I often write answers on Quora, where I am the most viewed writer for investing, wealth and personal finance, with over 230 million views in the last few years.
On the answers below, taken from my online Quora answers, I focus on a range of topics including:
- Who gets your stocks, ETFs and other assets when you die?
- Is Revolut a good solution for buying stocks or is it better as an alternative to the traditional banks?
- Will there be new ways to get rich, or wealthy, in the 2020s, or will existing trends just accelerate?
- Will Coronavirus result in a huge work-from-home trend, or will things return to “normal” soon once the vaccine has been administered globally?
- How much of your savings should you put into the stock market? I discuss some rules of thumb and basic asset allocation strategies.
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Who gets your stocks when you die?
That depends on a number of factors including:
- How you set up the account. If you set up a joint account with a spouse, then the account can be kept going with the survivor keeping 100%. That depends on which structure you pick on day one.
- Your wishes. In some cases you can set up a beneficiary form or put it in your will. Again though, some brokerage accounts do allow the beneficiary to take over the account, rather than just taking the money as cash, depending on their wishes.
- The legal jurisdiction in question. Different countries have different laws on this. In most countries a will is fine, but multi-jurisdiction gets complicated.
Of course, some people don’t care about inheritance, and just don’t care what happens to the money after they die.
That is one reason why there are tens of millions of dormant bank and brokerage accounts around the world.
In fact, there are so many that many governments have bought in rules that the money can be given to charity if it remains unclaimed for over a decade.
Most people do want somebody to inherit the money though, it just tends to become a bigger priority as people age.
In any case, the stocks, ETFs and other assets usually stay invested until the money is claimed.
Is Revolut a good platform for stock investment?
Revolut is great for banking. It isn’t great for trading stocks unless your needs are very simple.
The reasons are:
- There are only a small selection of stocks and other investments available
- Usually you are restricted to your home market.
- Often you can’t buy ETFs and other assets you might want to get access to.
- It isn’t portable if you are an expat and moving from country to country
- No specialised accounts are allowed like Junior ISAs as one example of many
Where it might offer some benefits are for very young people who don’t have much to invest, and are just getting started out.
I know somebody who has a Revolut trading account and he opened it because it is simple.
That is assuming you have a Revolut bank account, which in itself is simple to open.
He just used it to get started with investing small amounts of money.
It is good for this purpose as you can invest very small amounts of money.
The bottom line, therefore, is that it offers generalisation over specialisation.
That generalisation will probably end up being millions of accounts for relatively small amounts of money, for people who just want to dip their toes in.
It isn’t well suited to anybody wanting something bespoke, specific and tailored.
As a bank though I fully expect them to keep improving and take market share from the traditional players, alongside Monzo and a few others.
What will be some new ways that people become wealthy in the 2020s?
Imagine Quora was around during the Cultural Revolution in China:
And I would have predicted that this would be what Shanghai looks like today – with hyper-materialism:
People would have thought that I had gone mad.
Likewise, imagine ten years ago, I would have predicted that the Republic of Ireland, which was in a deep recession, would grow more quickly than Russia, Brazil and South Africa in the 2010s.
Again, most people would have thought it is very unlikely as “everybody” thought the BRICS would do better than the rest – China, India, Brazil, Russia and South Africa.
I doubt anybody here saw Covid, and especially the lockdowns, coming as well.
The point is, predicting the future is almost impossible, even though you can look at trends and take a calculated guess.
If I was to take a stab at this question, I think the 2020s will see the same trends get bigger.
What are those trends?
- The move to digitalisation and people buying online.
- More people focusing on health eating and lifestyle
- Interest rates staying at 0%, or at least close to zero, which means that more people are looking to buy assets over saving money
- More taxes in developed countries which results in an increase in people looking for second residency and passport service.
- More people working remotely and from home. That therefore means that more people can change their residency once Covid is over
- Less trust in traditional authority and big business/big government, and more focus on authenticity and what the community thinks (online reviews for example).
That list isn’t extensive, and there will be more new trends I am sure.
Either way, I expect new nieces to be formed along those lines. For example, digital has been a growing trend for thirty years now.
Yet it keeps changing ad 5G and AI will surely only accelerate opportunities for business people.
The problem is that most people wait until something is normal before they start doing something.
The people who make the most from an opportunity get in early.
We have seen that with the online world. Those who were proactive to trends like Google got in early in the early 2000s.
