The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: lizi on March 04, 2018, 04:13:02 PM

Title: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: lizi on March 04, 2018, 04:13:02 PM
I have a friend, not super close but close enough, who suddenly came into a lot of money. As in, seven-digits wealth. They are overall reasonably sensible with money, and have even expressed an interest in MMM and some of my weird frugal life choices. When I went to Camp Mustache TO last year they grilled me about the presentations, the people, the purpose etc.

So far normal life has continued after this injection of cash, with the only changes being that their mortgage is paid off, they bought back their secondhand car they had previously sold to a friend, they refinanced another friend's debt so they're paying 3% interest instead of 18%. And they incorporated an investing company, based on the fact that in the past they invested in weed stocks and turned $30K in ~$250K. This company will continue with those sorts of investments, but also do angel investing and interesting things like that. 

This is where my spidey senses start to tingle. There is a lot of useful investing information out there (MMM, J Collins, nords on angel investing etc), and I would love to recommend those resources and suggest a more conservative approach to managing the money, with say 10-20% as higher risk "play" money. But really it's none of my business, and I'm sure this person is receiving 1001 suggestions for what to do. I'm concerned for them, but also acknowledge they are a pretty sensible adult so they can figure it out. It would suck to invest and lose so much money in risky gambles, but at the same time maybe they just consider it all to be play money because it wasn't earned.

My thought so far is this: send an email saying something along the lines of "These are really good resources on investing, and I follow this advice for my own investments. I know you're probably getting a ton of suggestions from people about your money right now, so I totally get if you don't want any more. But if you ever want to ask me about any of this I'd be happy to talk".

Does that sound reasonable?
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: Catbert on March 04, 2018, 04:46:08 PM
Sounds good to me.  And then drop the subject unless they bring it up.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: Sarah Saverdink on March 04, 2018, 05:27:56 PM
Bogleheads is great investment resource, as well.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: secondcor521 on March 04, 2018, 06:39:04 PM
Does that sound reasonable?

Yes, it is reasonable.  But I think unsolicited advice between unrelated adults is rude.  YMMV.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: joonifloofeefloo on March 04, 2018, 06:49:10 PM
Sounds good to me.  And then drop the subject unless they bring it up.

+1. (I'm not annoyed by unsolicited advice; I appreciate it, so long as the one offering it does what Catbert said.)
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: Abe on March 04, 2018, 09:25:15 PM
If they're a close friend I'd just talk to them instead of an email. Otherwise they'll probably think it's just a phishing scam.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: okits on March 05, 2018, 12:47:20 AM
I would offer, in person, to recommend some "self-learning options" for investing, now that their situation has changed and bigger goals can be within their reach.  Then drop it if they don't take you up on it or ask for more.  I would guess that people who know about the windfall are possibly asking for money and you want to be clear you're offering information, not asking for anything.

You could also loop back to @monstermonster 's exercise at last year's CM*TO about goals and values.  If you were one of the many who found it helpful you describe it as effective at ensuring your actions are consistent with the outcomes you want.

Does that sound reasonable?

Yes, it is reasonable.  But I think unsolicited advice between unrelated adults is rude.  YMMV.

I don't think you're wrong, but among close-ish friends on important matters, I'd rather risk rudely overstepping once than staying silent when I could share something that could be useful.  There's one part of my family that would rather let critical moments go by rather than risk rudeness or upsetting people.  Watching this over the years, I've decided I prefer the opposite approach.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: herbgeek on March 05, 2018, 05:51:47 AM
They didn't ask for your advice.   They are well aware of your leanings, and yet, they haven't asked for your advice. You also say you aren't super close.  Stay out of it.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: Kl285528 on March 05, 2018, 06:25:20 AM
I think you did a nice job with that email - you could make the same suggestion in person, in the alternative. I'm curious, how many people now know they have this kind of money? Are you in the inner circle, or is it just common knowledge. That might affect your approach as well.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: lizi on March 05, 2018, 06:58:06 AM
They do live in a different city so I wouldn't see them in person until June or July. And I would definitely not normally be in the inner circle, but this person is very close friends with my DH, so I'm in the know through him. I'm not sure how many people know, but I'm guessing they haven't told many. The fact that they're keeping their job and staying in the same apartment means it's still pretty low-key.

herbgeek you make an interesting point about them knowing about my leanings and still not asking. That is something I hadn't really considered. But also they might not be aware of the investment side of MMM, and just think I'm an eccentric, bike-loving, ziploc-bag-reusing hippy who aspires to living in a trailer and being a ski bum. Hardly a reliable source for savvy financial advice.

