Author Topic: room mate jumped at my investing advice  (Read 5740 times)

vivophoenix

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room mate jumped at my investing advice
« on: January 16, 2016, 12:27:35 PM »
and now i feel a little queasy. not sure where to put this, but i feel like i need to breathe into a paper bag.



Backstory:

so I just moved into a new apartment with a friend of mine, who i know is well compensated,  because she is a consultant. she lives on frozen veggies and granola bars, and shares a cheap apartment with me., so i know she is a frugal. she also dreams of not having to work for the rest of her life.

story time:

we are both sitting on the couch, fiddling around on our laptops , and out of the blue she asks " do you invest?"

i reply, "not really, unless you count my 401k."

 then we start to talk more, and she mentions that she saves all of her money, but its siting in a savings account. i tell her how inflation is eating away at it and how there are more efficient vehicles for her cash, if she wants to save it to use for early retirement. i tell her that i max my 401k, and am working on finishing up maxing last years IRA.

she says she has a 401k ,and maybe an IRA but she doesn't know much else. she thinks maxing a 401k is the same as getting the maximum employer match. she hasn't even invested any or it. it all sits in MMA. i inform her of the true max and tell her how it helps with taxes and early retirement.


five seconds later she has her fidelity account open online and she changes her 401k to max contributions. then she asks about how much should go into an IRA. I tell her the annual limits and mention that there is still time for 2015.

right in front of my face, she funds 2015, 2016, signs up to max her 401k and then asked me which funds to put all this in.

at this point, i am feeling nauseous because of her easy acceptance, level of trust and willingness to move money around based on my say so.
we talk about mutual funds, index funds and ETF's. 

she demands all stock, cause she knows even if it goes down tomorrow,  eventually it will all go up.

at the end of all of this , my room mate is now in low cost, s and p 500 tracking ETFS, and similar, and i have helped her invest over $10k.

 later she says she wants to talk about after tax investments, cause after all that ,she still has more than a 6 month cash cushion in her savings account.

i now feel like the stock market will crash on Tuesday and i will rot in some strange hell . 
« Last Edit: January 16, 2016, 12:44:31 PM by vivophoenix »

browneyedgirl

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Re: room mate jumped at my investing advice
« Reply #1 on: January 16, 2016, 12:40:46 PM »
Nope. If I were telling someone what to do that's the exact advice I'd give them. Personally, I love this book as a guide for investing and I tell all my friends about it: http://www.amazon.com/If-You-Can-Millennials-Slowly-ebook/dp/B00JCC5JKI/ref=sr_1_1?ie=UTF8&qid=1396644838&sr=8-1&keywords=if+you+can+bernstein

Smokystache

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Re: room mate jumped at my investing advice
« Reply #2 on: January 16, 2016, 04:54:20 PM »
She won't fully realize how fortunate this turn of events was for probably another 10-20 years. But hopefully someday she will.


she demands all stock, cause she knows even if it goes down tomorrow,  eventually it will all go up.


This is especially comforting. As long as she fully understands this is a "long game" and doesn't panic, then she'll be golden.

But I can see how you'd be sweating bullets. That's a big change in about 45 minutes.

Gondolin

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Re: room mate jumped at my investing advice
« Reply #3 on: January 16, 2016, 07:45:36 PM »
Wow! I can understand the heady feeling, you probably just saved this person's (financial) life!

A lot of people don't have any idea what to do with their money and are SUPER grateful when someone they trust can give them direction. If anything you should feel good that your friend trusts you so much.

In the end, if the market does tank you'll both be (temporarily) suffering in the same boat, right? :)



P.S. - Why's this in the shame subforum? Move it over to the Badassity sub!

okits

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Re: room mate jumped at my investing advice
« Reply #4 on: January 16, 2016, 09:10:56 PM »
OP:
Quote
i now feel like the stock market will crash on Tuesday and i will rot in some strange hell .

I get why you're uneasy, so I would do two things: make it clear you're not any sort of licensed finance professional (unless you are) and that your knowledge is gained via your personal interest in the subject.  Second, have your roommate start reading and learning about finances and investing so she understands the "why" behind the choices you and she made.  She may make different choices once she knows more (didn't I read somewhere that 90/10 equity/bond had the highest return due to rebalancing opportunities?)  She should certainly do some reading on asset allocation and risk tolerance.

