What I wish I’d known when I started out: Advice from A-list investors

There has been no shortage of remarkable events over the past couple of years, but one of them has to be the influx of new investors.

In fact 15% of all current retail investors just got started in 2020, according to a recent survey by brokerage Charles Schwab. The median age of those investing newbies is 35.

That is perhaps no surprise to popular investing apps like Robinhood, which has soared from 5 million accounts at the end of 2019 to over 22.5 million this year.

All of which got us wondering: What words of advice could we offer to these young investors? After all, experience isn’t everything—but it certainly counts for something.

We asked some of the top investors in the nation—hedge fund kingpins, venture capitalists, CEOs, entrepreneurs—what they wish they had known when they were first starting out. Here’s what they had to say.

Thasunda Brown Duckett

President and CEO, TIAA

“Invest what you can, as early as you can, and stay the course. Along with owning a home, investing steadily is an important way to build wealth. My dad worked at a company for 40 years and never invested in his employer’s 401(k) program because he didn’t think it was for him. Having that knowledge and investing earlier could have put him on a different trajectory. You have to understand the importance of compounding interest and the fact that a dollar you invest today will be worth more tomorrow. This is how you build wealth. It’s not just about what you make, but what you keep.”

Reid Hoffman

Partner, Greylock; cofounder, LinkedIn

“The best advice for any investors other than experts is to make regular contributions to a broadly diversified portfolio of index funds or ETFs, and let compound interest work in their favor for decades.

“In expert tech investing, the best way to achieve outstanding returns is to be contrarian and right. It is psychologically easier to make investments that many people think are a good idea: a proven entrepreneur, an obviously hot new technology, following investments that other proven investors are making. But unpopular investments are more likely to deliver spectacular results.

“My investment in Airbnb was unpopular with some of my partners at Greylock. VCs like to back engineers and salespeople. Two of Airbnb’s founders were designers. VCs like to go after proven markets and business models. Airbnb let you pay strangers to sleep in their homes. The market demand seemed to be looking for low-price deals; renting the amazing places and experiences was aspirational, a future vision. So smart proven VCs were uncertain and negative on this investment; when you are contrarian, as one expert against others, there lies the potential for amazing investments. But by the time I invested, Airbnb’s founders had proven that while their idea sounded crazy, their hosts and guests loved it, and they were telling their friends. There was evidence that they were contrarian and right. Airbnb ended up being my first VC investment for Greylock.”

Chamath Palihapitiya

Founder and CEO, Social Capital 

“Have the courage to find yourself, then be yourself. When you’re getting started, it’s tempting to follow the noise and the crowd. The big headlines and the big names can easily pull you in. Ignore them. Have a healthy skepticism and do the work in the things that attract you. You can still get lucky if you don’t, and that’s great, but if you trust your gut and stick to what you are passionate about—an investment, a project, or a sector—you will learn about yourself and build the self-confidence that is needed to make the important decisions when the opportunity comes.

“At Social Capital, we are focused on the sectors we are the most interested and passionate about (climate, biotech, and crypto, for example) because those areas motivate us to spend the hours, days, weeks, and months needed to truly trust our instincts through market cycles. The quick, easy, and obvious wins are nice—but if you really want to do big things and have staying power, don’t follow the crowd, shut out the noise and build trust in yourself.”

Steve Cohen

Chairman and CEO, Point72 Asset Management; owner, New York Mets

“I see young people making short-term decisions that negatively affect their long-term career. The same type of analytical work you’d do on a stock or company should be applied to your career. Do the proper due diligence and go talk to people who are working at a place. Don’t be shortsighted about working somewhere that’s not the right fit. Find a place that’s as invested in your career as you are. A firm that’s aligned with your goals and provides you with resources, training, transparency, and a clear career path. Make sure that you’re surrounded by smart people who are willing to be your mentors, who care about you and your development. You have to get a lot of things right to survive in this business for 30 years—it doesn’t happen by chance. You can learn a lot from people who have been successful at doing this for a while.”

