Author Topic: Friend who isn't into investing  (Read 2860 times)

ana-stache-ia

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Friend who isn't into investing
« on: November 04, 2015, 01:37:35 PM »
I have a friend who has a really interesting job that he's compensated well for, about $55k/yr. I've been really proud of him for finding a job he loves and for saving so much - he spends probably $20k/yr or less and has no debt. I thought he was the smartest financial person I knew until I read MMM. Now I'm realizing he's really missing out by not investing. He puts a bit into a retirement account and keeps the rest of his savings safely in the bank. I think he's missing great opportunities to invest, since he's still young! Any advice on what I could do to convince him or make him more excited than he is hesitant? (Not that it's my business at all.)

Bettis

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Re: Friend who isn't into investing
« Reply #1 on: November 04, 2015, 01:46:50 PM »
I think the () say it all.  It's not your business, it's up to him... BUT occasional conversations about it can't hurt as long as he seems receptive and not put off.

My wife and I have a too large emergency fund so I "sneak" money towards my mortgage principal so at least it's doing something for me.  If he has a mortgage, work that angle since it's guaranteed return and amortization charts make it more tangible than the what-if's of the stock market.  If he has no debt and it's more about padding the retirement fund, maybe talk about what you do a little bit and see if you can strike up a friendly challenge.

frugaliknowit

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Re: Friend who isn't into investing
« Reply #2 on: November 04, 2015, 02:21:24 PM »
Don't tell him what he should do, but talk about successes you have had.  Something like, "Since I've been putting $XXX per month in VTAX, I've been averaging XX% per year...yada, yada..."

zephyr911

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Re: Friend who isn't into investing
« Reply #3 on: November 04, 2015, 02:24:56 PM »
Egads. People who do that tend to be afraid of risk and losses. The main problem with that approach is that it overstates the risk of good investments and instead picks one that is guaranteed to lose, albeit very slowly and steadily.

Money not invested will eventually deflate to nothing. It's a shame for someone to be so frugal and to waste the proceeds... if you say anything, I'd suggest focusing on the above.

ana-stache-ia

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Re: Friend who isn't into investing
« Reply #4 on: November 05, 2015, 08:39:35 AM »
Thank you all.

AZDude

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Re: Friend who isn't into investing
« Reply #5 on: November 05, 2015, 09:45:17 AM »
Even if he hates stocks, there are still much better things to do than just hoard money in a savings account earning .01%. Maybe talk about high rated bonds, real estate, or even REITs. Plenty the risk-averse can invest in that is better than a savings account.

MrMoogle

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Re: Friend who isn't into investing
« Reply #6 on: November 05, 2015, 01:51:09 PM »
A bank account is a guaranteed loss of inflation (~2%/year) with these crazy low interest rates.  Even a treasury bond would be better, and the only way it doesn't work out is if the US fails, and his bank wouldn't survive that either.

peeps_be_peeping

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Re: Friend who isn't into investing
« Reply #7 on: November 05, 2015, 03:06:26 PM »
It took me about 10 years to gently convince an investment-averse friend to put money into stocks. She has a retirement account through work, a rental property, and tons of savings from thrifty living. We are comfortable sharing financial details with each other. I never pressured her, but whenever the conversation turned to that topic I would tell her my index fund investments have returned over 7% over time... while her savings account has been earning less than 1%... A few months ago she put about $5,000 into VTSAX (probably 10% of her current cash holdings) and immediately told me. I was so proud!!!

Guesl982374

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Re: Friend who isn't into investing
« Reply #8 on: November 06, 2015, 08:57:19 AM »
I think the () say it all.  It's not your business, it's up to him...

+1 If you do convince him to invest and he loses, he'll blame you. Whether it happens in 1 week, 1 month or years, he'll blame you. Stay out of it.

Playing with Fire UK

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Re: Friend who isn't into investing
« Reply #9 on: November 06, 2015, 09:16:20 AM »
Maybe try the following:
Ask if he has thought about investing (if he says yes but not sure where to start, continue)
Explain what you do, how you decided on your asset allocation and the ups and downs (continue if interested)
Suggest some good resources: jlcollinsnh.com/stock-series , Tim Hale
Be there for questions

I was interested in investing for a while before I actually did anything about it; it was only when I found resources that weren't just glossy brochures for high cost services that I knew it was for me. Be prepared to be told no or not yet, and respect your friend's opinion if they say it's not for them.