buying single stocks

[rocksinmyhead]

I didn't want to put this in the Antimustachian Wall of Shame and Comedy because I love my parents and I don't think this is "antimustachian" in the "exploding volcano of wastefulness" sense... but it is pretty funny.

I was Skyping with my parents the other day and we were talking about my employer's share price. I said something about how I hoped it stayed where it was until the end of my ESPP period in June because it had almost doubled from what it was at the start of the period. my mom goes, "oh, [your little sister] should buy some of those! she has $400 at the credit union!" I said, "MOM. NO. if she wants to move it she should put it in a high-interest savings account, and then when she has enough I can help her invest it in something, but like, index funds. NEVER buy single stocks!!"

mom: "but she has like $400! she could buy a bunch of your stocks with that!"

*facepalm*

:) I really do love my mom but that was too funny. I think I need to talk to my sister (who's in college) about finances before my parents get to her, LOL.

[The_Crustache]

Dumb question:
Why is this a bad idea?

[frugalnacho]

Dumb question:
Why is this a bad idea?

Diversification and risk.  It makes sense for the op because she is getting a substantial discount on the stock through the ESPP.  If you don't get that discount then you are much better off investing in an index fund.

[Eric]

Dumb question:
Why is this a bad idea?

http://en.wikipedia.org/wiki/Enron

[rocksinmyhead]

Dumb question:
Why is this a bad idea?

Diversification and risk.  It makes sense for the op because she is getting a substantial discount on the stock through the ESPP.  If you don't get that discount then you are much better off investing in an index fund.

Yup.

also this particular statement was funny to me because my mom thought that by "don't buy single stocks" I meant "don't buy one single share of a single stock, but buying multiple shares is okay"

[jmusic]

Dumb question:
Why is this a bad idea?

Diversification and risk.  It makes sense for the op because she is getting a substantial discount on the stock through the ESPP.  If you don't get that discount then you are much better off investing in an index fund.

Yup.

also this particular statement was funny to me because my mom thought that by "don't buy single stocks" I meant "don't buy one single share of a single stock, but buying multiple shares is okay"

While I agree that it's pretty funny, it is actually good advice because the transaction costs would probably be really high relative to the amount invested. 

One exception:  BRK.A.  :)