- Blog
- Bios
- Boards
- Classifieds
- DIY
- Gallery
- Vendor Reviews
- Shop Weddingbee
Weddingbee boards
I'm not sure how to support my love - G - through this. His brother manages his investments and took G at his word when he said he was fine with high volatility/high risk in the stock market. Because of some very aggressive and complicated investments that his brother made on his behalf, G admitted to me that he's lost $20,000, about a third of his savings, in the past month or so. For context, he makes a very good income ($175K+ a year), but is thinking about a career shift later this year that would reduce his salary substantially for the next year or two, so he doesn't have a whole lot of time to rebuild his savings.
I feel like I'm writing to Suze Ormand, but I just am not sure how to make sense of this. I have my own savings, so it's not a matter of survival for us, but I'm just kind of shaking my head about how this happened. He's a really smart man, and his brother is too, but I think this might be a case of men being overly confident and bravado about risk. I know a lot of people have lost money in this economy, but when I hear that number all I can think is, "that's an entire wedding!!!". Any advice about how to carry on?
I'm so sorry! That has to be really hard for him, especially considering the future career shift. I don't have any real advice, I've never been in that kind of situation (I control most of the finances) but I am sorry that you both have to go through that.
Have you two met with a financial planner? I think that's an important part of planning a life with someone, making sure you're on the same page with money. As Laylabelle pointed out, never invest anything in the stock market that you can't afford to loose. Do you have other savings? It stinks, but it can be a good learning experience, both for how you manage your money, and whether you two are on the same page. Good luck!
Alot, alot of people have lost a TON of money in the stock market. Especially recently. However, with him losing that much, I really think he needs to hold off on the career change til he can recoup his loses. It kinda stinks to have to do that, but that's life and the price you pay for playing with high risk stocks. My dad is a wealth manager and while the gains can be great, the losses can be devastating. Just got to pick up the pieces and move on.
The hard part is trying to skirt the fine line between my being upset about it -- because hey, it's his money right now, I think he's plenty upset on his own -- but also letting his know that this freaks me out. I keep telling him to stick everything into CD's like I do, and we joke about how I'm totally opposite in terms of being conservative with my money. But hmm, you're right that this might be a little red light about potential issues in the future.
@KMSull, that's great advice, thank you.
That sounds like a tough situation to be in. I know it can be frustrating to watch someone make poor decisions with their money when perhaps you saw clearly from the beginning that it was a bad idea.
However, I think you should try to put this in perspective. He still has $40k in savings (right?) and still has a job that pays $175k per year. If he was thinking about switching jobs and did not feel comfortable with how much he had saved, he's in a lucky position that he has a good-paying job--one can hope that he should be able to stock some more away.
And he should be learning a very good lesson here, right? I mean, who doesn't know that "high risk" investments present a very high risk of losing some value? However, how many of us can really say that we truly appreciate how risky it is? Moving forward, I am sure he'll think of this experience when he (or his brother) starts talking about volatile investments.
So, maybe you can just help him see the good that has come from this and how lucky he is. I think, as far as life's lessons go, this one doesn't seem too bad. At least he's not $20k in debt with a job that pays a fraction of his, you know?
I think it can also be a plus not a minus that you have such different investment philosophies. This way your investments will be the safe backup while his investments will have the potential to provide a lot of wealth. I'm also curious, before he lost this sum recently how much did his brother make for him?
In the long run $20,000 is not that much and it's better that it happened now so he can adjust his strategy than later and with more money.
It sounds like the two of you are in a great financial position and will do just fine. It's only money. :)
Since there's nothing you can do about those $20,000 now, I would channel your frustrations/energies into making financial plans for your future. Talk with your fiance about what level of financial risk you are willing to take in your stock portfolios. Also, you said your fiance's brother "took him at his word" about how much risk he was willing to take. Maybe he was willing to take that much risk, but it's you who do not feel comfortable with it? Or did he overestimate how much risk he could actually handle? Money is one of the top issues couples fight about. It may be his money now, but soon it will be both your money and it's important you agree on how to handle things. Maybe there can be a compromise where some money is put into secure things and some into high-risk areas?
Nevertheless, the future is where you must put your attention. 20k lost stinks, but it's not like his entire savings is wiped out. 40k is still a substantial amount of money. And even if everything were gone, you would still find a way through. Good luck!
