Vlad Tenev, co-founder and CEO of stock trading app Robinhood, gives us the rundown on building Robinhood, the best/worst money he's spent throughout his career and explains what he's learned along the way.
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00:00 My biggest money mistakes have been when I've reacted emotionally.
00:04 Maybe I've read something in the news that led me to sell something
00:08 before my thesis had changed about the company or the product.
00:12 Anytime you react emotionally, there's a higher likelihood that you'll end up making a mistake.
00:18 I'm Vlad Tenev and I'm going to tell you how I learned about money and how to spend money.
00:23 Let's do it.
00:24 [MUSIC]
00:34 My family and I immigrated to America when I was a small child.
00:41 Both of my parents work. I spent a lot of time growing up on my computer.
00:45 This was in the mid to late 90s. We didn't have cable television,
00:50 but we did have a family computer with a 56K modem.
00:54 So I created a virtual portfolio on Yahoo Finance.
00:58 I was tracking my stocks. I got really into it.
01:01 I would tell my parents my progress and show them my portfolio from time to time.
01:06 And they saw, well, wait a minute, this kid's doing quite well at this stuff.
01:10 And at the time, I was trying to get into a selective summer program where you basically
01:16 do a year's worth of math classes in a couple of weeks.
01:20 One of the things you had to do to get into this math program was to do well on the SAT.
01:26 And my parents, they had this idea that if I got over a 1300, which would be a pretty good score,
01:33 they would give me money to invest in.
01:35 And I don't think they thought that I would actually do this,
01:39 but I ended up getting a 1370 on the SAT as a seventh grader.
01:44 Of course, this was in the heyday of stock investing,
01:48 and I ended up making some mistakes and ended up losing some of that money.
01:52 But that actually got me on what's been a lifelong journey of learning about the markets,
01:57 learning about investing and getting better and better every single year.
02:00 I remember the first extravagant purchase that I made was a really nice sectional sofa.
02:09 It was extra deep. You could kind of sleep on it and lounge on it.
02:14 It was very comfortable. The kids loved it.
02:16 And actually, I still have it to this day. It's still my favorite couch.
02:21 I was raised with sort of an apprehensions about going into debt.
02:30 It was all like pay for everything in cash, make sure you never go into debt.
02:35 And as a result, I was actually a renter up until fairly recently.
02:41 I mean, a few years ago, we actually bought a house.
02:45 And in hindsight, I think that if I had gotten into real estate,
02:50 even maybe had a mortgage a little bit earlier,
02:53 I would have been able to take advantage of the historically low interest rates
02:58 and the appreciation that the real estate market has seen over the past few years.
03:03 I started Robinhood because as an immigrant from Bulgaria,
03:09 which was a country that in the 90s saw its financial system collapse,
03:15 I grew up with a deep appreciation of what it means to live in America,
03:20 a country that has a very stable currency and a vibrant and powerful financial system
03:27 that in many ways is the envy of the world.
03:30 You know, the world's best companies list here,
03:32 they're publicly traded and available for investors to participate in.
03:36 What we saw was that if you're a high net worth individual
03:41 and you have quite a bit of money or you're an institution,
03:45 you have access to great tools and really high quality access to the markets.
03:50 The rest of us didn't.
03:51 And so we built a tool in Robinhood whose idea was that
03:56 every advantage that the big guys get, we should make available to everyone.
04:02 I was essentially a graduate student meeting my living expenses with my grad student salary.
04:09 So it wasn't really until I started Robinhood that I was able to use the product that I built
04:17 to actually become a more serious investor.
04:20 That was one of the really special things about building the company and the product.
04:24 It was a need that I had, and I actually learned quite a bit about investing and about finance
04:32 through continuing to refine the product that I'd built.
04:35 Growing up, my grandfather would always tell me,
04:39 if you have to remember one thing, it's try to spend less than you earn every single month.
04:45 And my grandfather was a doctor in the Navy in Bulgaria,
04:50 and they didn't have access to the ability to invest.
04:54 He would basically take his money and use it to buy copper cookware,
04:58 pots and pans, and that was his way of investing.
05:01 So I grew up with the appreciation very early that thinking about investing,
05:08 thinking about diversification is a way to protect the money that you've built up
05:13 and the nest egg that you've saved for your retirement and for your future.
05:17 I think those formative things led me to eventually being interested in it as a child
05:24 and kind of maintain that passion as I grew up and led me to where I am today.
05:31 I think the most common mistake is selling too early,
05:35 you know, reacting to something in the news,
05:38 letting your emotions get in the way and trying to time the market.
05:41 When for most people, unless your fundamental view about the economy
05:46 or a particular company changes, they shouldn't change their strategy.
05:50 Weeks ago, I got this bag of magnesium bath salts off of Amazon.
05:57 I think it was $25 or something.
06:00 If you haven't taken a magnesium bath, it's just a very nice way to
06:04 de-stress and relax after a hard day of work or a hard workout.
06:09 I have a family with small children and my favorite thing is just to
06:14 travel with them and show them different parts of the world.
06:19 I think one thing that's very important that a lot of people don't get is that
06:24 it's much more powerful the earlier you start.
06:28 It's almost more important to start early than to start with a large amount of money.
06:33 So a lot of people in America don't invest until they're in their 40s or 50s.
06:38 If we could just get people to begin the habit of it earlier,
06:43 compounding is this magical force.
06:45 That's this very powerful idea that you can start with something very small,
06:52 a small amount of money, and then add to it slowly over time.
06:57 And a few decades later, that could turn into a sizable nest egg for your retirement.
07:05 That's really sort of like the secret behind investing and wealth creation.
07:09 I grew up as a single stock investor.
07:14 I would invest in companies that I know, companies that make products that I use.
07:21 And what I realized over time is that diversification is actually incredibly important
07:28 because even though it might be not as exciting,
07:32 it helps you protect the investments that you've made and protects you against downside scenarios.
07:38 And ultimately, if done well, helps you sleep better at night.
07:42 And I think over the long run, that becomes more and more important.
07:49 Start as young as possible and just keep doing it.
07:53 Keep getting better every day.
07:54 Thanks for watching.
07:56 Now you know my secrets to investing in financial wellness.