Post # 17
- Wedding: May 2010 - Philippe Park
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!
Post # 18
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.
Post # 19
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.
Post # 20
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.
Post # 21
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!
Post # 22
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.
Post # 23
@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!
Post # 24
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! 🙂
Post # 25
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!
Post # 26
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!
Post # 27
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.
Post # 28
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. 🙂
Post # 29
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!
Post # 30
@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!
Post # 31
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!