How to invest your money in 2020 (and why I don’t use Robinhood ).

How to invest your money in 2020 (and why I don’t use Robinhood ).

Hey, welcome back. You’re just in time for
coffee with you’re host, ex-Google, ex-Facebook,
multi-millionaire, Tech Lead. And today, I thought I
would make a quick episode talking about how I manage
my millions of dollars. And, you know, you may be wondering, what am I investing my money in, what apps I’m using, am I doing cryptocurrency, gold, stocks, real estate, cash? And am I using E*TRADE,
Robinhood, Vanguard, Fidelity? So I thought I would
give you a quick rundown about the way I’m doing things. And I’m not going to pretend
I’m a professional at this. I may be a professional YouTuber, but if you have any suggestions for me or advice on how I can
improve my wealth management, then I’m all ears. I’d love to hear, post
in the comments below, I read everything. And remember to smash that Like button also for Graham Stephan. So let’s just jump into it. Most of my investments
are in the stock market, about 80% or so. And you may be wondering,
well, what apps am I using? Am I using Robinhood, Vanguard? And I’m actually not
using any of them really. What I’m using is Interactive Brokers. And you may be wondering,
well what is this? You may have not heard of it. Interactive Brokers happens
to be a professional stock trading brokerage platform. It’s not so much targeted at new people, but there’s one reason why
it outperforms Robinhood and every other free zero-commission brokerage out there. And for me that reason
is the low margin rates. So if you were to take a look at the margin rates for these, And margin is essentially the percentage that these brokerages charge. When you over-invest or
when you have negative funds in your account, how much
interest do they charge on that? Currently, Interactive
Brokers charges about 3.1%, which is one of the
lowest in the industry. By comparison, E*TRADE charges like 10%. Most discount brokerages
are charging about 10%. And meanwhile, Robinhood
charges about 5% margin rate on their Robinhood Gold plan, which is an additional $5 per month. Overall, it’s still pretty low, it’s still a pretty decent rate. Although, it’s not nearly as low as what Interactive Brokers is doing. So for me, given the amount I’m investing, sometimes I could be on the margin loan from $10,000, $20,0000, to $50,000 for a few weeks. Sometimes I need to
make like a tax payment, I need to pay somebody, I may need to pay a credit card bill, or I just need some funds
for some random purposes, I could be moving money
around here and there. And because of that, these margin rates are very important for me. And I could get slaughtered
on them if the margin rate is as high as like 10%, over at E*TRADE. Which is why even though
Interactive Brokers, they don’t have a really great UI, it’s not the friendliest for beginners. They continue to charge
trading commission fees when all other brokerages
are dropping them to zero, They charge like a $10 monthly minimum fee just for market news and data. But even with all of that, the low margin rates make
it worthwhile for me. In addition, they also offer
something called IBKR Lite. Which is kind of a version
that has no trading fees, in which they’re trying to
compete with other platforms. Now if you’re not really going
on margin all that often, then I might recommend
you check out Webull. So there will be a link for
you in the description below. Sign up for Webull, it’s
a stock trading app, and you will get two free stocks. So it’s a great deal. Webull is a highly well
reviewed stock trading app. No commissions, free trades, no minimums, no monthly/annual fees, or any of that. And a very clean, easy
to use, user interface. So check ’em out. There will be a link in
the description below. Sign up through my link and
you’ll get two free stocks. If you’ve seen my previous videos, you’ll know that I’ve
lost $350,000, or more, in the stock markets. And that has shaped a lot of
my stock investment philosophy. These days I tend to just
buy-and-hold, I go long. And I don’t mess around
with all these complex trading vehicles like options, futures, option-futures, Forex. I’ve played around with these before and it’s just way too complicated. As well as getting into
the whole day trading game, where I’m reading news all the time. It just seemed like a poor investment of my own personal time. And a lot of stress. You know, I could be
spending a lot of time trying to get good at
this stuff and still, after months of research, I had very little to show for it sometimes if something just happened
randomly and stocks tanked. And I was not really
building up my skills. So these days, I just tend to use very simple investment strategies. I tend to use something
known as asset allocation. Where I just determine, like say, “I want 20% cash, 30% bonds, 50% stocks,” something like that. And then I would pick a few ETFs that might represent what I wanna buy. For the stock portion, I
tend to invest a lot in SPY, which is just the S&P 500. Some people invest in
Vanguard’s global stock fund. I may also invest in VYM,
which is like corporate dividend-yielding stocks. I pick a few individual
stocks occasionally, usually a small portion of my portfolio. Like I may say, “Well, I
would take 5%-10% Tesla,” and that’s fine. Like if someone just told me they wanna pay me in Tesla stock, I’ll say, “Fine, yeah, I’ll take it.” And it’s not like I’m going
to convert that into cash right away, maybe I’ll
just hold on to that. If someone was to tell me that they wanted to pay me in Amazon stock. I may hold on to that as well, but if I were starting to
get paid too much in this, like 20% of my portfolio
was say Amazon stock, I might say, “Okay,