"Loss" when talking about investments can mean a lot of things. It's not like going gambling and literally dropping $20k. Are these long-term investments or something short-term that he got out of after losing that much so quickly? I recommend talking to a financial planner if you have combined assets.
If it makes you feel better, everyone has money issues. I take serious issue with the fact that my fiance has debt and does not save well at all.
I think that's sort of crazy that he lost a third of his money in a month. We lost about a third of our investments but that was back during the big dip in the market and it's slowly going up. I don't think that he should be investing with his brother, money matters really shouldn't be mixed with family I think.
If you two aren't sure what type of investments you should have, you should talk to a financial planner and determine your real risk tolerance. My husband and I are very risk tolerant because we are young and we don't really care if the market is volatile now because we don't need a lot of the money we have in the stock market for a while. But not everyone is like that. And honestly, if you need the money within 10 years, it shouldn't be in the stock market.
EDIT: I also think that you two shouldn't invest in anything that is complicated and that you don't understand. There are so many good investments out there that are easy to understand and you shouldn't be putting your money in things that are too complicated!
@fanatic888 and @chelseamorning, our assets are totally seperate so it's not a matter of any personal loss for me. I guess I do see this kind of playing with the stock market as gambling (this was on short-term options that expired, resulting in a total loss), and I am a little ticked at both G and his brother for being overly cavalier. He was making money at one point, but from his initial investment to now he's down the $20k.
Glad to see at least that everyone doesn't think this is the end of the world, I'm very protective of my money and I can see now that I'm becoming more protective of his.
20k is really not that much for someone making $175k a year. You have to ride the waves of the stock market. Was 60k the amount he had invested, or his savings? I'm guessing if he makes that much money he has more than 60k in assets. You should probably lay out your finances together and make a plan so you know what's going on with the money.
Stocks are meant to be long-term investments- not a savings account. He needs to diversify his funds in bonds, CD's, stocks, etc. If he is changing jobs, he needs his savings to be liquid, not tied up in investments. Also, never, EVER give all your money to one house, advisor, planner, spread it out!
I agree with sitting down with a planner- someone neutral- and find out what kind of risk you want to take with future nest eggs.
*Sigh, I'm getting off my soapbox. I just worry because I work for a financial firm and people don't even know the name of their brokers.
Yowch. If I were in your shoes I'd be a upset, too. I think the other bees who suggested meeting with a financial planner are on target, particularly if you're on the road to marriage or intend to combine assets. FI and I don't make nearly the amoutn fo money you mention and he's very responsible, but it was still really difficult for me to feel secure once someone else was involved in investment decisions.
That's the nature of the stock market, especially high risk. $20K is a lot of money, but as long as you guys don't necessarily need that money to survive (which it seems you don't) then there's no use fretting over it. It sucks, but it's already happened, and he can't get his money back now, so you may as well just put it behind you, move on, and invest smarter in the future. Good luck!
I'm a little concerned that he's playing with high-vol investments when his savings are so low relative to his salary. If he lost his job, how long could he live on what's left? It seems like he must have been using most of his salary to live on... which makes $40K only a couple months worth of living expenses at his current lifestyle!
For us, we did some calculations about how much money we would need in case of financial calamity - the assumption is that we would need two years worth of living expenses at a slightly more frugal lifestyle, and one of us would need to go back to school for 2-3 years. If we ever have that much in non-retirement savings (we save for retirement separately), then we can muck around with high-risk investments. Until then, no way.
Cinnamon Roll don't freak out and I ditto what Fanatic has said! You can watch the dollars in your portfolio go up and down like a roller coaster (as I'm doing at the moment as well...) but to actually create a "loss" requires a sell of the stock. If your guy has SOLD his investments for a loss, well then all I can say is that it's unfortunate and all you can do is just build it back up again. But from what you're saying it seems like what your refering to is the "worth" of his investments and therefore he has not actually "lost" anything because he has not actually sold any part of his investments. Also keep in mind that (and I'm going to give the brother the benefit of the doubt that he knows what he is doing) aggressive stock=long term gains... 15, 20, 40 years we're talking about here. Folks that delve into aggressive portfolios are young and have the years ahead of them to watch their money bounce all over the place along with the market. If he was investing in aggressive stock for short term gains then he's playing a risky game and I hope that's not the case. But if it's not and you are young, which I'm going to assume you are, and without knowing what *exactly* he's investing in, just know that the market will come back and if the brother allocated his investments correctly he should be okay within 5 to 10 years. With investing it's difficult to not become emotional because it's your/his hard earned money and it's personal, but sometimes you just have to sit and wait it out.