Now it is harder to rank on page one. Likewise, I expect to see the same trends with things like voice search.
Most will be reactive rather than proactive.
Will coronavirus trigger a permanent work-from-home trend?
This was the trend before the pandemic:
That 3% also went to over 6% before the pandemic…..so a doubling in four years.
Even before the pandemic, therefore, people recognised that working from home can save:
- Time – commuting and less gossiping
- Money from commuting, loads of lunches outside, more work clothes etc.
- C02 emissions
- Sometimes hassles. That depends on who you work with!
Many consumers are also becoming more conscious about the last point.
Even if the pandemic didn’t happen, I think 6% would soon have became 10%-20%, as more workers can work remotely.
The lockdowns have just ensured that more people realise that they can work well from home.
With that being said, some industries can’t work well at home, and some people aren’t suited to it.
Those in cramped homes for example, and new grads are better trained in person.
Therefore, I expect there to be three groups of workers going forward
- Those who permanently work from home (20%+ in most developed countries and maybe up to 50% in some)
- Those who work from home during some days, and from an office on others. This could be the majority and I am sure if we included those people in the graph above, the figures would be huge. People have been doing this for decades, only that it used to only be superior management who could take a long weekend
- Those who need to work in the office at least five days a week.
The pandemic has changed things, therefore, by bringing toward some trends.
Let’s not forget as well that work from home businesses can be more price competitive than firms spending loads on rent.
How much of my savings should I put in the stock market?
It depends on your individual situation. For most people, the rules of thumb are that you should have at least three months worth of savings before you begin.
This does depend on many factors though. If you have lost your job, you need more.
If you have a business which has regularly income being paid every week, and it has been like this for over a decade, then maybe you need less.
What is also important is knowing how long you want to invest for.
In general, time is one of the only free lunch in investing, so you should want to invest “forever”.
By forever I mean your whole life and just drawdown in retirement.
This is because time limits your risk and maximises your gains due to compounded returns, which includes compounding any dividends which are paid.
So, in answer to your question, you should want to invest everything apart from a small emergency fund.
Yet you shouldn’t want to invest everything in stocks. You need stocks and bonds, at least once you are older.
As per the research below from Vanguard, stocks beat bonds long-term, but they are much more volatile and can underperform bonds even over some 10–15 year time periods:
Provided you can deal with the volatility, it therefore makes sense to be 90%-100% in bonds when you are young/relatively young, and then increase your asset to bond as you age.
The mistakes most people make are:
- Thinking there is a perfect time to get into the stock markets. The best time is always now as nobody can predict the future and markets do rise over time
- Focusing on investing with a short-term horizon.
- Panic selling if the early returns aren’t good.
- Speculating in various ways. This can work short-term, but seldom long-term. The 1990s showed that. Many people did better than the markets even medium-term, but eventually didn’t.
- Not focusing on diversification. You don’t need over-diversification, but some is essential.
- Letting various emotional bias’ and impulses affect their investments. An example is “home country bias” where people prefer to invest in stocks and ETFs from their home country, even if it doesn’t make sense.
- Following on from the last point, “recency bias”. Which stock markets performed well last year? Korea, Taiwan and China were in the top 7–8. Yet few people were interested in 2018 or 2019, because they hadn’t done well for a while. The same thing with the Nasdaq. “Everybody” was interested in the 1990s and now, but few were during the wilderness years when it was cheap. Same with Japan. The market hit 30,000 today. Hardly anybody was interested in Japanese equities after the Bubble crashed.
- Not reinvesting dividends. Dividends compound. The aforementioned Japanese stock market is actually up for investors who reinvested dividends over the decades. It has contributed a huge amount to the returns of the S&P500 and FTSE100 as well. That is because dividends compound, alongside capital values.
- Regularly logging into a new stock account. This increases the chances that you will do something silly like panic sell if you keep monitoring the price.
Finally, it is also a mistake to invest without doing any reading or outsourcing it.
If you invest by yourself, and without an advisor, you need to know what you are doing technically and emotionally.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 230 million answers views on Quora.com and a widely sold book on Amazon.
In the answers below, I spoke about:
- Is it possible to be rich with a low net worth?
- Why are technology stocks soaring? Are we seeing another bubble?
- Is it true that people pretend to be passionate about something when it is all about money?
- Would Steve Jobs have been wealthier than Jeff Bezos if he was alive today?
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