Following a solid year of significant investment in the industry, fintech could finally make its way into an even stronger growth pattern in 2016. Along with increased attention, the industry could see a large number of launches.

Over the past several months, a number of new platforms using algorithms for determining investment allocations have been launched. Big banks have also begun to experiment with blockchain technology for securing payments as well as releasing mobile-payment apps designed to make services easier.

Fintech Funding Booms

In recent years, funding for the fintech industry has boomed. In 2014, investors funneled more than $12 billion into fintech companies, an increase from less than $3 billion in 2012. During the first quarter of last year alone, this sector saw almost $3 billion in investments.

Over the course of the last 12 months, nearly $14 billion in funding has made its way into the coffers of fintech startups, representing an almost 46 percent year-over-year growth rate.

The fintech industry has experienced a steady increase in funding since 2010. Among the top categories receiving funding are cryptocurrency, payments, online lending, and personal financial management. In total, private equity firms and venture capital companies have invested approximately $50 billion in fintech companies over the past five years.

To be certain, the fintech sector has experienced a tremendous amount of growth since the first companies made their debut into this sector. Most of these companies began with the idea of taking a revolutionary approach to retail financial services. Once the financial crisis hit, the concept that regulated institutions, including banks, were vulnerable began to take hold. This naturally presented a tremendous opportunity within the financial sector. Entrepreneurs entered the scene with the idea of transforming everything from lending to payments to finance. Venture capitalists quickly took notice and started to fund new generations of fintech entrepreneurs and startups looking to change how finance was handled.

VC to Crowdfunding

In 2016, funding for the fintech sector is not expected to decrease, but funding could come from different sources in the future. An emerging trend shows that crowdfunding​ could actually outpace venture capital funding in the coming months. This is quite interesting considering that crowdfunding itself is considered a sector within the fintech market.

Fintech adoption could actually double in 2016, according to some reports. Urban consumers tend to use fintech services at a greater rate than any other population. On a global scale, consumers in Hong Kong represent the highest rate of fintech adoption and use. While the fintech industry as a whole is clearly on a path toward greater growth, the potential for the industry does vary based on product category. Research shows that payment services hold the highest rate of adoption at 17.6 percent. This category includes money transfers and the use of non-bank providers for paying for goods and services. The second-largest category is savings and investment, with a usage rate of 16.7 percent.

The Bottom Line

The significant amount of funding being invested in fintech startups serves to underscore precisely how much technology, particularly online technology, has dramatically changed financial services. From the way in which people decide how they will spend their money to the tools they use for making payments and investments, finance is experiencing an unprecedented level of change.

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As a regular investor trying to cobble together enough for a comfortable retirement, what can you learn from the wealthiest investors? Read on to find out.

• They save more than average: Instead of spending more, the wealthy tend to save most of their money. According to researchers from UC Berkeley, those in the top 1% save almost 40% of their salary while those in the top 1% to 10% save 12% of their salary. A general recommendation is that you should save between 10% to 15% of your income to maintain your current lifestyle in retirement.
• They live frugally: Many millionaires drive around in used cars and spend money carefully. Warren Buffett famously lives in the same house he bought more than 50 years ago. Instead of upgrading your car or house every time you get a raise, keep your living standards modest.
• They diversify their portfolio: While many CEOs own stock in their own companies, the rich also tend to keep a mix of funds. Proper allocation allows you to better withstand the ups and downs of the market. A mix of growth and income securities is usually recommended.
• They have several sources of income: Don’t solely rely on your day job for income. Wealthy folks often have different ways of earning money, whether it’s from rental properties or side businesses. Earning more money allows you to sock more away in your nest egg. (For related reading, see: 5 Resources to Learn to Retire Rich and 6 Planning Tips for Your Final Working Years.)
• They hold stocks for a long time: The ultra-rich understand that investing in the stock market is a long-term strategy instead of a short-term solution. They also keep their cool when the market dips.
• They make saving automatic: The rich like to take the set-it-and-forget-it approach to investing. They create automatic transfers to their retirement accounts so they don’t have to remember to put money away in their 401(k) plans.
• They start early: Time is the most important factor when it comes to growing a significant retirement portfolio. The rich know that they need to start saving as soon as possible to build wealth.
• They max out their retirement accounts: If you’re younger than age 50, you can contribute up to $23,500 a year in your IRA and 401(k) combined. The top 1% know they need to take advantage of these limits.
• They don’t carry debt: Since the rich live frugally, they also pay off their debt. That means buying cars in cash, paying off a mortgage early and not carrying credit card debt. In general, they don’t make a habit of relying on credit for personal expenses.

The Bottom Line

Most of these tips are easier to follow when you’ve already acquired significant wealth. It’s much easier to live without debt when you have access to a booming bank account, and stashing away 40% of your income may not be feasible for those making just enough to scrape by. But that doesn’t mean the principles listed here are useless for a person who isn’t rich; most can be directly applied to your life. Chances are, most wealthy investors were applying these ideas to their financial approach long before they earned their first million—it’s probably how they got there in the first place.

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