let’s sell some of those. “Bring that down to say 5%-10%,” and just keep it around there. And then what I like to do is, I’ll take all of my assets across all of my accounts, and input them into a
spreadsheet where I can calculate my total ownership percentages
in each category. And just figure out like,
“Hey, if I’m 60% in bonds, “maybe that’s too much. “Maybe I should buy more stocks
to just balance that out.” Or I can check if the value of any of my individual stocks is too high. I like to keep each individual stock at about 5%-10% of my total portfolio. Just so that I don’t have too much risk exposed to any of these
individual companies. Generally though, if you’re starting out or you’re not interested in speculation, I would avoid those individual stocks. Go for those ETFs, which
contain a basket of stocks and have less risk. I would also avoid shorting stocks. I’ve lost so much money on shorting. The natural trend of a
market is to float upward, so if you do decide to short you need to be very sure of that. So that’s my overall
stock investing strategy. I like to keep things simple. Buy-and-hold through long term investing. It helps avoid those taxes
on short term capital gains, freeze up my time. And I don’t have to compete
with those high-frequency trading algorithm bots,
powered by machine learning, which are so complex these
days that I don’t know if any human will stand a chance against. Aside from stocks, I like
to keep 30%-40% in bonds. Usually I like to hold bonds
in my retirement accounts, like IRAs, which are tax advantage, so you’re not paying
taxes on those dividends that they’re spewing off each year. And then I might have a
10%-20% cash position. Sometimes I still think
about just throwing all the cash into the
markets so I can be all in. But if I do have the cash position I’ll be storing that in like a Certificate of Deposit (CD) or a high-interest savings account. You can check around, but
the online savings accounts like Wealthfront, Marcus, they’re offering around 1.7% right now, which are higher than what you’ll get from the brick-and-mortar banks. So there you go, that’s pretty much how I can manage my money. Real estate may deserve
some special mention. I’ve been thinking of investing
in real estate lately. But at the same time, as a programmer, I’m a software engineer, my hands are delicate, I can’t even hold a hammer. I ask myself sometimes
if I’m really suited to do real estate. Not to mention, it requires me sometimes to be on-site at a stable location. And recently, I’ve been
doing a lot to traveling. So I think that real estate
could be a good investment. There are a number of
tax advantages to it. I may be more interested in investing in like commercial real estate that I rent out for rental income. That sounds like more
of an investment to me. Not to mention, a lot
of apartment complexes can actually offer better living standards than say, a house in Silicon Valley, which is like 80 years old, and very torn down and worn out. Real estate though, it
does require maintenance. In a tough market, like Silicon Valley, everything is overpriced. And even if you were to bid on something, like I think I bid on
five homes in the past I lost every one of them,
even with pure cash bids. So it’s just kind of a hassle to get through that whole process. And then last of all, I use
an app, Personal Capital. I’ll have a link for you
in the description below. If you use my sign-up link, you’ll get a free 20 bucks. Personal Capital helps
track your expenses, your net worth, across
all of your accounts. You can just link up all of your bank accounts and brokerages. And you can quickly check all of your transactions, income, expenses, see if there’s any
fraudulent transactions. Check your brokerage accounts. And overall, stay on top of your money. Now there’s actually another hidden reason why you want to be careful about these no-fee trading platforms. Especially, if you’re
a professional trader or if you have a lot of money at risk here that you’re putting into the markets. And that is about the
execution quality of the trade. What happens is a lot of
these free trading platforms, like Robinhood, could actually be giving you poor quality trades, such that, you are not
getting a good price. So there’s an article here
from the Interactive Brokers. A CEO accusing Robinhood of not providing good trade execution. He says that, “The Robinhood
model is not sustainable. “That its model is based on providing “inferior execution quality. “So despite commission-free trading,” he alleges, “That it derives revenues “from how they are
executing their orders.” That’s one reason why I’m a little skeptical about Robinhood. And if you take a look
at Interactive Brokers’ newest platform, they
created this Lite version, where they’re giving you
commission-free trades, that they’re very clear
they say, “Equity orders “on this new Lite platform will be routed “to market makers in exchange
for payment for order flow.” So you can see that even though platforms, like say Robinhood, may be
promising you free trading, you have to take that kind
of with a grain of salt because you could be eating
up the fees either way, when you make your trades. And at the end of the day, if you’re not doing that much trading then it may not be that big of a deal. But if you are, then I would recommend that you check out the
trade execution quality on whichever platforms that you’re using. So that’s just a quick rundown of how I’m managing my money. But let me know if you have any additional tips or tricks for me, post ’em in the comments below. As well as any apps you may be using. Again, the apps that I
referenced are going to be linked in the description below, check ’em out. Remember to follow me over
on Instagram, @techleadhd. If you like the video,
give a like and subscribe. And I will see you next time. Thanks, bye.

