Author Topic: Playing with my inheritance (note parents are still alive!)  (Read 2606 times)

Aimza

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Playing with my inheritance (note parents are still alive!)
« on: December 12, 2017, 09:22:35 AM »
Hi all,

Background: I have controlled my parents retirement accounts from inception. Without me, they would have kept their savings in the bank forever. I made them start a 401(k), IRA, Roth IRA. My dad gets a pension, they both get social security and they have rental income. Their house is almost paid off and they have no major bills. They do not need their retirement savings to live as they are making more passive income per month than they need. Neither of them work.

That all being said, I had played with some money of theirs 7-10 years ago and put it in various stocks. I have sold off some, but what's left is Boeing (BA - bought at $75, now at $290 and worth $14k) and Goldman Sachs (GS - bought at $138, now at $253 and worth $5k). I'm torn on whether to sell and put all the cash into Vanguard's VFORX which has been performing at 19% this year.

Basically, their retirement fund is a savings account for my sister and me. Any thoughts?

Thank you!

Frankies Girl

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #1 on: December 12, 2017, 10:21:29 AM »
Hi all,

Background: I have controlled my parents retirement accounts from inception. Without me, they would have kept their savings in the bank forever. I made them start a 401(k), IRA, Roth IRA. My dad gets a pension, they both get social security and they have rental income. Their house is almost paid off and they have no major bills. They do not need their retirement savings to live as they are making more passive income per month than they need. Neither of them work.

That all being said, I had played with some money of theirs 7-10 years ago and put it in various stocks. I have sold off some, but what's left is Boeing (BA - bought at $75, now at $290 and worth $14k) and Goldman Sachs (GS - bought at $138, now at $253 and worth $5k). I'm torn on whether to sell and put all the cash into Vanguard's VFORX which has been performing at 19% this year.

Basically, their retirement fund is a savings account for my sister and me. Any thoughts?

Thank you!


I would caution you to stop thinking of this as your inheritance and stop "playing around" with their money. Until such time as they die or otherwise give the accounts to you, it is not your money. Announcing that your parents' money/items are yours and therefore you're treating it like a gambling fund comes across as hubris.

This situation might mean you could go more aggressive than other portfolios for their age group since they aren't dependent on every single penny, but you definitely need to take a few steps (leaps) backwards regarding how you're thinking of and treating their investments.

Despite your parents being comfortable right now and likely not needing to count on that money being available for them, none of you truly know what the future will bring. And your speculating and dancing in and out of stocks - pure market timing - is dangerous. Not just for them, but for you as well. You're getting over-confident in choosing stocks, making terribly risky moves - in your own words "playing."

They are trusting you to be smart with their money. You should be feeling a great weight of responsibility and do careful research and invest wisely for them in the hopes that they if they ever need that money, it will be there for them. And throughout your custodianship of the accounts, you should be learning to invest wisely not just for them, but for your own future and your sibling's future.

Luck is not the same thing as knowledge. Confusing the two could be disastrous for all involved.

« Last Edit: December 12, 2017, 11:24:53 AM by Frankies Girl »

Abe

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #2 on: December 12, 2017, 10:41:57 AM »
I also want to echo Frankieís statement. My situation is similar to yours, but I donít feel that my role as manager makes me owner of the assets. It is their money, and they may eventually need it for Long-term care (which can be very expensive). If you are going to manage (not play with) it, you need to take it more seriously. I agree that investing in a vanguard mutual fund is a good idea. Since they arenít dependent on it currently, and hopefully never, a fund weighted to stocks seems appropriate. Current yields arenít really relevant, as clearly that fund wonít perform at this level for a sustained period. Whatís more important is risk tolerance. Vanguard has a good illustration where you can see how various stock/bond allocations performed and fluctuated over time.

Aimza

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #3 on: December 12, 2017, 11:17:22 AM »
Wow. I literally used the terms they use regarding the money. No need to attack me for it.

The money in stocks was $10k. Literally $10k they gave to me and said "go play and see what you could do". Over the past few years, I've more than doubled that money with various stocks and have been pulling it out over the past couple of years and putting it in managed funds. They don't give a hoot about this cash and if I talk to them about it, they tune me out because it is meaningless to them.

They have a separate emergency account in cash, and a nicely funded Roth and Traditional IRA both of which contain low to medium risk managed funds.

I simply asked advice about this particular $19k which if lost will not put a dent in their savings.

Never mind. Sorry to have bothered you.

Frankies Girl

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #4 on: December 12, 2017, 11:24:05 AM »
Wow. I literally used the terms they use regarding the money. No need to attack me for it.

The money in stocks was $10k. Literally $10k they gave to me and said "go play and see what you could do". Over the past few years, I've more than doubled that money with various stocks and have been pulling it out over the past couple of years and putting it in managed funds. They don't give a hoot about this cash and if I talk to them about it, they tune me out because it is meaningless to them.

They have a separate emergency account in cash, and a nicely funded Roth and Traditional IRA both of which contain low to medium risk managed funds.

I simply asked advice about this particular $19k which if lost will not put a dent in their savings.

