Financial savvy apparently doesn't run in the genes

[creekland]

Financial savvy apparently doesn't run in the genes... my oldest (college sophomore) posted on his Facebook acct that he is 42nd out of 5016 competitors in Yahoo's Fantasy Stock Market contest having made a 76% rate of return on $50,000 in just 4 weeks.

 

Darn, I'm envious. When we invested (years ago) we should have asked him what to invest in. As it is, we (parents) lost over 6 figures of our savings - therefore drawing my conclusion that genetics aren't involved (at least in our case).

 

Now I'm wondering if he ought to change from Accounting/Business, etc, to investment banking... though I suppose they're all related.

[FaithManor]

Oh my word! Amazing! Was it a gene mutation? Is there any chance his future children may someday inherit the "Donald Trump" mutation of investment bliss?

 

Commisserating with you. We lost $50,000.00 in the 529 and six figures in dh's retirement. I truly wish we had just buried the money in the back yard. We would have been much farther ahead. As it is, we don't have any savings for the boys' educations. Guess who will be getting her music/science teaching job back before the next one graduates so we have money to pay towards college???? :glare:

 

If I send your boy 10 bucks, what do you think he can turn that into? :D

 

Faith

[creekland]

I truly wish we had just buried the money in the back yard. We would have been much farther ahead.

 

If I send your boy 10 bucks, what do you think he can turn that into? :D

 

Faith

 

I'm with you. I often wish we'd taken a month to explore parts of Africa and another to go across China as we'd be farther ahead financially now - and with the memories from the trips. Stuffing it in a mattress would have done better too.

 

Kiddo might have been 5 years old but we should have held options in front of him and let him point to some. It would have been difficult to have done worse than we did.

 

I'm debating telling my relatives as some of them still have investments he might be able to do better with.

 

I'm also seriously debating cashing out of ours - even at such a drastic loss - to see if he can make up the difference for us with what little is left. It's hard to decide. Technically, we haven't lost until we cash out, but... It's going to require some thinking. Kiddo hasn't been talking with us much lately (in love, plus loving his wings). That would need to change too.

[Lolly]

I'm just curious.. Did you have to take it out? When the stock market collapsed, we lost a good 30-40 percent of the value in our kids' 529 and retirement accounts. We just left it in there. In fact, my husband bought Ford stock at when it was REALLY REALLY low then. It had gained it all back and much much more. We moved all of oldests' 529 money to a guaranteed investment this year in case it happens again. That is what we heard about the Great Depression and what proved true for us, that if you can just sit there and leave it alone, it comes back. But boy, it was really hard.

 

We have waited it out. We still have lost a small fortune. When it is totally gone, it is totally gone.:tongue_smilie: I don't think anything has come back up to the level it was. Still holding...

[FaithManor]

I'm just curious.. Did you have to take it out? When the stock market collapsed, we lost a good 30-40 percent of the value in our kids' 529 and retirement accounts. We just left it in there. In fact, my husband bought Ford stock at when it was REALLY REALLY low then. It had gained it all back and much much more. We moved all of oldests' 529 money to a guaranteed investment this year in case it happens again. That is what we heard about the Great Depression and what proved true for us, that if you can just sit there and leave it alone, it comes back. But boy, it was really hard.

 

 

We had to cash out because dd was entering college. Loss of investments does not lower your EFC and we made just enough to prevent dd from getting need based aid and not enough to just write a check for what she didn't get in scholarships. We had no choice as ds, the one with the heart condition, had $6800.00 in medical bills not paid by the insurance and let me tell ya, hospitals want their money. When you have a year in which hospitals want their money and the college wants it's money and your dd is considering not entering college because of costs, well, it's ugly. We cashed it out, lost most of the investment, paid for two years of what she didn't have covered by scholarships, and she changed plans from going to her first choice school (which would have meant dorm costs and student loans) to her second choice school to which she could commute though a definite bit of distance from here...she has managed the scheduling and drive times quite well.

 

The retirement sits for now. However, at times dh has considered getting out of it what he can and doing something else with it since a good portion of it (the employee matching part) is in company stock and frankly, given the idiot whoo-ha and whoo-ha pals running the place making STUPID decisions extraordinaire, we do not foresee a recovery of any significance in the next decade. Nothing is earning right now. We've seriously wondered about real estate. With so many foreclosures around here, nice houses can be bought for "songs and beads". There are many good families seeking rentals and we've thought about cashing out what's left and getting into the landlord business...but that is another can of worms too...it's not easy to sort out!

 

Market volatility doesn't hurt too much when your kids are little and you've got a lot of time to make up for losses. However the 2009 crash destroyed a lot of 529 plans for graduating seniors that year. That's why we no longer recommend 529's. We've seen a very significant downside and so have many of our friends who graduated kids during the crash and had no choice but to absorb the hit.

