An investor who helps the ultrarich grow their wealth for a living shares what he wishes he knew about money when he was 25

Alex Livesey/Getty
  • Though daunting at first, investing in public markets is one of the best ways to grow long-term wealth.
  • David Bailin, the global head of investments at Citi Private Bank, which serves clients with accounts of at least $US25 million, says the younger you start, the better.
  • In a recent interview with Business Insider, he discussed the best practices on learning where and with whom to invest.

Many young people with steady incomes invariably consider some type of investing to grow their money.

Though complicated and daunting, it is one of the best ways to grow wealth over a long period of time.

Today, David Bailin travels the world advising people who have at least $US25 million in investable assets on how to grow their wealth. As global head of investments at Citi Private Bank, he certainly had some useful tips for his 25-year-old daughter when answering a question similar to the one Business Insider posed in a recent interview.

“You want to become a professional investor now,” Bailin said he told his daughter.

He’s not referring to an official certification. Rather, it’s about learning the best practices of where you should put you money and with whom you should invest.

“If you are not a global investor, you are crazy because our market is 52% of the world’s market capitalisation,” Bailin said. “It is absolutely guaranteed to change.”

China is one part of the world where Citi Private Bank believes its ultra-high-net-worth clients are underinvested. The country’s innovation in tech, expanding middle class with money to spend, and increasingly well-run state-owned industries are among the reasons the bank is optimistic about the country’s markets.

Regarding whom one should invest in, Bailin leans toward active managers who pick their funds’ stocks, versus products like exchange-traded funds that bundle stocks together or track an index. The problem with some ETFs, he said, is that while they can be bought cheaper, their performance doesn’t necessarily match the underlying securities they are tracking. This difference, called a tracking error, can take a bite out of returns.

He also said young investors should be careful about relying on the advice of retail brokerages, because the better advice does not involve lots of trading (which earns fees for the brokerages) and is not as US-centric.

He added, however, that financial technology had created access to some of the cheapest, most convenient ways to trade the markets. “That’s 80% of the way there,” Bailin said. “One-hundred per cent of the way there would be to have a global portfolio and be able to pick the funds. So I told her, ‘You should steal the info we provide to ultra-wealthy families and do it.”‘

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