Never mind. Sorry to have bothered you.

If you'd clarified that your "play money" was only $19K, and you weren't touching the bulk of their investments, then it would have made a huge difference in responses.

Saying that this money was your and your sibling's inheritance generally would lead others to think it's a large nest egg. So it wasn't anyone attacking you and sorry you feel that way as that wasn't intended to be an attack; it was us worried about your perceived flippant attitude. If you were trying to be funny, there was no indication.

On a message board, there is no way for anyone to mind read pertinent details you left out, or a comedic tone, and you didn't give us enough info to understand. Saying things like you are playing with your parents money or how you consider it your inheritance in a text-based communication - especially as you're quite new with little interactions to indicate your personality - come across quite differently without proper context or clarification.


« Last Edit: December 12, 2017, 11:32:52 AM by Frankies Girl »

Dee18

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #5 on: December 12, 2017, 03:49:27 PM »
The original post does say the current value of the investments is BA worth $14000 and GS worth $5000. 

Aimza it sounds like you are doing what your parents wanted and your judgment of what to do next is probably best. 
« Last Edit: December 12, 2017, 03:51:27 PM by Dee18 »

Abe

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #6 on: December 12, 2017, 10:20:02 PM »
To clarify - are you asking what to do with the $19k side investment or their overall retirement fund, since you mentioned both. For the $19k I donít think it makes much difference in the long run. For the overall fund, would recommend a target date fund as you discussed.

ChpBstrd

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #7 on: December 12, 2017, 10:58:37 PM »
Wow. I literally used the terms they use regarding the money. No need to attack me for it.

I've noticed the way one phrases things has enormous bearing on web forums, even though we are talking about objective financial transactions. If it was possible for nobody to notice, it would be fun to do some A/B testing and to talk about the wisdom of "gambling" their little allocation in BA and GS versus "investing" it in the same. My hypothesis would be that "gambling" would invite judgements and caution, and "investing" would bring allocation advice EVEN THOUGH IT IS THE SAME TRADE.

Anyway, despite your good luck with picking BA and GS, and despite the past performance of VFORX, I'd recommend investing in VTI. There's not much wrong with VFORX - it's just that you can get a lower expense ratio with VTI (0.04 vs. 0.16) or about $22.80 a year savings in a $19k account. Also, if we're talking about a small percentage of your parent's portfolio which has no other stocks, might as well go 100% stocks rather than a stock/bond fund. Set dividends to reinvest, then leave it alone.

2Birds1Stone

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #8 on: December 12, 2017, 11:33:46 PM »
Wow. I literally used the terms they use regarding the money. No need to attack me for it.

Never mind. Sorry to have bothered you.

Aww, that's cute.

Thick skin will get you far in life. I would just sell the individual stocks and put it into a balanced ETF based on your own risk tolerance.

If your parents are gifting you money, treat it the same as you would your own income.

What does your own Investment Policy Statement say to do in this situation? If you don't have an IPS, now would be a really good time to figure that out.

Llewellyn2006

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #9 on: December 13, 2017, 01:40:16 AM »
Wow, tough crowd. The dynamics between the OP and his parents about the money in question are between them alone and it's not up to anyone else here to make a judgement about it. Although it might have been a good idea to word the title of the thread a little differently, maybe those posters who ripped into the OP should have restricted themselves to giving the advice that was asked for.

marty998

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #10 on: December 13, 2017, 02:42:35 AM »
Wow, tough crowd. The dynamics between the OP and his parents about the money in question are between them alone and it's not up to anyone else here to make a judgement about it. Although it might have been a good idea to word the title of the thread a little differently, maybe those posters who ripped into the OP should have restricted themselves to giving the advice that was asked for.

That may be the case but OP said s/he had control of their parent's (implied entire) retirement accounts.

Naturally we are going to come down harsh if they are "playing around" with it. I agree with Frankies Girl here.

 

sieben

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #11 on: December 14, 2017, 07:46:25 PM »
Wow, tough crowd. The dynamics between the OP and his parents about the money in question are between them alone and it's not up to anyone else here to make a judgement about it. Although it might have been a good idea to word the title of the thread a little differently, maybe those posters who ripped into the OP should have restricted themselves to giving the advice that was asked for.

That may be the case but OP said s/he had control of their parent's (implied entire) retirement accounts.

Naturally we are going to come down harsh if they are "playing around" with it. I agree with Frankies Girl here.

I read this the same way you did. When I was reading through the OP's post my heart just sank. I know way to many people who have seen their retirements go up in smoke because they trusted the wrong person, it's surprising how often that person is a family member.
It certainly sounds like that isn't the case here but that was the way the post read.

Also... given the leaning towards indexing here on the site, lots of people talking about using their own money to play in the markets end up getting very similar advice. Seems like that advice would go doubly if you are using someone elseís money ;)

powskier

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Re: Playing with my inheritance (note parents are still alive!)
« Reply #12 on: December 14, 2017, 11:24:47 PM »
2 thumbs up for both of Frankie's girl 's responses.