investing 20% in one stock

[palomalou]

How do people feel about the safety of investing 20% of one's net worth in one major Italian corporation, such as Ferrari, Nutella, Enel? The purpose would be to obtain a visa by investment. Heretofore we have only index funds except for a few small individual stocks which we inherited.

 

[OldShooter]

William Bernstein: “Do you think that by choosing a portfolio of only a few stocks that you hope will score big, you are maximizing your chances of becoming wealthy? Indeed you are, but you are also maximizing the chances of a retirement of cat food cuisine.”

William Bernstein: “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

Can you make your visa investment via an Italian mutual fund or at least in a diversified portfolio of qualifying stocks?

 

[CRLLS]

The question I would ask you is, is 20% of your investments considered fluff money? How would you react if the company filed bankruptcy and you last that 20%? Would you still be able to live your retirement the same? Would you continually kick yourself afterwards for making a bad choice? In addition to the company you are investing in, you are investing in the country, i.e. the exchange rate fluctuations.

Not my cup o' tea, but I am not you.

 

[palomalou]

sadly, no, OldShooter, the regulations are only one company. Believe me, i'd do it in a heartbeat if it could be mutual funds.

 

[pb4uski]

Over the years we have had numero thread where posters are concentrated in employer stock and generally the advice is to have no more than 5% in a single stock to avoid concentration risk. I think the same principles would apply to the OP.

In your case if you really want to do it AND your retirement is so overfunded that if this 20% went poof you would not be ruined financially then that would probably be ok.

 

[Koolau]

Perhaps, if you can think of this financial move as your "ticket" to a visa AND you could stand a total loss of 20% of your stash, you could justify such a move.

In some ways, it's not much different than when we "traded" a $150K house in the heartland for a $450K condo in the Islands (lots of details omitted.) IOW a much more significant chunk of our money was now tied up in our living space. Should a housing downturn occur, we would take a much larger loss. We decided that the move was worth the chance of loss and it would not sink our retirement. YMMV

 

[The Cosmic Avenger]

If you think you can live off of the 80% pretty easily in Italy, I would consider it an acceptable risk. What are the restrictions on it? How long would you have to keep it tied up?

 

[palomalou]

Cosmic, it has to remain for five years. I am not sure that we would have to leave the country if we withdrew it at this point, but there is a tax advantage in that investing in Italy reduces the amount on which wealth taxes are subject.

 

[Koolau]

Cosmic, it has to remain for five years. I am not sure that we would have to leave the country if we withdrew it at this point, but there is a tax advantage in that investing in Italy reduces the amount on which wealth taxes are subject.

Yeah, you lost me at "wealth tax."

 

[calmloki]

You should do it in a heartbeat. 20% of your stash. Five years required investment. Ferrari is 77 years old for instance. Think they are going away?
Tax and Visa benefits? Cool!

But it's easy for me to gamble with your money.

 

[Koolau]

You should do it in a heartbeat. 20% of your stash. Five years required investment. Ferrari is 77 years old for instance. Think they are going away?
Tax and Visa benefits? Cool!

But it's easy for me to gamble with your money.

I don't know. Ferrari has been on the brink a couple of times in the past. No idea how healthy they are now. I guess that would be the first thing to check out before investing - just like with any other large investment. Research, research, research.

 

[Aerides]

What are your other options for obtaining a visa? There must be other ways to get in.

 

[Koolau]

What are your other options for obtaining a visa? There must be other ways to get in.

I guess in addition to this question, I would ask: Have you visited/checked your living options, language issues, stuff to do, etc? IOW How thoroughly have you researched such a move? I would suggest that is the more important question than the investment. But, YMMV.

 

[DJRR]

If your visa grants you access to free Italian health care then I would not worry about it. That is probably more valuable than 20% of your portfolio.

I would not invest in autos or banking. Maybe:

Prada S.p.A. (OTCRDSY) - rich consumer goods since 1913​

Edison S.p.A. (BIT:EDNR) - energy company since 1884​

Nexi S.p.A. (OTC:NEXXY) - electronic money and payment services​

 

[MarieIG]

Risky.

