Talk my daughter out of this plan

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1moreyr
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Re: Talk my daughter out of this plan

Post by 1moreyr »

Johny Fever wrote: Mon Jun 27, 2022 7:42 pm I actually pointed that out to them and their reply was well that was 1997, a lot of things have changed since then...LOL...true but...thanks for your reply...much appreciated.
yea " This time is different" :wink:

When I hear these words I want to go to 100% cash...LOL...... :D
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burritoLover
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Re: Talk my daughter out of this plan

Post by burritoLover »

Do they realize they already have 6% in AAPL via the rest of their equities being in the S&P 500?
DoTheMath
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Re: Talk my daughter out of this plan

Post by DoTheMath »

I think you'll have to agree to disagree. With two government pensions and fully funded 403bs in broad index funds, they're doing great. Even if the Apple stock goes to zero, they'll be better than fine. Giving the universe of alternatives (wasteful consumption, crypto, financial management leeches, etc.), it seems like owning a bunch of Apple stock is a minor sin. Only Bogleheads and 13th century theologians think it worth their time to fret about such things :-).

Imagine a world where they were doing the same but the money they've put into Apple was in spent on world travel? Wouldn't you feel like they're doing well and you'd be positively proud that they're generally following the BH way? Sure, you wish they wouldn't go on a big international trip each summer as that seems wasteful to you, but they sure seem happy with that decision. Wouldn't you let it go?

It seems like they've got awfully good judgement. Healthy savings; good, meaningful careers; and, not least of which, they've chosen a spouse it sounds like you approve of. Parents kill for such kids!
“I am losing precious days. I am degenerating into a machine for making money. I am learning nothing in this trivial world of men. I must break away and get out into the mountains...” -- John Muir
mary1492
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Re: Talk my daughter out of this plan

Post by mary1492 »

Johny Fever wrote: Mon Jun 27, 2022 7:24 pm ....their reply is well...it has worked for the past 18 years, why would we change today?
Then why are they asking for your input today? No matter what you say, if they don't like it, that will be their reply.

You gave them your advice, which I completely agree with. Now step back, you provided the inputs they asked for. It's up to them to utilize the information, or continue doing what they are because it's worked in the past.
Target2019
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Re: Talk my daughter out of this plan

Post by Target2019 »

Johny Fever wrote: Mon Jun 27, 2022 7:24 pm So this weekend my lovely daughter and her wife sat down with me to go over some financial planning they have done. Both earn low 6 figures in education and both will have nice pensions when they retire. Both max out their 403B and they have Roths, and then brokerage account and have done it right as far as I can see. Their allocation plan with their accounts in the Roths and brokerage accounts is 40% Apple 50% VOO Vanguard S&P 500 ETF and 10% VGIT Vanguard Intermediate Treasury fund. The 403b all goes into the S & P 500 TIAA fund. They have done REALLY well with this set up and my only comment was you should never have that much money in one stock. You have too much potential to lose huge amounts....their reply is well...it has worked for the past 18 years, why would we change today? Crap...I got nothing. I tried using Portfolio Visulizer tools and all that but I got nothing.

Honestly with their pensions and all that I can see why they can take a gamble on one stock. And Apple is a GREAT company but dang...anyone got anything to help her here or do I just say " dang kid, you guys got it figured out" and call it a day.

They both said show us a better plan and we will sure take it to heart but..Dad we think you are wrong...BTW...NOT the first time old dad has been wrong...about a lot of thing....Thank you all!!
No matter what plan you come up with it will not change their minds. I think their evaluation is too superficial, whereas you'd like to include a hardcore philosophy, more conservatism, and so on. Like my son, they value the higher risk in light of their personal beliefs. Their strategy may be working better than yours. But into the future there is no way to show with certainty that something else will do a lot better. Consider that your goals are vastly different and generational differences in attitude are real. APPL not only outperforms, it has corporate philosophy and practices that support their beliefs.

