Earlier this year, Adam Spector cofounded AbstractOps to help solve the back-of-office for founders. He, Hari Raghavan, and their founding team built a platform to automate operations for early-stage startups. Their goal is to outsource the back-office pain usually handled by a Chief Operating Officer or co-founder, allowing founding teams to focus on their super powers: building product and selling to customers.
AbstractOps has built a platform to simplify an overly complex space and let its users focus on the important things. Unifimoney has done the same, automating best-practices towards growing passive income by rebundling the best of Fintech.
The last decade has been one of disruptive innovation in finance, but it’s also meant that optimizing your personal finance takes 5-10 different accounts and apps. That’s why Unifimoney is building an all-in-one account. So, we approached Spector — the person his friends go to for financial advice — with a question: As a founder and head of product, living and working in San Francisco, what’s in your financial stack?
Adam Spector: So, on the corporate side, we have two banks that we're using: one more of a neobank and one a more traditional bank. And then on the personal side, I use one online bank as my main bank account, where I also trade stocks. Then I also have a few different places that I theoretically have bank accounts with, but that I don't really use quite that much. Some have better rates so it’s good to keep cash in them.
Spector: I have my bank's financial app, which is the one I use most. I also have Robinhood, which I don't use a ton, but I use it a little bit. I actually don't think Robinhood is a good deal for stock trading especially now that most online stock platforms have copied Robinhood’s pricing structure (i.e. free), but that's a discussion we can have another day. I have one or two other financial apps, but that's it. Not a ton.
I'm a weird demographic, of course, because I spend almost all my day sitting in front of a computer and I have a good computer and good internet, so I don't need to use my phone for that. And I do still think, especially for financial decisions, doing it on a web browser tends to be a more full-fledged experience if you want to go a little bit deeper, which I like to do. Many apps intentionally reduce what they show you, which is fantastic if you’re getting started but not ideal if you want to go deep.
Spector: I check at least once a week.
Spector: It totally varies. I would say it's anywhere from $1,000 to $2,000 depending on what I can afford and where else I'm spending money. But, for me, most of my investing tends to be buy and hold thinking about the long-term value and net worth I’m attempting to build. It tends to be a bad financial decision to day trade or even buy and sell monthly. Buy and hold is fine. Buy and sell opens you up too many taxes plus, you're very unlikely to beat the market. So, most of my investing is buy and hold.
I would also say — the amount I do with this varies, but I also am using one of the Betterment/Wealthfront-type companies and I just dollar-cost average with that. I'll invest like $50 a week into it and just let their version of AI decide which investments to put the money into. Dollar-cost averaging is definitely the best way to go. The rest, I play around with and it's fun, but it's always better to just dollar-cost average into a low-cost index fund.
And even more than that, the most important part of investing is compounding. It’s the eighth wonder of the world — I think Warren Buffet said that. So, believe in the power of compounding and the fact that you can't predict the top of the market or the bottom of the market every year. The secret to compounding: time. Hence, the earlier you start and fewer changes you max (taxes and fees will kill you), the stronger the magic of compounding.
What 2020 has taught a lot of investors is we like to imagine we have a free market economy, but the truth is our economy is so heavily dependent and predicated on what the Federal Reserve is doing. We don't have a lot of control over things. Anyone who's out there struggling right now financially knows that Covid-19 has decimated the economy, yet if you own stocks, you’ve actually done really well, because the Fed is pumping money into that part of the economy. It makes no sense, but it just goes to show that in today’s world, the market is utterly divorced from reality and how unfair a lot of the system is as well. Relatively speaking, so few Americans own stocks, which means so few Americans can enjoy the cushion provided by the free Fed money to — in most cases — the people who need it the least.
Spector: They come to me saying like, 'Where should I put my money? What should I do?' And I basically give them the advice that I just said which is, 1) dollar-cost average all the time. You can do that very easily on a bunch of different apps that are out there today — you can just auto-set whatever number feels right for you. A dollar a day every week! And just have it automatically buy a little bit from a bucket of low-cost funds such as from Vanguard. Don't try to play the market and then just don't touch it for 30 years and let it compound. The sooner you start doing that, the better off you are.
I enjoy getting a deal or saving money. It’s like a game. One example I talk about: coffee. What if you can forgo getting a coffee at the fancy coffeeshop down the street for $5 and you can make yourself a fancy coffee at home. Use great beans, get a nice coffee machine and have fun learning about the intricacies of coffee. Take that ~$100 a month and put it into a low-cost S&P tracking fund for the next 30 years and that will compound into a pretty nice retirement savings and you're not gonna have to be scrambling to build up a retirement account when you’re close to retirement.
You should spend money on things that bring you joy, of course, and simply walking to the coffee shop is nice if it gets you out of the house but I, at least, have found that you can find just as much joy from finding the very best coffee beans and figuring out how to grind it perfectly and make the perfect coffee and you're gonna save money. What a win. Try something different.
Spector: There are a few different things. I still haven't found a perfect solution for this, but I’d want something that can pull together all the different accounts that I have and give me a really good overview of: what my investments look like, what my financial health looks like, suggestions for where I should be spending money and how, or how I can save money. Mint was the canonical service that really tried to do this probably like 7 or 8 years ago at this point. Intuit hasn't done a great job keeping it up; they've done an okay job. But I've yet to find a solution that is significantly better out there.
So, one is that: an app that gives you a full understanding of your entire financial health. How do I get a full picture of everything? Because if you don't have a full picture, it's really hard to make decisions. We should all strive to use data to make a decision. If we can’t get the data, it’s hard to make an intelligent choice.
This theoretical app could do small things, going back to my coffee example, maybe it says, 'Hey, look: you're spending $100 a month on coffee. If you cut that down by 50% and invested that $40 a month in the market for the next five years, that would equal X amount when you're 70 years old.' That would be really cool.
Another feature would be just great suggestions for how to save money or good investments you should be putting money into that are truly low cost. Unfortunately, there are a lot of predatory financial products out there. Like going back to Robinhood, it seems really low cost and fun and gamified, but it actually costs a lot of money in the underlying trading to the point where the amount that you pay for a share on Robinhood is actually far more than the price you'd pay for that share with Fidelity or Schwab or one of the other online banks that do free trading. So, ‘what are the best financial decisions?’ because all these things add up over time. The amount of money Robinhood is making on that trade is miniscule to you in the moment, but over time, that amount can really add up.
The final feature is security. I would love to have a tool that can pull all my financial data together but I don't fully trust them with all my data, so I'd really want to know why I can trust that company. How secure they are and who they are; that’s really important. Is the company I’m using selling my data? Am I (and my data) the product?
Pulling your data into a single place is relatively easy. Plaid makes that somewhat straightforward — they have pretty good security — but everyone should have two-factor authentication set up on every account. Don't fall for scams — people are going to call you all the time and try to convince you that your social security has been stolen or something like that. Be very careful with your data.
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