 

[Surewhitey]

I've looked at ENI in the past. Big oil & dividend payment to boot.

 

[Dash man]

No way.

 

[dmpi]

I don't think putting 20% in for getting a visa is such a bad idea if you can somehow pick a good company to buy into. I thought Nutella is owned by Ferrero which is privately held. If I could I would buy into that. ENEL is a green energy company which is mostly owned by the Italian government. My view is that green energy is somewhat speculative at this stage. Ferrari sounds OK, but were in a EV transition, so there are risks. My view is people will always want gas powered Ferraris even if there's EV that are actually faster.

 

[Jerry1]

Maybe there’s a company with a great dividend record. In that case, you could look at it similar to buying an annuity. Lock some money up and get some income to live off of.

Of course, the reasons you have for wanting to live in Italy would be the most important driver of the decision. Then, along with the income generated (above), what value is there on various benefit, the main one being the access to free healthcare.

I agree with Pb4uski that greater than 5% is very risky but when you put together an entire package of risks versus benefits of this methods of moving to Italy then it might make sense.

I don’t know the Italian companies, but I’d try to find a strong company in the consumer products sector. Hopefully, people are going to eat and take care of themselves for a long time.

 

[Koolau]

I don't think putting 20% in for getting a visa is such a bad idea if you can somehow pick a good company to buy into. I thought Nutella is owned by Ferrero which is privately held. If I could I would buy into that. ENEL is a green energy company which is mostly owned by the Italian government. My view is that green energy is somewhat speculative at this stage. Ferrari sounds OK, but were in a EV transition, so there are risks. My view is people will always want gas powered Ferraris even if there's EV that are actually faster.

Maybe Ferrari will come up with the best simulated sound for their EVs. Imagine an EV that sounds like a 12 cylinder scream when you put your foot down on the go-pedal!

Returning you now...

 

[CRLLS]

Maybe Ferrari will come up with the best simulated sound for their EVs. Imagine an EV that sounds like a 12 cylinder scream when you put your foot down on the go-pedal!

Returning you now...

"Returning you now..." won't get you off the hook that easily.

Wouldn't that be like putting an air dam and splitter on a Chevy Chevette? It would sound great though.

 

[Closet_Gamer]

I’m uncomfortable with that level of concentration.

If you need to do it, could you hedge the position either directly or indirectly?

 

[Texas Proud]

The interesting question is why 20%? I would think that there is a dollar (euro) amount to invest and not a pct. of your money...

Now, that figure might be 20%... which is why I ask...

I would not invest that much for investment purposes, but the fact you want to get something from the gvmt then it comes down to how much are you willing to pay to get that thing.... I doubt any will go BK, but you might lose 10% to say 40% of your investment... if so, was the benefit worth the cost?

 

[tulak]

What happens if the company goes under/bankruptcy within 5 years? You’ve lost both your money and visa?

I’m assuming the visa is for residency and not citizenship? If so, how long and what are the requirements for citizenship, or permanent residency that allows you to get back your investment?

I’m guessing that the amount is fixed and happens to be 20% of OPs investible assets. Otherwise it wouldn’t make much sense.

It could be worth it depending on your overall goals. Not enough info to know, but if you’re looking at permanently living in Italy, then it might be worth it. If you’re just trying to get longer term access to the EU, there might be better options.

 

[palomalou]

I guess in addition to this question, I would ask: Have you visited/checked your living options, language issues, stuff to do, etc? IOW How thoroughly have you researched such a move? I would suggest that is the more important question than the investment. But, YMMV.

Yup, speak the language, have an apartment already and have spent several months in it.

The interesting question is why 20%? I would think that there is a dollar (euro) amount to invest and not a pct. of your money...

Now, that figure might be 20%... which is why I ask...

I would not invest that much for investment purposes, but the fact you want to get something from the gvmt then it comes down to how much are you willing to pay to get that thing.... I doubt any will go BK, but you might lose 10% to say 40% of your investment... if so, was the benefit worth the cost?

You are correct, it is a euro amount.