 

I buy my nieces and nephews US savings bonds. Not a big return, but the money isn't thrown down the toilet either.

 

Faith

[cjgrubbs]

However the 2009 crash destroyed a lot of 529 plans for graduating seniors that year. That's why we no longer recommend 529's.

I buy my nieces and nephews US savings bonds. Not a big return, but the money isn't thrown down the toilet either.

 

Faith

 

A 529 plan, just like an IRA or 401k, is simply an umbrella which protects your investments from taxes. While 529 plans have some restrictions (and different companies offere different investment options), you can hold cash in the form of money market accounts in them. As your children start progressing towards college you should start moving money from investments into cash and/or bond positions to prevent needing the money when the market is low.

 

In the case of retirement, I always recommended to my clients (when I was a practicing CFP®) that they keep 5 years worth of cash flow in cash or money market accounts. Each year we would sit down and determine from which investments to sell out (the ones with the best return) to move to cash. At this time we would also rebalance to maintain an appropriate percentage of stocks/mutual funds/bonds based on their individual situation.

 

But way to go to your son! Laser focus and reading up on companies and staying on top of all the news about the companies you are investing in is crucial to successfully investing in stocks for a large and quick return. It sounds like it might be something that he is currently enjoying. I would hesitate to hand over a large sum of money in less you felt confident that this interest will continue! However, there is no reason why he couldn't help you manage the money you have without "cashing it out". Most brokerage firms have account types that can maintain IRA status and still invest in stocks, bonds, mutual funds and cash. Now if this is 401k money you are talking about, there are restrictions on the types of investments based on each plan.

[Teachin'Mine]

Totally awesome!

 

I'd consider giving him an advance on whatever you'd be giving him next year and let him see what he can do. Don't give more than you can afford to lose, and ask him to return the principal asap and then he can keep investing the profits to keep it growing.

[Jean in Newcastle]

We have waited it out. We still have lost a small fortune. When it is totally gone, it is totally gone.:tongue_smilie: I don't think anything has come back up to the level it was. Still holding...

 

We lost big too. In our case, we ended up cutting our losses and reinvesting what we had left in some better things and ended up regaining a little bit that way. Some of the stuff we had invested in is no more, so there was no holding on for those. . .

[ktgrok]

That is awesome, but before you have him managing your relatives money you need to remember that making money in the short term is not that hard. What is to say he won't lose it all next month? The key is long term growth, and stability. I'd reserve judgement for now.

[creekland]

I'm just curious.. Did you have to take it out? When the stock market collapsed, we lost a good 30-40 percent of the value in our kids' 529 and retirement accounts. We just left it in there. In fact, my husband bought Ford stock at when it was REALLY REALLY low then. It had gained it all back and much much more. We moved all of oldests' 529 money to a guaranteed investment this year in case it happens again. That is what we heard about the Great Depression and what proved true for us, that if you can just sit there and leave it alone, it comes back. But boy, it was really hard.

 

When our income dropped to about 1/3rd of what we had been making, we did have to take out what was easily cashable (once our savings was depleted). There was no reviving some of it anyway. We kept our real estate investments. The alternative to cashing out was losing our house & more.

 

 

But way to go to your son! Laser focus and reading up on companies and staying on top of all the news about the companies you are investing in is crucial to successfully investing in stocks for a large and quick return. It sounds like it might be something that he is currently enjoying. I would hesitate to hand over a large sum of money in less you felt confident that this interest will continue! However, there is no reason why he couldn't help you manage the money you have without "cashing it out". Most brokerage firms have account types that can maintain IRA status and still invest in stocks, bonds, mutual funds and cash. Now if this is 401k money you are talking about, there are restrictions on the types of investments based on each plan.

 

Since what we kept was our real estate, we need to decide whether to sell one or more at a drastic loss (still getting back some of our principle, but not nearly what we put into it) or keep it. I do believe this son is going to continue with the market. He thoroughly enjoys it.

 

Totally awesome!

 

I'd consider giving him an advance on whatever you'd be giving him next year and let him see what he can do. Don't give more than you can afford to lose' date=' and ask him to return the principal asap and then he can keep investing the profits to keep it growing.[/quote']

 

If we cash out one of the real estate investments (and that's a big IF as the houses are rented right now), I like the idea of starting him with seed money and letting him keep anything earned (or maybe 50% of what is earned) for a few years. Thanks for the suggestion!

 

That is awesome, but before you have him managing your relatives money you need to remember that making money in the short term is not that hard. What is to say he won't lose it all next month? The key is long term growth, and stability. I'd reserve judgement for now.

 

I definitely wouldn't have anyone let him "play" with needed money, but some have "extra" and might be willing to actually fund his chance at doing some investing for real. He's been VERY independent since going to college - not really staying in touch much. That's my bigger concern. He would need to stay in touch more with these relatives.