What I do is try to point out the increased risk, in a general sense. Then explain that as the pile grows you can reduce some of the risk with diversification. That, IMO, is a lesson to pass on. Just telling two successful adults that they are wrong will not work.

Here is a question for them. They have 40% APPL, and another 5% or something in APPL from the S&P500 investments. If APPL's allocation in the S&P500 goes down to 2% someday, do they see a reason to reduce the individual holding of APPL?

Here is a question for you. If "they've done it right" as far as you can see, can you simply give knowledge when asked, and emphasize some principles for the future that will do them well?
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HMSVictory
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Re: Talk my daughter out of this plan

Post by HMSVictory »

I would ask one question: "do you want my advice". If the answer is no then keep it moving Dad if they do then:

One word. Enron.

Or Worldcom

Or Pets.com

Show them the history of the Dow Jones. Today's leaders are tomorrows laggards!

I'm not saying Apple is like Enron but it can happen. I am also a huge fan of Apple's products and have been since the early 90s.

By owning the entire market VTI you will ensure that you do not loose your entire portfolio on one stock (even Apple). They are also basing this portfolio on past performance not future. I would scale back the Apple holding to 10% of the portfolio or else they will learn the hard way (like many of us have).

PS Apple is the largest holding in VOO and VTI - in VOO its around 6% or so I believe.
Stay the course!
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

I 100% agree with most of your suggestions...to answer a few questions..
They hold all of their bond holdings in their IRA accounts so that should be ok.
They reinvest all dividends. They also dollar cost average into their accounts every payday no matter what the market is at.
They are 42 and 41 years old so they have some time on their side. They have no debt other than their house. Both had full rides to school for athletics and graduated with their Masters degrees then cash flowed their upper educations.

They sat down to ask some questions about buying a new house vs staying put and remodeling and what I thought made the most sense to me. This convo took us down the path to investments as well. I told them what my wife and I did and they said that sounds great, here is what we are doing.... They also wanted me to look over their estate plan but I told them that was a job for our family attorney and they agreed to go the professional and be sure its all tight. I did agree to take ownership of their dog, Dirty Harry ( a very nice and usually playing in the mud Newfy) in the event of their mutual passing.
One has access to 457 plan and actually is using that, I left that out, my bad.
They both have Roth 403B plans at work and put what they can into that. One gets 13% into her 457 plan by the school and the other I think is 10% but not 100% sure.
I used GE as my example and the reply was well look what a lousy job GE did keeping up with products and their management was horrible...ok..LOL...I just let that go.
One has tenure track position so the odds of getting let go are pretty small IMHO. Both have PhDs so they could find new jobs pretty fast I think. One works in a school system and one in a university.

Thats about as much as I know detail wise. I dont expect them to do things my way..hell at their age I wish I was 1/3 as put together as they are. I guess they could pick a worse company than Apple for sure but having all my eggs in one basket gives me pause. I did ask what would happen if Apple was to crash and burn...the reply was" well if Apple goes down what makes you think that the rest of the S&P 500 would be in much better shape. Apple has a ton of cash, has a great product, great management and over all a great track record and history.." So did GE...so did ...fill in the blank.

Anyway even if Apple went to 0 I think they would be just fine but as a dad its hard not to try. Brilliant kid that loves her family and will do anything for anybody so I had to try yes? But at the end of the day, she does just fine and I am an old goat that did ok as well I guess. We raised a good human being and that has to count for something.

I dont think they are going to make any radical changes based on my advise but I had to try.
Last edited by Johny Fever on Tue Jun 28, 2022 8:52 am, edited 1 time in total.
EnjoyIt
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Re: Talk my daughter out of this plan

Post by EnjoyIt »

Show them the history of GE which was kind of like Apple many years back. Any big company can and eventually at some distant point in the future will fail.

Show them that apple is already worth so much and has such a large market share. For stock prices to go up significantly, they will need to grow even more. How likely is that?

