Retail investing platforms, of which Robinhood is probably the most famous here in the States, have allowed hands-on investing for many who previously hadn’t considered managing their own investments.
As a result, retail investors, as they’re called, have become a significant force in the world of finance, but is this just a trend or is it the wave of the future?
Even more importantly, do these amateur investors really know what they’re getting themselves into? After all, investing is inherently risky, and unpredictable events can have a devastating effect on even the most diversified portfolio, as history has taught us again and again.
To help give us a clearer picture of the whole situation, and provide some advice to newcomers, we got in touch with lauded real assets investor Nicholas Marine.
Throughout his career, Marine has worked with investment groups such as Starwood Capital Group and Spear Street Capital, and he is currently working with a multi-billion dollar investment firm based in New York that has investments across the United States and Europe.
Marine places special emphasis on using the development and creative repositioning of real assets to create positive outcomes for cities and communities as well, tipping the scale in favor of what’s being referred to as “impact investing.”
Our interview contains both good news and bad news for entry-level investors, though even the bad news should be seen as words of warning rather than a message to turn back.
If you’re looking to improve your investing IQ, this is a great place to start.
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Do you think it’s easier than ever for the average person to start investing?
Marine: I strongly believe so. There are a number of applications that entry-level investors can turn towards, both to help them invest independently, such as Fidelity, or invest on behalf of the individual as a “robo-adviser,” such as Titan Wealth. The large brokerage houses like Fidelity have dropped transaction fees to $0 on most transactions, and the robo-advisors have allowed entry-level investors to invest in pools of stocks in the same way that high net worth individuals invest in hedge funds.
Do you have any opinions to share on the currently available retail investing platforms?
Marine: I think there are a lot of well-thought-out platforms for retail investors depending on their strategy. For those looking to stock pick, Fidelity, Schwab, or Chase are great. Titan Wealth and Wealthfront are really effective at lower-risk public markets diversification. There are also alternative asset investment platforms like Fundrise or Rally Rd.
Do you feel that beginner-level investors have a good understanding of the inherent risk?
Marine: I think it could be better. Most investors know that Crypto is risky and that the S&P 500 is less risky. But it’s not black and white, and there are many instances where entry-level investors get caught off-guard and lose money.
Experience helps, but so does timing. For those who invested in tech stocks between 2015 and 2022, the consistently high returns made them seem like one of the least risky asset classes out there. More experienced investors knew that over the past fifteen years, this has not been the case.
What’s one of the most important lessons for investors to learn early on?
Marine: The value of compounding growth, and appreciation for the long-term. You do not need to target returns of 30% per annum. If you can invest with low levels of risk and achieve 10-15% returns, over decades you will compound your wealth in an extraordinary way.
Consequently, there is no need to take on significant risk. Understand the value of compounding growth and find opportunities with excellent risk/reward profiles.
How did you first become interested in investing?
Marine: My uncle was a real estate investor. He spent a lot of time speaking to me about the housing projects he worked on, and we would often drive around Cape Town and point out new developments. I realized the positive impact that could be had on communities as well as personal wealth simultaneously. You could make money and improve a street block. It was eye-opening, and real estate investing became my first investing passion.
Are we going to see more retail investors in the coming years?
Marine: Absolutely. As wealth continues to increase and the world becomes more digitalized, middle- and lower-income individuals have increasing access to platforms and information that make investing cheap, accessible, and easy.
Do you have any additional advice for entry-level investors?
Marine: My advice would be to understand each platform’s inherent risk and pick the strategy that fits with your diversification and risk profile. Robo-advisors like Wealthfront have done a terrific job at offering market/above market-level returns with low fees and most importantly low risk.
For entry-level investors, you should keep your investments in risky assets, like Bitcoin, at or below 10% of your portfolio. Most importantly, every investment you make should have a long initial time horizon. Never look to make quick money. As information and global financial markets change, be open to selling so as to recognize financial gains and not be greedy.
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Mike Malone is Deputy Editor and co-founder of LNGFRM. His main areas of coverage are interviews, music, entertainment, and anything to do with gaming — with a growing focus on automotive culture, from the tech shaping next-gen vehicles to the intersection of cars, gaming, and entertainment (think sim racing, car culture in film, and the gearhead crossover in gaming communities). Whether he's sitting down with a chart-topping artist or breaking down the latest in automotive innovation, Mike brings the same curiosity and eye for detail to every story.