Carrie Schwab-Pomerantz

President, Charles Schwab Foundation; managing director, Charles Schwab & Co.

“One of the best things young investors can do is to invest in an index equity fund so they get broad diversification, professional fund management, and low fees. When I was in my early twenties and made my first contribution to my IRA, I called my dad for investment advice. I thought he would give me a hot stock tip and I would make a lot of money right away. Instead he said to me, ‘Pick two equity funds and split the money.’ I was so disappointed. But it was a good lesson that it’s not about the hot stock, but about participating in the markets over the long term.”

Alex Rodriguez

Chairman and CEO, A-Rod Corp.; former MLB star

“Find the courage to look beyond the hype and trust your process and intuition. When I first started investing, I would hear about great companies and get excited, caught up in the rush. I often felt like I was going to miss the boat if I didn’t jump in right away. With more experience and the support of a great team, I spend more time stress-testing, and have learned that you need more than a good idea to make a good investment. You need to dig deeper and understand if you can trust the founders, the team, and the company’s ability to execute. Do they have the vision, capital, and people needed to bring the best ideas to life? That is what I look for in a winning team.”

Thomas Tull

Former CEO, Legendary Entertainment; founder, Tulco

“Trust the data, but don’t ignore your feelings about the people you’d be working with. People are continuously sending signals about who they really are—be attuned to that since very rarely does someone do a complete 180. I made this mistake early in my career, because I so badly wanted to get a deal done. The opportunity looked like a winner by all other measures, but when the business encountered challenges, as all businesses inevitably do, people’s true colors came out, and there was no way we could be successful if we couldn’t work as a cohesive team. When you do find an investment you love, with people you’d choose to be in your foxhole, it is then time to go all in.”

Emmitt Smith

Entrepreneur; NFL Hall of Famer

“There are so many things I wish I had known, but I wish I’d had a better understanding of how to evaluate an investment from top to bottom. With real estate, there is so much work to be done before you even put a shovel in the ground. That requires a great deal of experience, of patience, a lot of dotting of i’s and crossing of t’s. You have to be willing to go through that entire process, and then once it starts coming out of the ground, things move very quickly. Over the long term, if you have a good piece of real estate in a growing market, it’s only going to get more valuable. A prime example is the area I live in, in Dallas: 20 or 30 years ago, it was considered way out there. Since then, there has been so much development that I’m basically in the middle of the city. So have patience, because they’re not making any more land.”

Kathy Ireland

Chair and CEO, Kathy Ireland Worldwide

“There are so many things I wish I’d known when I began investing. The greatest lesson is invest in people with great ethics and integrity. Go with your gut, and sectors you’re passionate about…and then be certain to investigate carefully and independently. As a teenager, I had an adviser who counseled against my dream of purchasing land in Hawaii. The parcel was 40 acres on the Big Island, managed by a family who grew flowers. I naively allowed myself to pass. It was less than $50,000. The bank felt secure that I could handle the mortgage with modeling income. A few years ago, I checked in on that sweet family, who sold the land for multiple millions and still manage their business. I learned an invaluable lesson…And the ‘adviser’ is the first person I ever fired.”

Ray Dalio

Co-Chief Investment Officer and Chairman, Bridgewater Associates; author, Principles: Life and Work

“Pain + Reflection = Progress. It would have been wonderful to have had this principle earlier in my life. Early in life when one strives to have great upside, one overlooks the fact that failures and pain are part of the process, and that it is in them that the most valuable learnings take place. The biggest mistake of my career, which nearly ruined me and was terribly painful, was one of the most valuable experiences of my life because it gave me the humility I needed to balance my audacity. Out of it, I learned how to minimize my risks without giving up my upside. That principle has helped me go through the most difficult experiences in my life and gain valuable lessons from them.”

This article is part of Fortune’quarterly investment guide for Q4 2021.

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