At the very least try and convince them to at the very least stop making new contributions and maybe to divert dividends to other funds.
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BrooklynInvest
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Re: Talk my daughter out of this plan

Post by BrooklynInvest »

cjcerny wrote: Tue Jun 28, 2022 5:47 am When I was a kid in the 70’s, I can remember going to Kmart to buy one of this little gold/yellow boxes of Kodak film.
I was going to say "Tell 'em about cutting edge tech companies like Kodak, Xerox, Hewlett Packard and Dell."

That said, there are worse problems than misplaced enthusiasm leading to an over-concentration in Apple stock. Plenty to time to convince 'em to stop.

Also, I still buy film ;-)
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arcticpineapplecorp.
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Re: Talk my daughter out of this plan

Post by arcticpineapplecorp. »

Johny Fever wrote: Tue Jun 28, 2022 8:33 am I 100% agree with most of your suggestions...to answer a few questions..
They hold all of their bond holdings in their IRA accounts so that should be ok.
They reinvest all dividends. They also dollar cost average into their accounts every payday no matter what the market is at.
Ira or roth ira? You only mentioned 403b and roth ira in your OP.

If bonds are in roth ira that's not good. If its an ira (not roth) that's fine.

They shouldn't reinvest appl dividends but should send to settlement. Otherwise they are potentially increasing their appl position. The tax impact of the dividend is the same.

Are they dollar cost averaging into apple or just other investments? They shouldn't be adding to aapl because they may increase that 40%.
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mr_brightside
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Re: Talk my daughter out of this plan

Post by mr_brightside »

HMSVictory wrote: Tue Jun 28, 2022 8:20 am I would ask one question: "do you want my advice". If the answer is no then keep it moving Dad if they do then:

One word. Enron.

Or Worldcom

Or Pets.com

Show them the history of the Dow Jones. Today's leaders are tomorrows laggards!

I'm not saying Apple is like Enron but it can happen. I am also a huge fan of Apple's products and have been since the early 90s.

By owning the entire market VTI you will ensure that you do not loose your entire portfolio on one stock (even Apple). They are also basing this portfolio on past performance not future. I would scale back the Apple holding to 10% of the portfolio or else they will learn the hard way (like many of us have).

PS Apple is the largest holding in VOO and VTI - in VOO its around 6% or so I believe.
exactly. Or GE. Or Kodak. etc. Companies that once dominated that either eventually go belly up or simply fade to the background.

I understand the emotional attachment to a stock that has done well. But for all love pair it back to max 10% of the portfolio.

There isn't an advisor in the world i have ever read that would advocate such a high percentage in one equity.

But state your case and in the end it's their decision.

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cbs2002
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Re: Talk my daughter out of this plan

Post by cbs2002 »

Maybe pointing out that they are actually close to 50% AAPL because of its weight in the index could help? Just writing that makes me nervous.

I do agree that getting burned yourself teaches a lesson much better than someone trying to tell you. I would not wish that on anyone though.

We got burned. Rode a loser all the way down, never again. Probably sacrificed several hundred K in losses and potential earnings had that money been in the S&P over the last decade+. Fortunately most of the rest was. So it goes. But it was 10% of our NW at the time, not 50% (again, yikes!).
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MrMadoff
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Re: Talk my daughter out of this plan

Post by MrMadoff »

Back in the day, the big innovators were companies like IBM and Kodak. You may wish to suggest that they review a bit of that history.
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windaar
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Re: Talk my daughter out of this plan

Post by windaar »

Yes, Apple could go the way of Kodak. But what if you talk them out of Apple and next year they launch some miracle product and their stock quadruples? Then you're blamed. I stay of other people's investment decisions unless they ask for it. The times I have been asked for it? Zero times.
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hnd
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Re: Talk my daughter out of this plan

Post by hnd »

I would say you said your piece and leave it at that. What if you had had this conversation 5 years ago with your daughter? what if you convinced her that 40% was too much of Apple stock and she pared it down to market levels. and what if, today, she realized that apple stock is up 300% and VTI is up what 70% over the past 5 years. Now what does that conversation look like?

