Passiv’s mission as a company is to make DIY investing accessible for everyone. Nick shares his thoughts on DIY investing, how ETFs have been a massive win for the industry, and how to enable people to become better investors.
Nick first shares with us about Passiv as a company and how it was created to solve a problem that a co-founder, Brendan Wood, had. Brendan wanted to make sure his family was on pace to have a secure financial future and achieve their financial objectives. Thus, he manages his, and his wife’s retirement accounts, alongside a couple of education savings, accounts for his children. While Brendan successfully managed his family’s finances, it was painstakingly manual and an extremely high-touch process. This is where the idea for Passiv was born.
Passiv provides a highly customisable solution and is geared towards people keen on DIY investing who desire a lot of configuration. Nick notes that with the level of customisation available, one has to be financially educated to the point where they are confident and competent in managing their finances. The idea of empowering investors through education is something Passiv stands behind, offering many tutorials and blog articles on their website to impart financial knowledge. By providing a robust software platform and financial education, they continue to make DIY investing accessible to everyone.
When asked about passive and active investing, Nick puts forward that passive investing is the best solution for most investors based on collected data. This is primarily attributed to passive investment funds charging less money than active ones. The other reason is that there are no strong predictors of active fund performance moving forward. Hence, there is no evidence that those who have done well in the past will continue to do well in the future. In spite of these, active fund management will never really go away as there will always be people who are passionate about actively investing. Nick believes this is a positive thing as without active investors, there will be no price discoveries in the market, and it will be challenging to determine what the fair value of a security is.
Nick also comments that ETFs have been a massive win for the investment community. People will always have biases that they wish to express through their portfolios, and ETFs make it increasingly easier to do so. This is attributed to ETF’s lower fee structure and their democratisation of asset classes, making it easier to invest in a wide range of things that might not have been feasible previously. While this means that it has never been easier to be a DIY investor, it has also never been easier to be a bad DIY investor. With abundant and convenient access to information, it is easy to react negatively to news headlines based on impulse. However, Nick shares that now is probably the best time to be a DIY investor if one can resist this knee jerk reaction.
