Bogleheads

[mfen]

Hi: How far would go to help friends or family with investments? One of the nephews (early 30's) has asked us for advice. He did go as far as to take the investor risk analysis at Vanguard as I requested. But beyond that he has not tried to research any recommendations. I feel uncomfortable proceeding further without some educated input from him.

I am emotionally torn because his parents have taught him nothing and they continue to struggle in retirement even going as far as reverse mortgaging the house at 62 and I see the same future for him. He is a good worker and a good saver. How can I motivate him to educate himself or should I just back away?

Thanks for all suggestions.
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Maryanne

[livesoft]

I point friends and family to books. If they won't read the books, there is no hope. If they ask me to help explain the books, then I help explain the books.

If they ask me what I do, I tell them. If they tell me they did something that I wouldn't do, I say, "I wouldn't do that myself, did you read the book?"

In essence, advice should not appear to come from me. It should come from a book.

[Call_Me_Op]

I agree that Livesoft's approach is best. I made the mistake of making recommendations to a family member who did not appreciate the relationship between risk and expected return, etc - and when the market soured his wife (behind closed doors) blamed me for their paper losses. My new policy is not to give investment advice except to encourage people to make an investment in education.
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Best regards,

-Op

............................................................

"In the midst of difficulty lies opportunity."

Albert Einstein

[JW Nearly Retired]

The first thing I would do is email him a link to a cool investment advice site I stumbled across some time ago.

http://www.bogleheads.org/

That may get your nephew's attention. Then give him a W. Bernstein book for Christmas. If neither of these has any effect give up for now....... perhaps try again in a few years.
JW

[dm200]

The problem/risk in giving advice and assistance in such situations, in my opinion and experience, is that the person will only hear (or remember) part of the information. If, for example, you suggest 5 things, and 4 turn out to be home runs, and one fizzles, they will remember (and blame you) for the fizzle.

Similarly, they may not understand "risk". They may say they can tolerate "risk", but what they really mean is that they can tolerate it only is they never lose money.

Finally, even if the advice is 100% good, and the investment would have a good return over a several year period, if they panic and sell out on the smallest of losses, then they blame you - instead of their own impatience and panic.

[Judsen]

Perhaps just as much as the nephew needs advice, he needs accountability.
Being his aunt, you can take a teacher role and let him report to you what he has learned as he learns. Even though he is grown at 30, he is still a student with respect to investment knowledge.
This can be a very good and beneficial opportunity for the two of you to accomplish a safer future for him and you too as teaching is a good learning experience.
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Be the change you want to see in the world

[bob90245]

[norookie]

He asked.............I'd grade him on his effort, with my matching effort! Just sayin.....he obviosly has seen the consequences of not planning. jmo
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"I hope to put my last dime when I die, in the parking meter in front of the state house, then die in my car awaiting many parking tickets"

[fishndoc]

As others have suggeted, the best thing you can do for him is encourage self-education. I would start our with the "Coffeehouse Investor". If the light comes on, then steer him to Bogle's "Common Sense" books, as well as this forum and its reading list.

If he can't/won't read thru something as short and clearly written as Coffeehouse, then I would just recommend a Target Retirement fund, and stop wasting my time and effort.
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" Successful investing involves doing just a few things right, and avoiding serious mistakes."

J. Bogle

[mickeyd]

I agree with previous posters that advise new investors to Bogleheads books to read. To hand out specific advice to friends/family on investments or financial planning is a road that I refuse to travel. Too many pot-holes in the road.

I have recommended books over the years to folks, but very few wish to invest the time in doing "research" of this kind. They prefer a quick answer their simple Q.

If they choose to read a recommended book, and the results of the advice is not immediately positive, you will not be "blamed" for the "bad advice" that ensues. Lets face it, most of us at one time really misunderstood what "long term" really meant.
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regards,
mickeyd

In Dire Need of: Faster horses, younger women, older whiskey, more money. (Not necessarily in that order)

[giacolet]

mfen states:

[giacolet]

mfen states:

[mfen]

Giacolet wrote:

[dbr]

[YDNAL]

[dkdoy]

[pkcrafter]

mfen:

[allsop]

[snodog]

[Laura]

The Automatic Millionaire is a great book that explains how investing small amounts of money automatically over many years leads to great wealth. I hate the actual investing advice in this book the suggestions on how to get started and how to automate are great. It is very easy to read.

Laura

[flyfisher_work]

My parents taught me little to nothing about investing...I've learned from reading books recommended by those in this forum. My first was Jack Bogle's The Little Book of Common Sense Investing.

[Redbelly]

My experience with giving financial advice supports the old adage that no good deed goes unpunished.

As has been stated, younger people generally do not want to put the work into it to really understand the trade offs between returns and risk. I agree that they should be steered to a reading list and then left alone. Perhaps one could answer some questions if they are thoughtful ones.

For older people, give wide berth. Someone has been making the investment decisions up until now and that person will resent your input, no matter how tactful or well intentioned.

[b_glenn]

[mikep]

My Uncle gave me a book when I graduated college titled What Wall Street Doesn't want you to know by Larry Swedroe. It's the reason I index and am here today. I am glad he stepped out of his comfort zone and gave me that book.

I would suggest giving a book and indicating to them "this has worked for me". I wouldn't really be pushy, just succeed quietly on your own and then they will come to you with questions on what to do.

[Eureka]

Giving investing advice to family is fraught with peril. If he's saving money every paycheck, investing in a 401(k) and/or Roth IRA, paying off his credit cards in full each month, and not buying expensive cars with borrowed money, he's already way ahead of the game.

If you suggest good investment books and he won't read them, what can you do? I would try it in very small doses. Give him a good, short book once a year. He has time. I you try to get him to read 15 different books, it may give him a homework flashback.

Here's a blog site I recommended to some former co-workers in their late 20s who have told me they find it enlightening. I believe Trent is in his early 30s. Not sure. The blog is about money, not, particularly, about investing. But he explores his relationship to money, which is something everyone needs to do: http://www.thesimpledollar.com/

The nice thing about blogs is that the posts are relatively short, and there's always something new. Trent also reviews books. Here's one he did on "The Bogleheads' Guide to Retirement Planning": http://www.thesimpledollar.com....-planning/

I have no connection to this guy or his blog, but I have found him wise beyond his years.