Betterment’s Jon Stein: Curb Your Enthusiasm For Stock Picking

Betterment CEO Jon Stein has been selected as one of 21 financial luminaries in the Forbes 2015 Investment Guide: The New Money Masters.

View the original article by Sam Sharf.

Jon Stein | 35

Hometown: Dallas

Alma Mater: Columbia, M.B.A.; Harvard, A.B.

Specialty: Indexing

Day Job: Founder and CEO, Betterment

Cred: Robo-advisor Betterment manages more than $2 billion in 93,000 accounts using index funds and an automated allocation system, based on an investor’s risk tolerance and time horizon.

Worst Investment: Bought Enron on the way down, catching a falling knife.

Pay-It-Forward Wisdom: Curb your enthusiasm for stock picking. “Trading on my own I learned the hard way that I wasn’t any better than anyone else. No one in the long term beats the market,” says Stein. “The best things you can do is invest in a diversified portfolio that is optimized to get you the best possible expected return, net of risk, net of behavior, net of taxes.”

Biggest Worry: Not enough savings. The issue, he says, gets “neglected in favor of things that are more shiny.”

Best Idea: Don’t think too much about investing and rebalancing; let software do it. That said, Betterment’s biggest holdings across age cohorts ranging from 25 to 55 are three ETFs: Vanguard FTSE Developed Markets (VEA), Vanguard Total Stock Market (VTI) and Vanguard Value (VTV).

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This article originally published June 17th, 2015 on Forbes.