You will either be "right" and eventually they will learn and come to you for more advise, or Apple will continue on its amazing path and your children will be beyond wealthy. You win either way(I'm being facetious) sleep easy.
MathWizard
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Re: Talk my daughter out of this plan

Post by MathWizard »

Luckywon wrote: Mon Jun 27, 2022 8:10 pm
MathWizard wrote: Mon Jun 27, 2022 7:54 pm One thing in favor of a single stock is that while they may get taxed on dividends, they are
not taxed on capital appreciation until they sell.
In this way, they get the same benefit as a tax deferred account, but unlike a tax deferred account
1. they can sell at any time without penalty,
2. they will only pay long term capital gains, 20%, not at individual rates,
3. the account can be a shared account,
4. there are no RMDs, and
5. If it passes to an heir, there is a step-up in basis, so no taxes may need to be paid at all.
:confused This is true of anything they purchase in a taxable account, and doesn't particularly favor a single stock. In fact, purchasing a few stocks instead of a single stock would likely afford more opportunities for capital gains/tax management.
Yes, I used the wrong word. I should have said "individual" not "single" stocks, and should have specified vs a mutual fund (or ETF).

With either individual stocks or a mutual fund, you will be paying taxes on dividends whether you sell or not.
However,
with individual stocks you will not be taxed on capital gains until you sell, but
with a mutual fund, trading by the manager of a fund means that there are sales of stocks, and the capital gains get distributed proportionately to the funds customers. Similarly for an ETF.

The problem I have with individual stocks is that I cannot predict what will happen with individual stocks.
Some people (think that they) can.

However, these are educated adults with 6 figure jobs and pensions, who are filling up their tax advantaged space plus putting money ion a taxable account. They may not have an optimal plan, but they cannot help but be OK.

It was somewhat unclear, but it sounded like just the taxable account was 50% S&P index and 50% one individual stock (Apple).
It was not specified what percentage of their total investment portfolio was in taxable. However, assuming under 50, they would be contributing
$41K to two 403b s and another $12K to two IRAs. That's $53K per year. It's hard to image that they will not be able to retire
with the pension, SS benefits, and just the403bs and IRAs and the 50% S&P in taxable even if Apple goes to zero. (And they can Tax Loss Harvest
if Apple does go to zero.) That's is why I say that they savings habits alone gets them a pass on investing a portion in a single stock.

I'd guess that with $53K savings, there is not much left to put into taxable. Perhaps
the 50% of taxable is their "play" money, and less than 5% of their portfolio.

Apple is not a bad.
They could be putting their money in speculative investments that can no longer be mentioned on this site.
MadDwag
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Re: Talk my daughter out of this plan

Post by MadDwag »

The old bald tire fallacy. These tires have never given me a problem over the past 80,000+ miles, so why change them out?
deltaneutral83
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Re: Talk my daughter out of this plan

Post by deltaneutral83 »

Annie Duke covers this conceptually in her books, and this is resulting. BH (and many sports coaches) focus more on process than the results, "controlling the controllables". If we master the process, we know we are likely to get good (but not the best) results with acceptable levels of risk. I can probably get to my destination faster by running a red light at an intersection where I know there is little traffic if any at 5 a.m. but there is a chance I get T-boned and it's all over. Usually the people that dabble in single stocks that have beginner's luck then begin to spread it around and then learn the lesson. Putting 40% of your portfolio in AAPL in 2004 and then indexing the rest is simply the best of luck, and I highly doubt anyone would be able to convince the recipient otherwise, especially if they are on a beach sipping a drink that AAPL bought them.
GoldenFinch
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Re: Talk my daughter out of this plan

Post by GoldenFinch »

It’s probably best to let adult offspring figure things out for themselves, if that is what they want to do. Wish them luck and get busy focusing on something else. Sometimes experience is the only teacher.
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MrMadoff
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Re: Talk my daughter out of this plan

Post by MrMadoff »

windaar wrote: Tue Jun 28, 2022 11:33 am But what if you talk them out of Apple and ...
Which is why I didn't recommend that they try to talk them out of anything. I merely suggested that they be encouraged to learn a bit of history. 8-)
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unclescrooge
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Re: Talk my daughter out of this plan

Post by unclescrooge »

Concentrated holdings can make you very rich.

