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Old 09-21-2019, 05:15 AM
Status: "Questioning authority." (set 13 days ago)
 
Location: Pennsylvania
13,170 posts, read 4,493,856 times
Reputation: 10471

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Quote:
Originally Posted by Mister 7 View Post
My mother is retired and has money, she just lets her financial advisor handle everything and she's happy as a clam.
What could possibly go wrong....
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Old 09-21-2019, 06:52 AM
 
73,564 posts, read 73,382,311 times
Reputation: 51167
Quote:
Originally Posted by BeerGeek40 View Post
What could possibly go wrong....
Quote:
Originally Posted by Mister 7 View Post
My mother is retired and has money, she just lets her financial advisor handle everything and she's happy as a clam.


exactly ... whats her reference for how she is doing ? my buddy told me how his mom did great just tucking stock certificates away in drawer ... when we actually looked up how she did the returns sucked compared to a simple index like the s&p 500
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Old 09-21-2019, 08:00 AM
 
Location: Knoxville, TN
1,738 posts, read 707,887 times
Reputation: 2185
Quote:
Originally Posted by mathjak107 View Post
exactly ... whats her reference for how she is doing ? my buddy told me how his mom did great just tucking stock certificates away in drawer ... when we actually looked up how she did the returns sucked compared to a simple index like the s&p 500
Lol she’s doing just fine.
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Old 09-21-2019, 08:32 AM
 
3,935 posts, read 3,257,582 times
Reputation: 8469
Quote:
Originally Posted by Mister 7 View Post
Lol she’s doing just fine.
If you start with enough money you can do just fine lagging the indexes.
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Old 09-21-2019, 08:40 AM
 
Location: Knoxville, TN
1,738 posts, read 707,887 times
Reputation: 2185
Quote:
Originally Posted by 1insider View Post
If you start with enough money you can do just fine lagging the indexes.
I'm not privy to the exact details, but I know she lives off of dividends and interest while still making money from investments.

Her financial guy has made her a lot of money, too.

She's smart enough to literally leave a very minimal amount in her checking account to have every penny possible invested...
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Old 09-21-2019, 09:10 AM
Status: "Whatever it takes - ‘cause I love the adrenaline in my veins" (set 20 days ago)
 
Location: San Francisco
2,654 posts, read 639,622 times
Reputation: 1520
Quote:
Originally Posted by ohio_peasant View Post
This comes up frequently on the Investment forum. The synopsis is, that reasonable people can train themselves to be patient and to refrain from rash or emotionally-driven decisions, such as selling into a bear-market. But even so, this feels awful.

The more money that one has, the larger the ratio of one's portfolio to one's income, and therefore, there's progressively less that we can do, to save more and to recoup market-losses by more assiduous savings. So, the wealthier that we become, the more dependent we are on the market, as opposed to our own wherewithal as salaried employees. This is nerve-wracking.

Also, with longer life-expectancies, even say a 60-year-old might need to plan for 30+ years in retirement (or longer). This means that we never quite reach an age where we can coast, rotating into low-risk/low-volatility investments.

None of this insinuates that success in investment is impossible, or a fool's game or attainable only to a select few. But it does mean that accumulation of money is NOT liberating at all! On the contrary, it elevates our angst.
It’s actually the exact opposite - the wealthier we become, the less dependent we are on the market; or at the least, it depends on how low/medium/high risk one’s portfolio is as well. That said, most people opt for a low to mid range with higher risk the further away from retirement they are (provided they have a solid income stream). As that gap begins to close, typically one’s portfolio transitions.

I simply don’t agree the accumulation of money elevates our angst; in fact, people who inadequately save/invest for retirement are those who will suffer. A good rule of thumb - if you can’t afford to lose it, you shouldn’t be throwing money into high-risk investments. Your perspective in re: to investing almost sounds like a gambler i.e. refraining from rash decisions, feeling awful, high angst, the inability to sit back and coast and ‘nerve-wrecking’.
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Old 09-22-2019, 10:22 AM
 
8,297 posts, read 5,233,047 times
Reputation: 14115
Quote:
Originally Posted by CorporateCowboy View Post
It’s actually the exact opposite - the wealthier we become, the less dependent we are on the market; or at the least, it depends on how low/medium/high risk one’s portfolio is as well. ...
Let's try a thought experiment. The Fairy Godmother wires $1B into your account at Fidelity. That's one billion dollars, just to be blunt. What are you going to do?

