Author Topic: Investing Damage Control  (Read 1806 times)

Lesley0526

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Investing Damage Control
« on: December 03, 2019, 09:27:14 AM »
I  am under huge amount of pressure since my husband received a large settlement for an accident he was in. Since he cannot work again we figured investing best way to go to grow the money. He taught himself, used pretend accounts to practice, researched, read books. We were doing well at beginning but now may lose a big chunk. Could lose our house and retirement funds.

So I'm at point I  need someone to look at our portfolio and use their expertise and knowledge to do damage control before we lose it all.  So if anyone knows of great investment planner in Ontario who is fee based and can look at our whole portfolio and hopefully save us from losing it all. We are Canadian and have both Canadian and US investments. I  prefer fee based since heard this is better but I  am still learning and all overwhelming.

Also on personal note this is causing huge stress and since my husband has worked hard on this he's a little sensitive. So how to get him on board getting a professional to help us without causing a divorce.
Maybe not that bad lol but money does cause stress.

I  have children plus work full time so right now I  feel pretty stupid I  went along with this blindly but I  believe in investing and I  hoped we would do well. I  just think my husband sounded so positive but nothing really is guaranteed.

Any help or advice would be a lifesaver. Thanks

acepedro45

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Re: Investing Damage Control
« Reply #1 on: December 03, 2019, 10:11:12 AM »
Not a lot of detail in your post, but it sounds like your husband may be using speculative and high risk strategies that are almost certainly long-term losers.

Step 1. Stop digging! Your investment strategy sounds like gambling, to the point where you mentioned "losing it all" twice in your post. A real investment strategy should not cause this kind of heartburn. You should not feel afraid of losing your house and retirement funds.  Even if I'm totally misreading your post and you just have a much lower risk tolerance than your husband, you need a strategy that makes you both feel comfortable. Get your money out of whatever risky thing you're doing and park it in cash, even if this means recognizing "paper" losses. Do this immediately since your stress levels sound so high.

Step 2. Work the marriage and communication angle. Your husband is undoubtedly struggling with the mental aspects of being suddenly disabled and not being able to help the family, and maybe this made him jump in recklessly to the investing/gambling stuff. With Step 1 completed, you don't need to rush for the rest of the steps.

Step 3. Figure out what your needs are in terms of annual cash flow to support your family. How big is the gap between the income you make from your job and your family's requirements? Here's where a good planner may be able to help you use the settlement money to bridge the gap. Be sure to account for the expensive care your husband may need now or down the road.

Step 4. If your expenses are out of balance with your income, even supplemented with the settlement money invested for the long term, come see us again for a case study and we will try to straighten you out.

Your post reads as pure terror from the spouse of a problem gambler. It sounds like you both don't have a terribly well developed plan for your settlement money, and that is scary since your husband can't work to support your family any longer. But breathe. You can get through this.


MDM

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Re: Investing Damage Control
« Reply #2 on: December 03, 2019, 10:13:17 AM »
You might want to post in the Bogleheads forum, using the format described in Asking Portfolio Questions - Bogleheads.org.

Could also do the same here.  See also How To: Write a "Case Study" Topic for a slightly different format.

MoneyQuirk

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Re: Investing Damage Control
« Reply #3 on: December 03, 2019, 10:21:18 AM »
Communication is really important. I'd make sure you two can get on the same page first. Does he agree there's a problem? Does he think any changes need to occur?

If the answers to those are no, then stop everything else you're doing and focus on those. You can't win this single-handedly.

If he is on-board, then I would focus on diversifying your portfolio. It sounds like he has been picking stocks, which, while fun and can work out well, can also turn out really poorly.

acepedro45

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Re: Investing Damage Control
« Reply #4 on: December 03, 2019, 10:31:49 AM »
Quote
Does he agree there's a problem? Does he think any changes need to occur?

@MoneyQuirk, I debated the order of my steps and wondered if maybe establishing good communications should be step 1....but here's the quote that really scares me:

Quote
He taught himself, used pretend accounts to practice, researched, read books. We were doing well at beginning but now may lose a big chunk. Could lose our house and retirement funds.

That sounds dangerous enough to me that I think a clean stop on all the trading is in order. There are areas of trading beyond picking individual stocks that can have very serious consequences. Options, commodities, cybercurrencies and trading on margin all come to mind as ways to potentially make and lose large sums quickly.