He didn't make a bad decision, and it's not like he gambled the money away or anything. He chose the risk level that was right for him and invested accordingly. If he doesn't touch the money, it could regain the original value plus some in the upcoming year.
Since it sounds like you have different risk levels that you are comfortable with, once you are married you can think of your money as being one big portfolio that needs to be balanced properly. You can control the portion that is invested conservatively (most advisors suggest 10-15%) and he can control the portion that is invested aggressively (we use 30% for our portfolio). You can choose a basic low-fee fund for the majority of your money (remaining 55-60%), such as an age-targeted fund. In the end you will have a well-managed, well-balanced portfolio, and you can both sleep at night.
Well, my parents lost a lot more than that and their investments weren't even very aggressive. Depending on the investment, it will go back up with time. Like if you invested in an ETF that mirrored the Dow Jones, you would have made back most of your money already.
The best thing he can do is move the rest of his money out of those aggressive stocks into something more stable with a smaller return. If he really does want to recoup that $20K, he'll have to hold off on the new job and keep saving.
I'm still too nervous to invest my savings in the stock market, I'm happy with my 1.5% return!
I think people are misunderstanding. I believe he made a short term investment "shorting" some stock or something these kinds of investments aren't really investments and have a sort of "due date". What this means is that he doesn't currently "own" any stock so he can not recoup his money with time, he basically bet that a certain stock will go up or down and lost. The money really is lost. It's still not the end of the world and these kinds of bets can make sense though 20,000 is a substantial sum to play with. I'd maybe be comfortable playing with 5,000.
@Arachna, you're right on target. The money's gone, but it is just money. I really like what you said, snmcdowell, about thinking about balancing the overall portfolio down the road. If it were up to me, he'd be "playing" with a much smaller percentage of total assets and the bulk of our money will be in less exotic investments. Thanks y'all for your wise words!
I'm really sorry. But it is the stock market and the economy keeps changing, so he may be able to make it all back soon. Just keep telling yourself that! :)
Yikes. I can't relate because hearing that he still has $40,000 in his savings is like... a goldmine to me. Good luck and I agree with others that there is nothing you can do with the lost 20K except to refocus your attention on future financial planing.
Remember that you aren't alone!
20k isn't a lot if you're making 175k+ a year - if he didn't eat out or do anything frivolous for even a couple months, and just paid his bills, he would have significant savings. It sounds like he should actually have more than that in savings, to be honest. I know it sounds like a lot (and it is) but for stocks, in this economy, it's going to happen. not worth thinking about the state of your relationship.. just maybe talk more about savings vs investing and you're golden.. Good luck!
Thats the nature of investing...and like some have said...if he makes that much money I don't think 20k is going to hurt him. Think about how that is how much like half of America takes home in an entire year...it could be ALOT worse. And as you said...its his money.
I think its unfair to assume that because he makes a decent amount of money that this 20k loss isn't such a big deal. 20K is a lot, even if he's making 175k+ a year. First of all, close to 80K of that goes to the gov't. So thats basically 1/5 of his yearly net income- GONE!
Quite often people who make 6 figures + spend more & live cheque to cheque because they KNOW they will have enough to "bounce back" every 2 weeks. People with smaller incomes actually save more because they HAVE to, whereas high income earners don't feel they need to. Seriously. I've seen it first hand...
@cinnamon roll: My advice is to just be there for him! He probably feels about thisssssssbig right now & just needs to know someone in this world thinks he's still the bee's knees. :)
I agree with you RB! I really think that it is a big loss and especially because he doesn't seem to have much savings. People who are making a large amount of money should be saving just as much as us making less! I did taxes for someone who made almost a million dollars a year yet they had no interest statements at all. I honestly don't understand it! If I had that much, yes I would want to go out and have fun, but I would also want to have savings so that we can have fun later in life too!
@MissAsB: I'm not directing this towards you... it's just a general statement that your comment reminded me of! I heart you :)
Anyway, it's soooo easy to say "when I make more, I'll save more" but it rarely happens! People get into this mentality like, "Oh I can start saving next month" but next month never comes. :) It's like losing weight haha!