1. Should you invest that money into stocks (individual stocks, indices, managed funds,...) all at once? Or dollar-cost-average?

2. What are you going to do about taxes, such as on dividend distributions?

3. How are you going to feel if a month after this cash-infusion happens, your account will have declined by a mere 5%?

4. How are you going to feel if 5 years later, because of market conditions, your account hasn't budged from the initial $1B?

5. Even 0.1% of a billion is $1M. Your account might have daily fluctuations of well over $1M. How much do you earn every day at your regular-job? Every year? How would you feel about multiple years of gross salary, accumulating or evaporating in your account daily?

6. OK, so you eschew the stock market at put everything into long-term CDs, earning 1.5%/year. Years later, you survey your account, finding that (a) you paid enormous (relative to your salary) taxes, and (b) your portfolio has been lagging inflation. Despite all of that good stewardship and risk-avoidance, not to mention zero withdrawals, you have less money now, than you had at day-0. How would that feel?

To me it seems that such an "investor" would be utterly in thrall to market-conditions. He/she could do NOTHING about saving more, or earning more, to affect the outcome of his/her portfolio.
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Old 09-22-2019, 10:30 AM
 
Location: Haiku
5,029 posts, read 2,827,309 times
Reputation: 7321
I spend maybe 10-15 hours per year on my portfolio. Twenty years ago before I went to passive investing I would spend more like 10+ hours per month on investing decisions. My wealth has gone up considerably in that period. So I am not sure it so much is a question of degree of wealth that prompts more work in investments, it is the degree of complexity.
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Old 09-22-2019, 11:47 AM
 
73,564 posts, read 73,382,311 times
Reputation: 51167
Quote:
Originally Posted by TwoByFour View Post
I spend maybe 10-15 hours per year on my portfolio. Twenty years ago before I went to passive investing I would spend more like 10+ hours per month on investing decisions. My wealth has gone up considerably in that period. So I am not sure it so much is a question of degree of wealth that prompts more work in investments, it is the degree of complexity.
i am not a passive investor for the most part . never have been and it is now more than 30 years ... i devote about 20 seconds a week to my portfolio's .

i run 10% index fund . everything else is fidelity actively manged funds
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Old Today, 05:52 PM
 
Location: Omaha, Nebraska
7,562 posts, read 4,346,086 times
Reputation: 19110
Quote:
Originally Posted by ohio_peasant View Post
Let's try a thought experiment. The Fairy Godmother wires $1B into your account at Fidelity. That's one billion dollars, just to be blunt. What are you going to do?

1. Should you invest that money into stocks (individual stocks, indices, managed funds,...) all at once? Or dollar-cost-average?
Lump-sum it into my current investment portfolio.

Quote:
2. What are you going to do about taxes, such as on dividend distributions?
Pay them, just as I do now. it's not like I won't have enough money to do so.

Quote:
3. How are you going to feel if a month after this cash-infusion happens, your account will have declined by a mere 5%?

4. How are you going to feel if 5 years later, because of market conditions, your account hasn't budged from the initial $1B?
Since my account could decline by 95% and I'd still have more than enough money left to last me the rest of my life, I'd feel fine.

Quote:
5. Even 0.1% of a billion is $1M. Your account might have daily fluctuations of well over $1M. How much do you earn every day at your regular-job? Every year? How would you feel about multiple years of gross salary, accumulating or evaporating in your account daily?
I'd feel fine, since those fluctuations would have no real impact on my everyday life.

Quote:
6. OK, so you eschew the stock market at put everything into long-term CDs, earning 1.5%/year. Years later, you survey your account, finding that (a) you paid enormous (relative to your salary) taxes, and (b) your portfolio has been lagging inflation. Despite all of that good stewardship and risk-avoidance, not to mention zero withdrawals, you have less money now, than you had at day-0. How would that feel?
Again, this strategy would still leave me with more money than I could spend in my lifetime, so why would I be upset?

Quote:
To me it seems that such an "investor" would be utterly in thrall to market-conditions. He/she could do NOTHING about saving more, or earning more, to affect the outcome of his/her portfolio.
Your hypothetical investor doesn't need to save more, or earn more. He needs an attitude adjustment, and to understand the meaning of "more than enough."

Compare that to the person whose account balance is so low that a 50% decline could mean the difference between retiring or having to work indefinitely. Compared to this person, your hypothetical $1B investor is on Easy Street. Only a complete societal collapse is going to wipe the billionaire out.
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