From Andy Rachleff, Vice Chairman, University of Pennsylvania endowment investment committee President & CEO, Wealthfront Inc.:
Financially sophisticated individuals start with an asset allocation. For someone under 40 you should probably allocate around 30% of your assets to fixed income securities (probably half in treasuries and half in TIPS) and the remainder in securities that have more appreciation opportunity (10% in real estate, 35% in US equities, 20% in foreign equities and 5% in emerging market stocks). it's very hard to outperform the market in fixed income so i recommend buying treasury and TIPS ETFs. For your US, foreign and emerging market equity allocation you might want to try wealthfront.com to identify money managers who have outstanding track records (I am a co-founder of wealthfront). Wealthfront currently doesn't offer any real estate managers so a REIT ETF is probably the best bet.
By the way, when buying TIPS (or any kind of Treasurys), you are basically saying "Yes, I like the fact that the USA is deep in debt and I want it to go more into debt rather than balancing its budget!" That is what Treasury bonds are -- the USA borrowing money from you and promising to pay it back. This is where the debt comes from!
Somehow I do not think many people realize this...
There is zero default risk in US Treasuries because the government has the capability of printing more money. Can you name any other type of bond or fixed income that has zero default risk?
Okay, but I never said anything about default, so I don't know what this has to do with anything! As you know, when the government prints more money, it dilutes the value of the existing money. So then, when you buy Treasurys and they get paid back, you made your money by silently leaching it out of the pockets of all other Americans, with the government as intermediary. What a great financial model!
Both models are valid, and both models require different approaches. Steve Blank will be talking about this soon at Wealthfront and you should feel free to join.
As for the self-serving recruiting post... we're not recruiting anyone this year!
Hmm, is that a small bit of condescension I detect in your response? Our goal is also to create a large independent company, not build a $500k/year online TODO list company or whatever it is you have in mind (our revenues surpassed that in year 1).
I'm not really sure what you mean by 'independent', though, because all companies depend on their customers.... (QED?)
Here are some large, independent companies in our space:
RAX,
TMRK (well, not anymore I guess),
peer1.com,
he.net,
IBM
From what I can tell your competitors are the large mutual funds, ETFs, and retail wealth management, so I'm sure you will achieve success, as it's a large and proven market.
And as far as not recruiting this year - web content doesn't disappear after a year.
Great points, totally agree. Given the hype of HTML5 and canvas, we wanted to make sure to spread the word that it is not the tool that surpasses everything else.
Financially sophisticated individuals start with an asset allocation. For someone under 40 you should probably allocate around 30% of your assets to fixed income securities (probably half in treasuries and half in TIPS) and the remainder in securities that have more appreciation opportunity (10% in real estate, 35% in US equities, 20% in foreign equities and 5% in emerging market stocks). it's very hard to outperform the market in fixed income so i recommend buying treasury and TIPS ETFs. For your US, foreign and emerging market equity allocation you might want to try wealthfront.com to identify money managers who have outstanding track records (I am a co-founder of wealthfront). Wealthfront currently doesn't offer any real estate managers so a REIT ETF is probably the best bet.