Gondolin is right, having someone trustworthy to ask, who knows even just a little more than you, is precious.  You can try to frame this as a learning experience/journey you're taking together (even if you know everything you are still learning how to be comfortable in an advisory role.) I do hope the day comes where she hugs you and says you helped her FIRE.  :)

Taran Wanderer

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Re: room mate jumped at my investing advice
« Reply #5 on: January 16, 2016, 10:07:41 PM »
vivophoenix - you gave great advice and got a fantastic outcome. I can see why you're nervous, but now you just need to hook your roommate up with some other resources that reinforce what you already told her.  Here are some of my favorites:

Get a Financial Life by Beth Kobliner
A Random Walk Down Wall Street by Burton Malkiel
The Wealthy Barber by David Barr Chilton

You could also point her to Wealthfront.com.  I don't have any money there (yet), but I have found their information useful and informative, and again, it backs up your advice about index fund investing, tax benefits, etc.

You are really lucky to have someone take your advice so readily, and your roommate is really lucky to have you giving her advice instead of someone who would encourage her to blow it on a car or new wardrobe or the like.  Congratulations to you both!

With This Herring

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Re: room mate jumped at my investing advice
« Reply #6 on: January 17, 2016, 09:52:40 AM »
Have her sign up for the forum while you're at it!

Even if the market does crash Tuesday, it's not like she's losing anything permanently.  It might have been a better time to buy, but we certainly can't know that ahead of time.

Squirrel away

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Re: room mate jumped at my investing advice
« Reply #7 on: January 18, 2016, 03:48:59 AM »
Have her sign up for the forum while you're at it!



Exactly!

slugline

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Re: room mate jumped at my investing advice
« Reply #8 on: January 19, 2016, 10:44:15 AM »
It's OK to be queasy. There are people that will nod and say they are investing long-term . . . until they hit their first market correction/crash. Only then when things "get real," do you find out if they can keep the emotions in check.

Jack

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Re: room mate jumped at my investing advice
« Reply #9 on: January 19, 2016, 10:49:48 AM »
You need to make sure to convey the most important lesson to her: now that everything is set up, LEAVE IT ALONE.

onlykelsey

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Re: room mate jumped at my investing advice
« Reply #10 on: January 19, 2016, 10:51:59 AM »
You need to make sure to convey the most important lesson to her: now that everything is set up, LEAVE IT ALONE.

So you mean I shouldn't be logging in to vanguard hourly to frown at my personal performance charts like I've been doing for the last two weeks???

TheAnonOne

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Re: room mate jumped at my investing advice
« Reply #11 on: January 19, 2016, 11:43:58 AM »
Eh, I guess it is a matter of perspective. 10k is a pile of money to some and little to none to others.

I max my (and my wifes) IRAs and 401ks(401ks maxed by March) and still do the vast majority of investing in taxable accounts. So moving around 10k is really not that exciting. It sounds like your roommate is in the same boat.

StockBeard

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Re: room mate jumped at my investing advice
« Reply #12 on: January 19, 2016, 06:30:25 PM »

So you mean I shouldn't be logging in to vanguard hourly to frown at my personal performance charts like I've been doing for the last two weeks???
Hey, that's my line!

MgoSam

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Re: room mate jumped at my investing advice
« Reply #13 on: January 19, 2016, 07:07:18 PM »
You need to make sure to convey the most important lesson to her: now that everything is set up, LEAVE IT ALONE.

So you mean I shouldn't be logging in to vanguard hourly to frown at my personal performance charts like I've been doing for the last two weeks???

My dad has been asking how my funds are doing at least 3 times a week, the past two weeks he's asked me daily. My response has been the same, "Haven't checked it since re-balancing in December."

WildJager

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Re: room mate jumped at my investing advice
« Reply #14 on: January 19, 2016, 09:35:49 PM »
You need to make sure to convey the most important lesson to her: now that everything is set up, LEAVE IT ALONE.

So you mean I shouldn't be logging in to vanguard hourly to frown at my personal performance charts like I've been doing for the last two weeks???

My dad has been asking how my funds are doing at least 3 times a week, the past two weeks he's asked me daily. My response has been the same, "Haven't checked it since re-balancing in December."



That little line there?  Yeah, that's all you need to worry about.  Call me when it tilts down.