91 thoughts to “How to invest your money in 2020 (and why I don’t use Robinhood ).”

  1. Don't talk about this,please! I have traumatic on there haha in the future when you keep talking about this i'll unsubscribe you father but now i can drink coffee without sugar

  2. Hey techlead. There has been lot of talk about bitcoin halving in few months. What are your views about it? is it a time to invest in crypto?

  3. Buy gold. Gold has outperformed the S&P500 over the past 50 years(CAGR 7.5% for gold versus 7.1% for the SPX). For stocks, focus on free cash flow per share. AMZN and GOOG are the kings of cash flow($42 (AMZN)$40(GOOG) cash flow per share). MSFT has a mediocre $5.3 free cash flow per share. For short term traders I recommend Theotrade.

  4. Don't use margin, ever. Every-time you buy a stock or the stock goes up, put in a stop sell, and if it triggers, be disciplined and wash your hands of the stock for a while.

  5. "Today I'll thaugh I'll make a YouTube video on how I manage my millions of dollars", just randomly, just like that…😂

  6. Split your trading strategy.

    Use Base capital trades on preferred stocks/baby bonds that have very predictable trading ranges and PAR values.

    Use base capital profits to fund risk capital account. Risk capital can include options strategies, futures, etc.

    consistent profits from risk capital account can be moved to complement your base capital growth over time.

    Base capital interest income can be used to support your lifestyle while capital gains can either #1. FUND growth of additional shares/units or #2. fund risk capital account.

    Margin leverage is not ideal in many cases. Some potential better ways to gain access to leverage such as options or futures.

    I started in 2008 full-time and never worked other than being a trader. I started with just $72K and my average expenses per year were between 55K-80K.

    In my opinion, the best trading platform is ThinkorSwim from TDameritrade. I wouldn't use anything else. Its all crap, in comparison. Also, you can call TDameritrade trade desk anytime there is a problem and interactive brokers doesn't have that call support. One time, during the flash crash, one of my orders did not fill in a timely fashion and they gave me tens of thousands of dollars to keep me happy after i called them up and complained about an order execution. They have consistently worked hard to keep my business and to help execute and be successful over the years.

