Do others have experiences and how have you solved the dilemma? It’s probably a fairly typical case that the inner circle of a quite successful investor asks for tips or portfolio management help. On the other hand, it pains me if, for example, relatives or close friends keep their money in some high-fee scam funds or a zero-interest bank account.
On the other hand, investing is largely psychology in my opinion, and for example, my own behavior and risk-taking ability change completely if I had to invest someone else’s money. Once I invested some amount on behalf of my mother, as the money had indeed been sitting in a bank account, but even this felt a bit like it should be the last time. I can tolerate losing my own money, but not that of my loved ones.
Sometimes I’ve thought that if I keep an investment diary, I could open it up for others to use with the preface: ‘read my reasoning and follow along if you wish, but the decisions and your money are always your own.’ I have sometimes tried to talk about investing to those who ask, but my long ramblings don’t interest people who aren’t interested in investing themselves, but rather want easy money. So usually I just state laconically: invest in an index.
The investment strategy is the most problematic aspect here. A spouse is generally in the same age group, so you can start building a portfolio with the same investment horizon. If you’re 30 and your parents are 50+, then you really have to start scratching your head. In my case, it would inevitably take me far from my own strategy. Not to mention if someone potentially wants to use their investments for consumption.
Not very easy. There should be enough interest in investing for them to understand something. I’ve found the same thing.
I invariably recommend index funds to my close friends and family. It’s distressing when a couple of friends who follow me on Shareville parrot my trades without even researching the companies, let alone considering that their goals and risk tolerance are completely different from mine. I’ve even considered closing my entire Shareville portfolio because of this.
Sometimes I asked a friend for advice on investing, and he linked some website… It might have been this one, it certainly looks familiar.
If you’re not interested in investing, then indeed, go for indices, or take a risk with small sums in cryptocurrencies. In this, as in many other things, it’s hard to succeed in something you’re not interested in.
Here, investing other people’s money carries a bit of a risk: if things go south or turn out badly, it will never be forgotten.
I’ve also recommended investing in index funds, but it seems everyone sings the same tune: “Too small returns,” and they immediately expect to hit the jackpot and go “from rags to riches” overnight. But if predicting stock prices is difficult even for analysts, then…
My spouse is a perfect example of “everything now and immediately” investing. They started investing in a Finnish index fund shortly after I did. When the money put into the fund went down and the return was negative, they wanted to sell everything because they weren’t getting any returns from it. I forbade them to sell yet and told them that if the money disappeared from the fund, it was likely that all of Finland would be bankrupt. Then they stopped investing in that fund and eventually sold the shares, declaring the whole thing stupid. And they recommended that I sell my own shares when they were in the red at the time. Currently, my spouse’s only stock investment is this apartment, and I have the same apartment + money in the stock market, where I’ve managed to double my capital. Of course, tomorrow all the returns gained today could be lost, even the principal.
Four years of persistent work have finally paid off, and my results have convinced my wife, for whom we are opening an AOT (Osakesäästötili/Equity Savings Account) today. Now, I have a beginner’s question: how do you manage the stock portfolios, buy and sell orders, of your close relatives? I understand there are several people here who do this. Do you use your spouses’ bank IDs, or can management also be done with a power of attorney? Thank you for your help.
At least with OP, managing the securities accounts of a spouse and children is possible if these individuals grant a power of attorney for asset management, i.e., securities trading. The securities accounts and their associated own accounts are visible to me. Participation in an IPO requires a separate order from the interested parties. Easy, at least with a normal securities account!
No way, and I don’t understand why anyone would. If showing an index curve and the returns it can generate, along with monthly deposits into a couple of funds, isn’t enough for a relative, then they should learn about stocks and decide where they want to invest. I wouldn’t start buying stocks with someone else’s money because they can also get returns from passive investing.
For my children, I put their gift deposits/“ten euros a month” into index funds.
Bank IDs should never be given to another person, as it practically means giving up your passport and signature, with the difference that the other person doesn’t know if it’s Matti or Maija on the other end.
Powers of attorney and electronically registerable authorizations should be sufficient for handling all necessary matters. For example, banks’ investment and share savings accounts can certainly be managed with an authorization. In these cases, depending on the bank, it is also possible to set limitations with the authorization, so that not everything is possible. For example, it might be possible for another person to only use funds in an account linked to the AOT (asset management agreement), in which case transferring money for investment is still under the person’s own decision-making.