Lesley0526

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Re: Investing Damage Control
« Reply #5 on: December 03, 2019, 11:05:33 AM »
I'm at work now so will post answer more thoroughly later.  I  am truly grateful for the well thought out responses... Actually was a bit teary eyed although I  know this is a forum but you are all wonderful to reply.

I'm going to read all responses and reply in kind soon. I  certainly have some food for thought already Thanks again to your responses. 😁

Bernard

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Re: Investing Damage Control
« Reply #6 on: December 03, 2019, 01:03:27 PM »
Hi Lesley!

We here are Mustachians, a term derived from Mr. Money Mustache (https://www.mrmoneymustache.com/) a man who retired in his 30s because he had invested enough money to live off his investments the rest of his life.
As such, we embrace living below our means, utterly enjoy what we have, find pleasure in things that necessarily don't cost (much) money, and invest as much as we can in order to gain financial independence. Our investment strategy is very simple. We don't gamble, we don't try to beat the market, we are simply riding the wave which ultimately gets bigger and bigger due to compound interest.

Many of us, and I'm one of them, have invested in individual stocks. We got lucky, we lost money. But in the end, it is impossible to outsmart the super computers and the big wall street giants. In fact, even most of those cannot beat the market in the long run. Warren Buffet made a $1 million bet a bit over a decade ago with a bunch of super fund managers that they would not be able to outsmart the market. He put $1M in a single, very low cost, Vanguard index fund, VOO. It holds all of the S&P 500s companies. He won that bet.

Even Warren Buffet himself (and I own stock in Berkshire Hathaway), was not able to beat the market the past few years. He furthermore said that for the overwhelming majority of investors, investing in a super low cost index fund or mutual fund (same thing) is the way to go.

Since January 2019, the S&P has gained over 25%!
https://www.macrotrends.net/2490/sp-500-ytd-performance So how can one lose money if making money by doing nothing gets one 25% gains?

Answer: only by gambling. By trying to outsmart the market. And that's a very bad strategy.

There are folks among us who have most of their money in a single mutual fund, VTSAX, or its ETF equivalent, VTI. We put the money in, and never look back. We don't sell, because we want to live off that investment. We only add to the stack. It can get a bit more difficult by diversifying, but I don't want to confuse you.

I suggest you talk with your husband and give us detailed information what he has invested in, his cost basis, and current status, and why you are so worried to lose it all.

Better yet, do a case study. None of us are gamblers. We are very conservative when it comes to money, and I think there are some really experienced and knowledgeable folks here who may be able to get you on the right track.

ysette9

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Re: Investing Damage Control
« Reply #7 on: December 03, 2019, 01:14:03 PM »
Posting to follow. Good luck

robartsd

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Re: Investing Damage Control
« Reply #8 on: December 03, 2019, 02:54:12 PM »
So I'm at point I  need someone to look at our portfolio and use their expertise and knowledge to do damage control before we lose it all.  So if anyone knows of great investment planner in Ontario who is fee based and can look at our whole portfolio and hopefully save us from losing it all. We are Canadian and have both Canadian and US investments. I  prefer fee based since heard this is better but I  am still learning and all overwhelming.
Yes, if using a financial planner, you want someone who charges you for their time, not making money based on your portfolio size (assets under management) or trading commissions.

Even Warren Buffet himself (and I own stock in Berkshire Hathaway), was not able to beat the market the past few years. He furthermore said that for the overwhelming majority of investors, investing in a super low cost index fund or mutual fund (same thing) is the way to go.
One little quibble. All index funds are mutual funds, but not all mutual funds are index funds. Some mutual funds have professional managers who try to beat the market. They usually have annual expenses on the order of 1% or more (index funds usually have annual expenses on the order of 0.2% or less). As Bernard mentioned, even professional managers frequently fail to beat the market (more often under performing the market, especially after the drag of their fee is factored in). Index funds don't have active managers trying to beat the market, they just trade as needed to keep in step with the index.

RWD

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Re: Investing Damage Control
« Reply #9 on: December 03, 2019, 03:22:56 PM »
[...] I  feel pretty stupid I  went along with this blindly but I  believe in investing and I  hoped we would do well. I  just think my husband sounded so positive but nothing really is guaranteed.

What you described is less investing and more gambling. There is no reason to start doubting investing now, you just have to actually do some investing. The correct solution is index funds. If you are actively managing your funds (either directly or paying someone to do it) then you are doing it wrong.