    Follow me on Pacman010987 over on twitter / DMs are fine. Not interested in helping you form long lists of which stocks to buy or short but i'm here to bounce some ideas or talk strategy. I don't go on youtube very often but i'd be happy to talk there. Techlead, wish you the best on your future endeavors. I post real pictures of my computer screen showing 6 figure profits on various trades. I'm not here to sell anyone on anything – i'm just like helping people because i wish i had more support when I was starting out. I know whats its like to have your entire family think poorly of you for being a full-time trader. I've been called a loser, deadbeat when i was starting out between 2008 and 2011 before i gained to a larger size. Now everyone that knows of me – magically wants to call me up and be my friend. I've seen it all over the years and dealt with so many problems/obstacles.

    **I'm not trying to sell anyone anything and i'm not taking any new clients. So I am not interested in managing money on anyone else's behalf. Just a friendly voice to bounce ideas/talk stocks/bonds/strategy if interested – add me over on twitter.**

    This post is not financial advice, nor is anything i post

  7. I'm doing ok on my Robinhood and webull. I always trade with the cash i have on hand. I don't invest what I don't have. I'd rather use a 0% cc offer and have 15-20k cash for 12-15 months!

  8. The US stock market will keep trending up, provided that the US can keep printing money. US debt is growing exponentially. Once this arrangement falls apart, however…

  9. Techlead, check your IG DM! Let's do coffee if you're still in Japan. I'm in Tokyo!

  10. Hey TechLead, if you're interested in real estate investments read books by Biggerpockets, and also read the books suggested there. You really don't need to lift or even touch tools to invest in real estate these days.

  11. How about you do two videos a week: tech Tuesday and financial Friday or something.

    Also maybe consider Q&A video? Because I have a question. With your expertise, wouldn't you be able to start a company? I don't mean some side work. I mean an actual company with employees and stuff.

  12. If you keep day trading you won’t be a multimillionaire… you’ll be broke. Day trading = losers game 1) got to time the market correctly when you buy and sell 2) got to beat your margin fees 3) got to beat short term taxes. Too many factors to beat to likely be better than buy hold strategy.
    Your current strategy sounds very good.

  13. You’re sponsored by webull and personal capital to trash Robin Hood. Solid. A lot of online brokers are commission free these days and offer a range of service and an actual trading platform, unlike robin hood. Order execution isn’t important if you’re buy and hold investing which is what a lot of people end up doing because they aren’t skilled enough to day trade.

  14. Do you know of any diversified short ETFs or ETNs for commodities? I used an ETN called DEE in the past, and it was the perfect ingredient in my portfolio as kind of an insurance against recessions, but it seems to have stopped trading, and i can't find any good alternatives.

  15. After you reach a certain level or status, let professionals run your wealth management. And you just dump certain percentage of your income to them. I recommend UBS.COM … Just let the long established Swiss wealth management company safe-guard and grow your money!

  16. ok techlead listen interactivebrokers is charging fees for trading at least with the pro version because their trading executions are excellent and day traders need to be going in and out of stocks at a fast pace so they need good excecutions meaning their orders need to fill in the fastest way possible. You cant day trade with for example robin hood because the executions take a while to fill.

  17. Try to speak about something you are good at because apparently you have no idea about the stock market and investing.

  18. A big reason why I use IB is that they have 8b USD in capital, are very profitable, have top notch risk management, and the top executives have a high percentage of their own net worth in the stock. Other reasons are direct access (no selling of order flow), access to 30 exchanges world-wide. Low fees.

  19. I am using IB as well, very nice platform.
    If you do not mind volatility, then it is ok to invest in stocks. In the long term you will make money, no questions about that.
    If you want lower volatility returns, look up AllWeather strategy by Ray Dalio (he manages abot 150bln $ in his funds, so I think he knows couple of things)

  20. Check out Argent available on iOS and Android. Interest rates are currently 7% for Dai a dollar equivalent, built on Ethereum. It has the smoothest on boarding.

  21. What are your thoughts on companies that manage real estate (as contracting those would remove the necessity to be at a specific place)?