An older relative asked me to invest their extra money since it’s not earning anything in a savings account. At first, I had the usual discussion about risk and emphasized that the money could be lost, and that I’m not a professional. However, they are quite understanding and just said that’s part of the game.
So, emphasizing risks and creating some kind of plan. Sometimes they call and ask what we should do when a company comes up in the news. The answer has always been the same, “nothing” with a possible small comment. The shares are practically on an eternal hold, as an inheritance after them, but if for some reason they want to stop, I’ve told them that’s completely their decision.
Faith, Hope, and Love should be left out of investing.
This is already an excellent return compared to money eaten by inflation and left idle. Investing in any instrument with a “positive-signed” expected return is a plus. In index funds (e.g., S&P500), Macy’s or others don’t bother much… The mud flows to the bottom over time, and new and glorious things emerge as the years pass. A place in the index must be earned. Company risk is small when diversification is large.
Oh boy, if only every Finn understood these things. The next generations wouldn’t have to be at the social services desk.
By no stretch of the imagination can I be called a successful or experienced investor, yet some close relatives have asked for help in getting started with investing. I made it very clear that I cannot recommend any specific investment targets, but instead, I warmly recommend getting started with investing in general. At least a couple of long-time lottery players then became index investors after we looked at some charts, seeing how much money goes into the lottery and what that could mean in an index fund. Playing the lottery also stopped at the same time, sorry Veikkaus.
In addition to this, I have a power of attorney for my children’s and spouse’s AOT (equity savings account) accounts through Nordnet; money now automatically goes into an index fund for them every month. So, I don’t actively do much, other than occasionally show them charts of their account development. My daughter, at least, is excited when “money comes to money”
No one can know what will happen in the future. Some may delude themselves into imagining they know what will happen. There is a consensus view in the markets about what is to come, and one can read about this view from economic experts. When you buy stocks, you are more optimistic than the consensus. When you sell, you are more pessimistic than the consensus. In March 2020, the consensus was that this would be a multi-year recession worse than the financial crisis. It was unknown if central bank actions would help at all. The consensus was wrong, and those who bought stocks were right. In January 2020, corona was a Wuhan problem, and the consensus said there would only be minor disruptions to supply chains. The consensus was wrong, and those who sold stocks were right. Whatever you do, you have some belief about the future. Consistent people have consistent views and allocations.
I’ve been investing my 18-year-old brother’s money. He’s a hard worker (last 2 months: 320h + 320h), but he doesn’t have the time or interest in stock investing. Currently, €20,000 has been invested, and the balance is €28,000, meaning a return of €8,000 in a year. Of course, I’ve told him that he must be prepared to lose all the money if he gets into this game. The portfolio has evolved to be almost identical to my own, excluding the riskiest investments.
Years ago, I realized that giving free investment advice to friends/relatives is the stupidest thing in the world. If your hot tip brings them, say, a 30% return, they’ll assume that’s how it was supposed to go, since the great guru advised it. Not a word of thanks. If, on the other hand, a loss occurs, you’ll get blamed, and in the worst case, your relationship with the advisee will be permanently damaged. Once, someone even demanded compensation for their losses, even though I had explained that it was a high-risk investment.
So, don’t give advice; instead, direct the person to a professional. The advice might be worse, but at least the professional gets paid for taking the heat.
You can always make an agreement for this kind of consultation. I made quite a bit of money with those in the 90s.
Everyone should do with their money what they want. It’s not worth stressing about other people’s money, let alone if the outcome isn’t pleasing. It’s not worth ruining friendships or family relationships over money.
Out of curiosity, I’m asking those of you who manage the stock portfolios of your close ones: Do the portfolios share the same investment plan? Are company selections made based on very different criteria, or does it feel like your own stock portfolio and that of your close one reflect each other quite a bit, with similar criteria used for company selections?
My spouse has finally started investing again, and at least for now, I execute the orders at his request. And I tell him about the different options. The first purchase was the same as what’s in my own portfolio, and I can imagine that he initially feels safer buying the ones I also own.
I’ve acted as a portfolio manager for my parents a bit, but luckily with a rather modest sum. The stocks in my parents’ portfolio are also in mine, but the time horizon is completely different, as is their risk tolerance, so their portfolio only contains the safest and most boring stocks from my own portfolio.
My wife, who asked me to start investing her money once she graduates and starts earning more, has begun to come to her senses after I showed her the portfolio during these normal days since the January rally. I believe we’ll end up with index monthly savings for her part
