I just went looking for a generalized piece on what to do with personal resources and didn’t find much [1]so here’s a question: What recommendations does the EA community hold as ways to manage personal finances and optimize investments? *I recognize this is very dependent on personal situations, place of residence, access to various forms of capital, expertise, etc. AND I sense there is some broadly applicable advice among us.*
Of course there is the extreme option of donating as much as possible as soon as possible but what about a more nuanced approach to personal savings in balance with effective giving. Are there specific ‘investing hacks’ people recommend or see as uniquely possible now (vs 3-10 years ago)? What are you investing in and why? How much time and energy do folks spend updating their personal finance strategies in a given year? Are there financial advisors you’d recommend if you’re looking to work with someone 1:1?
Given how central this feels to enhancing folks ability to increase effective giving, I’d almost expect financial planning and money management to have a well researched and updated set of resources around it.
There are a few articles and Q&As on the EA Forum, like Investing to Give Beginner Advice? There are also blog posts on EA personal blogs, in particular Brian Tomasik’s Assorted tips on personal finance and Ben Kuhn’s Giving away money: a guide. Appendix B of an article I wrote on improving nonprofit treasury management also covers investments. The 80,000 Hours article I linked to in Appendix B, Common investing mistakes in the effective altruism community, is also pretty good.
My opinionated TL;DR is that “investing to give” is useful for various cases including donating once-a-year on Giving Tuesday, longtermist investment funds, and of course standard personal wealth accumulation. The standard investment advice is to use low-cost ETFs to create diversified portfolios. The main tax tip applicable to EAs is to donate appreciated securities (assume someone is donating their earnings). In addition to standard investment advice, more advanced investors will use leverage/margin to increase the returns of low-volatility portfolios as Tomasik and the 80K article mention. IMO the best strategy, which no one really uses, involves using various evidence-based factors to select asset classes, which the 80K article briefly alludes to at the end. That’s what sparked my initial interest in the investment space and why I launched an investment firm (I also do more standard stuff like optimal high-interest bank accounts and passive asset selection by popular demand).
I run Antigravity Investments, which is an EA-aligned investing firm. I’ve mostly been advising charities, but now that better technology is available like Altruist, I’m in the process of expanding to once again directly advise individuals (that’s why the website has a temporary placeholder at the moment). Robo-advisors are good for people that want something standard, and there are a few firms doing evidence-based asset class selection. Alpha Architect is one such firm.
Amazing, thanks for surfacing these resources Brendon. Will dig in and follow up with any further learnings or questions I feel may be generally applicable. As someone who does not spend much time using financial language, I appreciate the array of resources you’ve shared.
In addition to what Brendon said, I’d say that finance best practices for EAs are mostly the same as best practices for anyone else. I like the Bogleheads wiki as a good resource for beginners.
IMO you can get most of the benefits of investing just by following best practices. If you want to take it further, you can follow some of the tips in the articles Brendon linked, or read my post Asset Allocation and Leverage for Altruists with Constraints, which gives my best guess as to how EAs should invest differently than most people.