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Jan Szilagyi of Toggle: “Compound interest”

I think the most underappreciated concept is “compound interest.” Einstein may or may not have said it, but it truly is the “the most powerful force in the universe”. So my first advice would be to start saving and investing early. It doesn’t matter how much, just start. For example, let’s say you started saving […]

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I think the most underappreciated concept is “compound interest.” Einstein may or may not have said it, but it truly is the “the most powerful force in the universe”. So my first advice would be to start saving and investing early. It doesn’t matter how much, just start. For example, let’s say you started saving 100 dollars/month when you’re 45 and do so until you’re 55. If you get slightly below average market return, you’ll have 37,500 dollars in the bank when you retire at 65. But if you start saving the same amount at 25 until you’re 35 and then just collect interest, you’ll have 150,000 dollars when you retire at the same age.


As a part of my series about the The 5 Essentials of Smart Investing, I had the pleasure of interviewing Jan Szilagyi of TOGGLE.

Jan spent most of his career managing global macro strategies, starting with Stan Druckenmiller at Duquesne Capital, and most recently as Co-CIO at Lombard Odier Investment Managers in New York. He is now the CEO of Toggle, a financial technology platform built and used while he and his co-founder were actively managing global macro portfolios. Jan graduated Phi Beta Kappa from Yale with a degree in mathematics, and completed his PhD at Harvard under Ken Rogoff in international finance.


Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

My college roommate’s father worked at Duquesne Capital, a prominent New York hedge fund and he invited me to meet his boss, Stanley Druckenmiller. I was in Boston at the time, just starting a PhD in Economics at Harvard. I met with Stan for 5 minutes: I can’t remember what we talked about but I didn’t leave thinking I had nailed it. 5 blocks from the entrance I received a call: I was hired. I dropped out of Harvard the following Monday and haven’t looked back since.

Are you working on any exciting new projects now? How do you think that will help people?

At TOGGLE, we aim to help investors “invest rationally, not rashly”. We are harnessing immense cloud computing power and pairing it with state-of-the art data analytics to deliver curated, actionable portfolio insights. The advances in AI have made it possible to do wholesale data analysis and distill it into custom-built insights tailored specifically to the individual user. It is analogous to what has happened in the quest for self-driving cars: in the process, we made cars smarter and in turn, their drivers better and safer.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers? If you had the power to make a change, what 3 things would you recommend to improve these numbers?

You have to start with the concept of “basic financial literacy.” What does that even mean? At the core, basic financial literacy meant you understood enough about money that you could manage to keep your spending in line with your income, with some thought given to how your income might vary over time. This variability in income drove a decision about how much to spend now vs. later. When interest rates were high, it was mostly just a decision to switch between your checking and savings account. Occasionally, you’d refinance your 30-year fixed mortgage. But the industry that grew around the financial management process — banks, brokers, robo advisors, and more — have obscured these basics. I don’t think people have gotten worse at thinking about the problem. The tools built to address it are increasingly complex and complicated to understand. That means people spend more time thinking about the tools than the problem. I would advise people to bring it back to a simple spend vs. save decision. Then turn this into a rule that requires no thinking (automatically save a fixed amount of dollars every month.) Finally, make a one time decision how the savings are going to be managed. If you have the interest (and time) to manage your savings actively, allocate a portion of it to a trading account and the rest to passive investments like equity and bond index funds. If you don’t have the interest (or time), all of it could be in passive investments.

Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each.

I think the most underappreciated concept is “compound interest.” Einstein may or may not have said it, but it truly is the “the most powerful force in the universe”. So my first advice would be to start saving and investing early. It doesn’t matter how much, just start. For example, let’s say you started saving 100 dollars/month when you’re 45 and do so until you’re 55. If you get slightly below average market return, you’ll have 37,500 dollars in the bank when you retire at 65. But if you start saving the same amount at 25 until you’re 35 and then just collect interest, you’ll have 150,000 dollars when you retire at the same age.

Another piece of (related) advice is this: when you’re young, don’t be averse to risk. There is a huge gap between, say, investing in bonds and investing in equities over a 10 year period. This will allow you to increase the level of interest and take full advantage of the compounding effect. So set aside some amount you can do without for 10 years and invest it all in equities, or something you have high conviction on over a long period of time. Many people often treat the entire savings pool with equal concern — it must be available tomorrow — which results in gaining little to no interest over a long period of time.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

There have been a number of people who have had an influence on my professional career. When I was in graduate school, my head advisor Ken Rogoff really dedicated enormous amounts of time advising me. We used to have calls even on Saturdays and Sundays, not the norm in academia. Stan Druckenmiller took a chance on me when I had nothing but a fancy school pedigree. He gave me a start in the industry and supported me at a number of critical points in my career, including most recently when we started TOGGLE. He was the first to offer encouragement to take the plunge, and ultimately financially backed the endeavor as well.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“I’m a great believer in luck, and I find the harder I work, the more I have of it.“

-Thomas Jefferson

I think hard work actively raises the odds of success by being in the right place when the lucky moment arrives. I have to recognize I have been very lucky: getting into a US university out of a small Eastern European country, getting hired and taught the investment ropes, getting patient mentoring by many, and meeting far smarter people than myself who became colleagues. Each of these started with the good old-fashioned effort to reach a goal: do well on a test, find a new angle for a project, etc.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

Give everyone a tool to better manage and invest their savings so they can retire in peace.

Thank you for the interview. We wish you continued success!

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