  22. I invest in duplexes. My first home cost me $45k which I paid cash for. My rental income from it comes out to about $1300 a month which adds up to $15,600 a year in income. I had to reinvest about $2000 of that to do maintenance. So overall I made about $13k per year for a $45k investment. That's a 30%+ return. I bought my second house for 51k and make 16k a year on the second property. So currently I'm making 25k + per year off of just 96k investment. And that's accounting for a very very conservative 5k in maintenance per year which never happens. Typically yearly maintenance per property ends up being less than 1k per year.

    Curious to know what your return is on the stock market, for me real estate seems to make the most sense. I stay away from mortgages to not get owned in bubble blowouts, but people will always need a place to live so real estate seems like a safe bet. My plan is to buy a new house, cash, every 2-3 years. Within 10years I should own at least 5 properties or 70k in passive income per year for a total 250k investment.

    Anyone have any questions or comments regarding why they think my strategy is bad feel free to comment.
    Btw I am in the software world myself, so him saying he has delecate hands seems silly. Obviously don't buy homes in high rate markets like silicon valley, buy low in cities that are coming up. My first house I bought for 45k was reestimates of value and came back estimated at 61k already after only 3years. So in 3years, i made 29k in profit from rent and my properties value went up by 16k. Therefore if i sold today, I would have made all my money back. So doubling my 45k in just 3years

  23. Real estate has a return on investment of about 5%-8% in rentals or equity annually in the Bay Area. If you want to own real estate, you have to make a commitment to maintaining your properties, which is the obnoxious amounts of maintenance and sales (finding good tenants).

    I now am based in SoCal, I think the better investment for you would be REITs (companies that own real estate assets that are legally obligated to pay out 85% of their profits in dividends).

    This is just my suggestion, but there is a channel called “Joseph Carlson”, I think it is wise to focus on a dividend portfolio that grows and pays a substantial return.

  24. Exactly ten minutes! Trading is for the birds. It's all about those 100 year Argentina bonds! (just kidding)

    For cash, why not consider having bank accounts in other countries, especially in Asia, which can offer much better interest rates on savings. 1.7%?! I suspect you can get much higher in Singapore or Hong Kong etc.

  25. 30-40% bonds is too high for most people unless they are close to retirement. Since you can't access your retirement accounts until a later age, its better to go for riskier investments that grow more over the long term.

  26. How do you justify you are not gambling? Buying the right house could have a higher chance making more than trading in the long run. You can buy multiple houses and rent out to your students and fans or sell it to them.

  27. When I was working I didn't have time to trade individual stocks except for a short time during the era when I traded a lot of Sun Microsystems stock and luckily sold it when it was near $100. Other than that my investing has been maximize by 401k plan, exercise employee stock options, own a home in bay area that is now paid off. This has allowed me to accumulate wealth. I did pull out of the market before the 2008 crash but I was probably slower than I could have been in getting back into the market. Now I am retired and I have done some individual stock buying and selling usually with the goal of achieving a particular gain, i.e make enough on AAPL to pay for a new MacBook Pro. Now I invest a little in TSLA. At my age I am very conservative with wealth preservation, zero debt and enjoying life. I hope you have time to do the same!

  28. I don’t know your financial situation/goals, but I’d assume if you’re already a multi millionaire and you have 80%of your wealth in equities, you’re looking to grow it more so than preserve it. I would consider some defensive investments that operate inverse to the USD (I like physical precious metals, primarily gold and silver). Consider real estate, precious metals, fine art and others that can potentially preserve the amazing gains you have already made. I’m not a complete bear on the stock market right now, but the fundamentals seem a bit too scary to have 80% of your wealth tied up into it.

  29. Is it just me or are a lot of these multimillionaire videos recorded in a shed? If it were not for the high quality video I would be a skeptic.

  30. Have you looked at Timothy Sykes and Steven Dux YouTube videos? They seem to explain how to navigate the stock market and understand how to be flexible in your trading.

  31. I have a question,
    Do employees at FANG always sell their stock right after receiving? Nobody ever discusses it, but it seems weird to keep 90% of your portfolio on one single company.

  32. Seems like you would like Jack Bogle style investing. Common sense investing using index fund ETFs. Reversion to the mean

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