Stock markets go both up and down, could it possibly come back up? I am so sorry that you are in this situation, hopefully you both can sit down and discuss your financial choices in the future!
this isn't really advice, but they say women are too conservative w/ their investments...but then women also make more on their investments in the long run, so maybe you 2 can find a risk level you are more comfortable with....I tihnk it's OK to have some higher risk in a diverse portfolio WHILE YOU ARE YOUNG but then slowly chill out...*hugs
@RB: I knew you weren't directing it at me! But 30% is a lot for a month (especially since most investments aren't doing that horribly right now).
I think money is very relative as well.. if he makes 175,000 per year losing 20 is like loosing 1000 or 1500 it sucks but it's not that huge of a dent. The stock market is volatile right now and will probably shoot up in the next few months or few years. I think perhaps he should focus on building his savings up, he should sock away about 6 months of living expenses away and after that then he can relax. and invest. but i think you'v ebeen given brilliant info already so i don't have anything to really add.
Keep in mind that investments and savings are not the same thing. If he had $60k invested in the stock market in an aggressive portfolio I'll assume he knew what he was doing and he'd allocated that money as a long term investment. (that generally means 10 year minimum, in terms of the stock market often much much longer).
That's what happens with long term investments. Sometimes they gain a lot of money and sometimes they lose a lot. You just have to stay invested and ride out the bumps (which includes not counting your chickens if you make a big gain and you don't intent to convert to cash).
He needs to stick to his game plan. If he truly has a high risk tolerance and is properly allocated this sucks but it's not a catastrophe. If not (for example, if he'd planned to withdraw that money 2 years from now to buy a house), then he should look at re-evaluating his financial strategy.
And one could say that spending $20K on a wedding that's over in one day is quite similar to losing it on the stock market in a couple of months....(I said could, not should :D)
Losing 20K is losing close to 2 1/2 months pay. Average income earners would have a heck of a time recouping that loss.
GAH... in one month?! If his broker wasn't his brother, I'd sue him!
And plus the OP did say it was his savings, which I'm assuming means he doesn't have cash savings other than this $60k.
Yeah, read the updates - OUCH on the short sell.
Definetly work on communicating about investment strategies. Sounds like a balance between the two of your approaches would actually be a great mix...but it'd be better to do it without giving you an ulcer!
Um, this is going to be an unpopular opinion so I apologize if I offend anyone,
$20K is a heck of a lot of money if your FI makes $175K. Most people making $175K are paid in significant bonuses. If this is his base salary, it is a little different, but if he is getting a significant portion in bonuses, this is taxes as gaming winnings at almost 50%... which would make that $175K around $87K, which is a huge difference. Even if his base is $175K, he will stil be in a very steep tax bracket. If he lives in California for example, deduct another 10% on top of that for state taxes.
Long story short, $20K is most likely close to 25% of his take home pay for the year ever if he is maxing out his 401K ($16.5K pre-tax dollars). It still won't drop him down a tax bracket.
If my FI lost close to 25% of his annual take home pay due to poor investments even if he "trusted" whoever, I would be pissed. Same thing goes for me, if I lost that kind of money on high risk investments, he would be pissed.
In general, you shouldn't be putting a significant portion of your investment money in high risk investments... thats just asking to be cleaned out. Especially in this economy, which is in so much flux. If his investment porfolio is $300K or so in total and he lost $20K, then I wouldn't be so upset, but if this was most if not all of his money invested, I would be seriously concerned about his ability to invest wisely for our future.
@Mrs. Louboutin: I share your sentiments EXACTLY... I commented above, so your opinion isn't that unpopular! To say its "not that big a deal" is so untrue!
You must log in to post.
| Visit our sister sites | eHarmony Online Dating |
eHarmony Advice Dating Advice |
Project Wedding Wedding Songs |
JustMommies Pregnancy Calendar |
Create the honeymoon of your dreams.
| User | Posts Today |
|---|---|
| Lyndzo | 46 |
| AshleyR83 | 24 |
| rebwana | 24 |
| mypinkshoes | 23 |
| Ms. Salamander | 23 |
| beargoose | 22 |
| his chippymunk | 21 |
| Jenlon | 20 |
| kat2014 | 19 |
| Cady | 19 |
| User | Posts Today |
|---|---|
| fivemonthsnotice | 3 |
| ama0219 | 1 |
| StrwbryBlnde | 1 |
| sienna76 | 1 |
| LammChop | 1 |
| Dizbee | 1 |
| Jamieg | 1 |
| shychigirl | 1 |
 sklm0818 |
1 |
| Dela2012 | 1 |
