Here's how Robinhood's chief brokerage officer tells his kids to invest

• Steve Quirk advises new investors to build a core portfolio with four diverse stock indexes.
• They include the S&P 500, Nasdaq 100, Russell 2000, and the MSCI Emerging Markets Index.
• Quirk said investors also can allocate some money toward individual stock picks.

Earlier this week, Business Insider asked Steve Quirk, Robinhood's chief brokerage officer, how he would set up his portfolio if he were just starting out on his investing journey.

As it turned out, it was a thought exercise the Wall Street veteran had recently gone through with his kids, who are in their 20s.

The cornerstone of Quirk's investing philosophy is building a core portfolio — assets that you plan to buy and hold, and keep adding to on a recurring basis. His recommendation to his kids was to divide this into four different stock indexes.

They include: The S&P 500, which tracks most of the top large-cap stocks in the US; the Nasdaq 100, a tech-heavy index that follows the top 100 stocks that trade on the Nasdaq; the Russell 2000, a group of small-cap stocks; and the MSCI Emerging Markets Index, which holds stocks from developing markets around the world. There are various ETFs that allow investors to track each index.

"In today's day and age, companies come and go quick — not like when I started in this business, you could buy IBM and sit with it for 60 years," Quirk said. "Some of these companies are going to be gone in five, like the EV companies and others — they come and go pretty quickly. So, the index kind of protects you because they're going to kick them out of the index before they get booted and bring somebody fresh in."

Indexes also provide every investment professional's favorite buzzword: diversification. While it's fairly common advice to have most of your portfolio in something like an index fund to spread your bets out, Quirk said one of the most common mistakes he sees retail investors make is being too concentrated.

Your investing journey doesn't have to be completely pre-determined, though. Quirk says it's fine — and even encouraged — to make more individualized bets with a small portion of your money.

That might sound counterintuitive, as it's exceedingly difficult for stock pickers to outperform the market. But with the risk to the overall portfolio being low due to the relatively small size of the bets, Quirk said it helps keep investors more engaged and interested in their portfolio. It can also be educational.

"A lot of people like hands-on investing," he said.

"I think that's the way you learn, even if you make mistakes, but you do it with a very small percentage of your dollars," Quirk continued. "When you're young, you have to learn."

It's advice that investing legend Rob Arnott also shared with Business Insider last year.

"View it as tuition," Arnott said at the time.

Financial professionals who spoke with Business Insider last year recommended keeping individual stock picks to just 5-10% of your portfolio, if you're going to do it all.

Finally, Quirk recommended having a small part of your portfolio in cash to take advantage of market pullbacks. The size of that allocation will depend on your investing timeline — younger investors should be more aggressive than those closer to retirement, he said.

But it's also a good place to hide and collect yield if your risk tolerance is fairly low, and stock-market volatility makes you uneasy — something more common for new investors.

"If I'm a brand new investor and I'm seeing all this news, I'm a little shaky," Quirk said of the recent volatility. "I haven't seen it before. I haven't seen what it does to the market and how quickly it does it to the market. So, I'm going to be a little nervous about that."

"We actually offer a cash sweep vehicle that pays 3.35% so it's 20 some times what you're going to get at the bank," he added. "So if you just want to sit in that idly, then you're OK doing that."