I like the point about one offer of advice and then nothing after that unless they ask for more. I also think the JL Collins stock series is a good resource for anyone embarking on investing, so that's a good, neutral start. I don't necessarily have to talk about index funds or risk, I'll just provide some of my favourite investment blogs and let them go from there. Thanks everyone!
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: secondcor521 on March 05, 2018, 02:55:29 PM
One more comment:  For those recommending giving advice, how do you handle the risk that they listen to you, follow your advice, things don't turn out well for whatever reason, and they blame you?  There is a reason financial shows all have a disclaimer that they're not giving you advice.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: netskyblue on March 05, 2018, 03:37:07 PM
Unless they are someone you already regularly talked about finances with, I'd avoid giving unsolicited advice.  It tends to carry the connotation of "I know more than you do," and sounds condescending.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: jjcamembert on March 05, 2018, 04:06:43 PM
If you were in their shoes, would you want your friend to give you that advice? I personally wouldn't want it and don't give out "advice." If someone turned $30k into $250k good for them! Did they understand their return on risk, maybe (likely) not. On the other hand, what if they were more comfortable being conservative, and wanted to stay all in cash? Maybe their risk tolerance is different from yours.

Unfortunately the proposed email message sounds like an ad I'd get from a financial advisor. Hypothetically if I had a lot of money and didn't know what to do with it then I'd seek out a real financial advisor, not advice from friends. If there's something specific, like they are all in on XIV, maybe you could show concern like, "Hey remember that guy who lost $4M on XIV?"

Also what if you convince them to buy index funds and then the market tanks; they'd probably get mad at you personally.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: NoraLenderbee on March 05, 2018, 04:29:28 PM
Based on what you've said, it doesn't sound like they need your advice. At most, I'd send them the link to the Bogleheads wiki topic about what to do when you get a windfall.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: COEE on March 05, 2018, 08:30:29 PM
Stay out of it.  Lead by example - if they want help they'll ask for it.

It's fun to daydream about this stuff.  If I had 10M+  I'd put my FIRE funds aside and never touch it, then I'd gamble with the rest.  How do you know they aren't doing that?

Bring them a decent bottle of wine to celebrate their good fortune when you see them!
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: Missy B on March 05, 2018, 08:54:43 PM
Stay out of it.  Lead by example - if they want help they'll ask for it.

It's fun to daydream about this stuff.  If I had 10M+  I'd put my FIRE funds aside and never touch it, then I'd gamble with the rest.  How do you know they aren't doing that?

Bring them a decent bottle of wine to celebrate their good fortune when you see them!

+1. They sound like they don't need help from you, actually. I think they're already getting good advice from professionals, based on what they want to do with their money. They may already know more than you about investing, but have a different temperment and risk tolerance.
Title: Re: Sticking my nose where it don't belong: Advice for a suddenly wealthy friend?
Post by: AnnaGrowsAMustache on March 05, 2018, 09:24:08 PM
I have a friend, not super close but close enough, who suddenly came into a lot of money. As in, seven-digits wealth. They are overall reasonably sensible with money, and have even expressed an interest in MMM and some of my weird frugal life choices. When I went to Camp Mustache TO last year they grilled me about the presentations, the people, the purpose etc.

So far normal life has continued after this injection of cash, with the only changes being that their mortgage is paid off, they bought back their secondhand car they had previously sold to a friend, they refinanced another friend's debt so they're paying 3% interest instead of 18%. And they incorporated an investing company, based on the fact that in the past they invested in weed stocks and turned $30K in ~$250K. This company will continue with those sorts of investments, but also do angel investing and interesting things like that. 

This is where my spidey senses start to tingle. There is a lot of useful investing information out there (MMM, J Collins, nords on angel investing etc), and I would love to recommend those resources and suggest a more conservative approach to managing the money, with say 10-20% as higher risk "play" money. But really it's none of my business, and I'm sure this person is receiving 1001 suggestions for what to do. I'm concerned for them, but also acknowledge they are a pretty sensible adult so they can figure it out. It would suck to invest and lose so much money in risky gambles, but at the same time maybe they just consider it all to be play money because it wasn't earned.

My thought so far is this: send an email saying something along the lines of "These are really good resources on investing, and I follow this advice for my own investments. I know you're probably getting a ton of suggestions from people about your money right now, so I totally get if you don't want any more. But if you ever want to ask me about any of this I'd be happy to talk".

Does that sound reasonable?

Do it. Suddenly wealthy is a hard place to be, and advice from people who don't want something and won't profit from the advice is probably pretty thin on the ground.