The head of digital at a $3 trillion financial giant shares 3 pieces of simple investment advice for millennials

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Tobin McDaniel, senior vice president and head of digital and managed advice at Charles Schwab. Charles Schwab

For many people, investing is a scary thing. The financial markets are complicated, and people don’t want to lose all their money by messing up.

Tobin McDaniel, senior vice president and head of digital and managed advice at Charles Schwab, a San Francisco-based brokerage firm, knows all about messing up in investing. In a recent conversation with Business Insider, he talked about how he lost a bit of money as a college student during the dot-com bubble in the 1990s.

“You could buy any tech stock and it would just go up and up and up,” he said.

That was until they didn’t. When the tech market corrected itself in 2000, McDaniel lost all of the gains he had made, and then some.

McDaniel heads the team that rolled out Schwab’s two automated financial advice services, Schwab’s Intelligent Portfolios and Schwab Intelligent Advisory, in 2015 and 2017. Automated financial advisers, known as roboadvisers, rely on algorithms, not humans, to guide their investments. Schwab, which manages $US3 trillion in assets, was one of the earliest legacy firms to get into robo.

McDaniel told Business Insider that he hadn’t done his homework when he first got in the investment game, and didn’t know enough about the companies he was investing in.

“I don’t think anyone knew what they did,” he quipped. “It taught me a very valuable lesson: invest in things you know.”

Following are three pieces of advice McDaniel has for young people looking to get started.

  1. Find a roboadviser. Putting a little bit of money in a roboadviser and learning about investing that way makes a lot of sense. It’s never been more affordable to invest. [Editors note: It should be obvious that someone who works at a roboadviser will recommend one.]
  2. Invest in a company you like. I also think it is good, if there is a company you are really excited about, to invest a little bit in that company. Obviously it is very hard to pick stocks, but I think that’s how you learn about investing.
  3. Don’t ignore your 401(k). Put as much money into your 401(k) as possible. A dollar put in there today will grow so much over 20 years. You don’t want to make it up in your 40s.

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