Since Bay Area young tech billionaires tend to have the analytical mind of an engineer and the bank account of a small country, it’s interesting to look at where they’re investing their money. The answer is mostly stocks, but young millionaires are also putting a sizable chunk in alternative investments like real estate. The bottom line, they are making sure their portfolios are diverse.
“They tend to be more hands-on, engaged and interested in details than our typical entrepreneur clients,” said Darrell Krasnoff, a managing director at Bel Air Investments, an industry leader in providing customized managed services and investment counsel exclusively to high net worth individuals, families and foundations with $20 million or more in investable assets. “They come to us with an engineer’s approach, so we go deeper with the amount of information we give them. We show them more data, charts and graphics to show what’s possible.”
However, not all young entrepreneurs choose the traditional route when it comes to managing their money. In fact, a growing number of them rely on Wealthfront, the fastest growing online financial advisor in the country.
CNNMoney named Wealthfront one of the 15 best financial apps and sites last year. Assets have ballooned from less than $100 million at the start of 2013 to more than $650 million today.
Nearly 60% of the site’s customers are under the age of 35, many based in San Francisco and the Silicon Valley. Their clients are a Who’s Who of influential tech companies including Google, Facebook, LinkedIn, Microsoft, Twitter, eBay, Amazon and Apple. On average, younger Wealthfront customers have just under $100,000 in their accounts.
“These are people who grew up on computers, they’re comfortable with software, and they have a lot of wealth because their companies share it with them,” said Wealthfront CEO Adam Nash. “They really like the idea of an investment system that’s automated, so they can spend more time on what they care most about.”
He goes on to stress what it takes to achieve long-term investing success.
“It’s not that millennials don’t trust the stock market, but … they don’t think there’s a way to beat the market,” Nash said. “They’re actually pretty realistic in their expectations. They know that the market goes up over time, but they’ve been through two crashes. That’s why they like the idea of passive, diversified investments.”
Having clients who happen to be Bay Area young tech billionaires, I’ve become adept at knowing their needs, goals and objectives when it comes to investing in San Francisco real estate. It’s knowledge and skill I’d love to share with you as well. Please feel free to contact me via email at Daniel.DerVartanian@sothebyshomes.com or by direct line at 415.901.1727. If you are planning to sell or buy for yourself or as an investment, I’m here to help. In the meantime, be sure to check my website for San Francisco real estate listings, community and neighborhood information, and much more.