial picture to make sure that they’re making the most optimal decisions. This includes areas such as tax planning, risk mitigation, estate planning and other customized services that are relevant to the clients’ goals and needs. While investing is an important aspect, there has been a shift to a greater emphasis placed on managing the total financial picture, and how all these pieces work together in the most optimal way.”
9. Riley Adams, Senior Financial Analyst at Google, Founder of Young and the Invested
“Investing will change as time and technology progress. We see it now with new applications automating how people invest their money. Many simply set a fixed amount of money to deposit directly into their investing accounts with services like Betterment, Wealthfront, Acorns, and many others. In so doing, this instantly invests the money in preset asset allocations matching their investing preferences and financial goals. The underlying investments tend to be low-cost index exchange traded funds (ETFs) which automatically diversify the investor and provide broad exposure to multiple asset classes.
Many millennials fund investment accounts like this or have begun to move money into the markets with investing applications like these. These apps are low-cost and have negligible initial investments required to begin investing. The future of investing resides in these automated investing apps.”
10. Ben Fraser, VP of Finance at Aspen Funds
“Since the passing of the JOBS act in 2012, which has made it easier to raise capital privately, alternative investments have opened up to the broader market. Individual investors are now able to invest the way large institutional investors have for decades by investing in private funds where they have direct ownership, and generally are backed by real assets.
With the increasing volatility and distrust of the stock market, investors continue to look outside of traditional investments. Alternative investments historically are uncorrelated to the stock market and can provide attractive returns.”
11. Ruslan Gavrilyuk, co-founder and President of Kepler Finance
“I see the future of investment driven by investors differentiation and more funds being unlocked. Modern technologies like Blockchain provide means for the development of digital securities. Generally, there is a tendency towards alternative financing and retail investment. I see more individual investors participating and being legible.”
12. Logan Allec, CPA and Founder of Money Done Right
“Investing is going to become a lot more accessible to everybody in the future. Throughout most of the 20th century, the only way that the the average person could invest in the stock market was through an expensive broker who often charged exorbitant fees. Then near the end of the 20th century, we saw the rise of online e-brokers. A major problem with these e-brokers, however, is that people are basically left on their own to figure out what to invest in, and unfortunately many people — looking for the big win — invest foolishly. So I think here in the 21st century, everyday people are looking for smart ways to invest their money at low costs, and I think a lot of the big investment companies are showing up to meet this need.”
13. Mik Breiterman-Loader, CEO of Vestive
“The future of investing is sustainable investing. Consumers have demanded sustainability be a factor in so many industries, food, consumer products,energy, and investing is no longer the exception. Every year we see huge growth in sustainably invested assets, and as more accessible sustainable financial products become available we expect this trend to continue. Demographics also bear this trend as well, with 86% of millennials stating they would like to incorporate environmental and social factors into their investment portfolios. This will likely only increase as Gen Z, which some have labeled the compassionate generation, enters the workforce and looks to start investing. Sustainable investing has been a niche, but in the future it will be the norm.”
14. Jay Palter, Chief Engagement Officer at Jay Palter Social Advisory
“Artificial intelligence (AI) is the future of investing, BUT it is not some holy grail. It will not create heroic returns. It will not magically make all portfolios risk-free. It will not change the laws of mathematics and deliver top quartile result for every investor. No amount of AI will eliminate the need for real economic value to exist at some point, somewhere in the capital ecosystem.”
15. Anatoliy Knyazev, Executive Director at EXANTE
“The future of investing is definitely in more open, more accessible capital markets. A recent trend reveals that big companies have been going publicrather late in their lifecycle – most growth benefits are reaped by hugeprofessional players. With all their drawbacks, blockchain-based projects have shown there's tremendous demand for an accessible market for capitalallocation – globally, across countries, currencies and asset classes.”
16. Ryan Vet, Entrepreneur and CEO of boon
“I think there are two main futures of investing. First, we are seeing the rise of robo-investing platforms that are using algorithms to accurately predict and make trades against a portfolio's goals. This scalable, low-cost model lowers the fees on traditional wealth advisors. That is for the public market. However, since the JOBS Act passed, there is a massive opportunity for private investing. Platforms like WeFunder or SeedInvest are creating new marketplaces for investors to put their cash.”
17. Izet Elmazi, Senior Portfolio Manager, Bristol Gate Capital
“While the core principles of good investing are timeless, we believe the future of investing will see the continued evolution of humans and machines working together to solve investor needs. Whether it be roboadvisors adding human advisors to their mix of offerings to overcome shortcomings in their model or traditional asset managers increasingly automating some manual processes, we expect this trend to continue.”
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