Men, women, relationships and money

[h2xblive]

That's good to keep in mind

 

[2B]

I have been trying to get DW interested in budgeting, investing and retirement planning. She comes from a family where "Daddy" did all of that so by default that's my job. Now that she's having to dig through all of the crap and mismanagement he left for her she's starting to get more interested in our situation.

Of course, if she starts getting involved, it will cut down on the number of fly rods that just seem to show up now and then.

Overall, it would be a good thing for her to be part of the show.

 

[youbet]

Is it really common investing advice that one never puts more than 5% of their retirement money into their company's stock?

Yes.  Actually that common advise is a subset of "don't put more than 5% of your investment assets into any company's stock.  Of course, many examples can be quoted where an individual did well with a concentration of investment dollars into a single stock, but it's a risky situation generally advised against.

 

[2B]

Yes.  Actually that common advise is a subset of "don't put more than 5% of your investment assets into any company's stock.  Of course, many examples can be quoted where an individual did well with a concentration of investment dollars into a single stock, but it's a risky situation generally advised against.

I've heard all sorts of "rules of thumb" that go anywhere from never own any individual stock (all mutual funds) to never more than 10% of your own company's stock in your 401k (if they make you put their contribution in their stock). Owning very much of any individual stock always increases risk by reducing diversification.

For every Enron in 1990 - 2000, there is an Enron post 2001. The same can be said for many other stocks like Lucent, GM, Cisco, IBM...... I'm sure there were periods where "everyone" said you couldn't lose with these stocks.

Truth be told I made great money when Getty forced me to put their 401k contribution into their stock. It languished for several years (paying an 8% dividend) but eventually spiked 125% when it was taken over. If I'd have put a million dollars into that stock, I'd be a rich man today.

 

[Outtahere]

My stepdad learned the hard way, 90% of his retirement was in Lucent stock. He's one of those hold overs from year ago that preach loyalty to the company. All us kids tried to get him to diversify, he wouldn't ... he lost almost everything. He was the classic example of losing the nest egg and having to work at MacDonalds to pay the bills until SSI kicked in.

 

[youbet]

Owning very much of any individual stock always increases risk by reducing diversification.

There ya go!  I have no problem with any generalized rule of thumb that enforces this concept.

Truth be told I made great money when Getty forced me to put their 401k contribution into their stock.  It languished for several years (paying an 8% dividend) but eventually spiked 125% when it was taken over.  If I'd have put a million dollars into that stock, I'd be a rich man today. 

Woulda-shoulda-coulda!  I love anecdotal examples of concentrated investments yielding huge successes for the owners!  Titillating to hear about and ignites that "river boat gambler" instinct part of my persona.

Alas, as a family guy with more than my share of responsibilities, I'm relegated to the boring old diversified approach!  Darn!    

 

[astromeria]

Yes. Actually that common advise is a subset of "don't put more than 5% of your investment assets into any company's stock. Of course, many examples can be quoted where an individual did well with a concentration of investment dollars into a single stock, but it's a risky situation generally advised against.

Ah, youbet, we agree on many things

 

[Billy]

Texas Proud

My sister and BIL does that... they each get their allowance... do anything you want with it, but all other decisions must be made by both... obviously you are still new to it all..

Seems each couple has to figure out what works best for them.

My Sister and BIL each take an equal percentage of their income and put it into a joint account. All joint expenses come from this account. What's left over is their own personal money. No questions asked. The husband buys 'boy' things like tools, car parts that jazz up their racer, or whatever things guys buy ( ), my sister buys 'girl' things, like pedicures, days at the spa, or gifts for family, etc.

It works for them.

OTOH, when Billy and I first met (29 years ago  )we had little money. We got back from 6 months in Europe, after researching restaurants, food, wine, etc., and Billy worked in a French restaurant (before we opened our own in the Monterey Bay area). Billy had $4 to his name at the time, and I had the upper hand: I had $100 and a job prospect.

So we both started with nothing, and put it jointly into the pot. We work things on the 49/51 veto power, with each trading positions depending on who's better in that particular area of decision making.

P.S. I'd love to have an allowance!  8) Heck, I'd even call him "Daddy" if that'd work!   

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[mickeyd]

And I'll have to disagree, it's better to do nothing than lose your money.  Look at those poors chaps who used to work for PG&E and Enron.  Where did all their retirement money go?

I really have to disagree with this comment. There have always been Enrons, Tycos, Worldcoms etc. and there will always be financial misdealings that are done. But that is no reason to assume that because less than 1% are bums and misuse the trust that has been placed in them (Ken Lay, Bernie Ebers, Jeff Skilling) that the other 99% are also plotting to do the same thing. Taking the approach to do nothing, robs yourself of the benefits of the "eighth wonder of the world" as Albert Einstein put it~the time value of money.

The longer that an investor procrastinates and delays making a decision to invest for the long-term, the lower will be his/her total return at the end of the time-horizon.

 

[2B]

There ya go!  I have no problem with any generalized rule of thumb that enforces this concept.

Woulda-shoulda-coulda!  I love anecdotal examples of concentrated investments yielding huge successes for the owners!  Titillating to hear about and ignites that "river boat gambler" instinct part of my persona.

Alas, as a family guy with more than my share of responsibilities, I'm relegated to the boring old diversified approach!  Darn!    

youbet --

I'm not quite sure where you're coming from. I believe in diversification. Once when forced by a company 401k, the gods smiled on me. I also owned Enron and got wiped out. Fortunately, I only had about 1% of my portfolio in Enron. I could cover up this forum with "great" stock buys and total "duds" I have bought over the years. The Enron fiasco was the last straw. I've moved almost entirely into mutual funds -- primarily low fee, index funds. My last individual stock is Bank of America which I received when a small regional bank was acquired years ago. I have a massive LT capital gain and I'm waiting for the right time to take the tax hit. It is also less than 1% of my total portfolio.

I recommend that we mortals avoid common stocks unless we are "professionals" and willing to spend the time analyzing them. That sounds to much like a full time job to me. Following some nut case on TV or the radio isn't analysis. It's gambling.

 

[youbet]

youbet --

I'm not quite sure where you're coming from. 

I'm agreeing with you 100%! Sorry if I wasn't clear.

 

[mathjak107]

well in my old marriage none of my hobbies ever cost more than 50 dollars and nothing was ever bought new...well at least as far as my wife anyway ha ha ha...in my new marriage we are so much a like and into the same things..its scarey as every thing i buy we have to get 2 of..bought a new hunting jacket so my wife had to get one..got a new road bike ,wife had to get one...not sure which is worse ha ha ha

 

[mathjak107]

the funniest was at the archery range the place had a plan in place for helping the guys get their new bows in the house passed their wives...if you bought a bow and told them when to call they would call when the wife was home but you werent and leave a message with your wife to tell you that you won the door prize in the drawing,to call and make arraingements to pick up your new bow