Unfortunately they can also make you poor.

In general you should avoid things that can make you poor.

Never hold more than 25% of your assets in one company. Personally I wouldn't even hold more than 5%, but I've won the game.
aristotelian
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Re: Talk my daughter out of this plan

Post by aristotelian »

See if they would go for holding their current shares but diversifying with new money. Alternatively, ask them for stock tips. Maybe they know something you don't.
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

Honestly about the only thing to come out of the chat was the fact that they are pretty much set up for success even if Apple went bad and that I will inherit their Newfy Dirty Harry if they both pass. I am super proud of their saving and work at their age so I guess if they love Apple who cares....Thanks all for you help.
mdavis6890
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Re: Talk my daughter out of this plan

Post by mdavis6890 »

I would frame it in terms of gambling and probabilities. Let's suppose we roll a pair of fair 6-sided dice (36 possible outcomes). You win on anything but twelve. We roll annually and when you win you get a 3.5% return (slightly better than fair), but if it comes up twelve I get all your money. More than likely, you will go for a long, long time winning. But even with better-than-fair odds you will eventually roll that twelve.

Would you put all your money in something like this? 40% of it, when you already have a lot? I wouldn't. Maybe when I'm starting out and don't have much to lose, but once I've won the (financial) game I wouldn't take this winning (in theory) bet anymore. Our risk tolerance should change as our circumstances and wealth change.

Not every positive-expectation bet is a good one, and not every negative-expectation bet (insurance) is a bad one.
drk
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Re: Talk my daughter out of this plan

Post by drk »

If they're partial to 18-year increments, hopefully they've considered the previous 18-year increment.

That said, the way you presented the information makes it hard to understand what their portfolio actually looks like. If 90% of their retirement is in the 403b and pension, what happens in their Roth IRA and taxable brokerage account is irrelevant. Even a 50/50 split would mean ~75% S&P 500, 20% Apple, and 5% intermediate Treasurys, which isn't horrible even ignoring the pension.
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calmaniac
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Re: Talk my daughter out of this plan

Post by calmaniac »

Tell them that there are 75 posts about their AAPL investing on bogleheads.org and send them the link to this thread!

BTW, I bought 2,840 shares of AAPL in October 1993 for $2500. You do the math. It was before I knew better and switched to index funds. Over the past 10 years, I keep selling selling off chunks of AAPL (& MSFT) as I know this was just dumb luck and it won't last forever....and AAPL share prices keeps going up. :D
≈63yo. AA 70/30: 30% TSM, 16% value (VIOV/VFVA/AVUV), 16% foreign LC, 8%emerging, 30% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
Target2019
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Re: Talk my daughter out of this plan

Post by Target2019 »

I know that Berkshire Hathaway holds 40% or more APPL stock. This article describes the current downside for Warren and Co.
https://www.barrons.com/articles/warren ... 1652974419

I don't follow Warren with fervor, but I've taken a peek from time to time at his holdings, and wished I knew him. There is much upside to his talents and approach. The lack of extra money always limited what we could do, but just regular contributions from paychecks to index funds leaves us in a very good spot. YMMV.
Wanderingwheelz
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Re: Talk my daughter out of this plan

Post by Wanderingwheelz »

How could you possibly just be finding out about his now?

If my daughter had been investing in Apple for 18 years, contributing new money all along the way and never selling a share, surely I’d be hearing about how amazing her investment returns have been at least once before now. This is especially true since she knows I have an interest in investing.

Assuming you have known this for a long time, what makes you think they’ll change things up now when they didn’t take your advice before?
jatwell
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Re: Talk my daughter out of this plan

Post by jatwell »

Johny Fever wrote: Wed Jun 29, 2022 5:58 pm Honestly about the only thing to come out of the chat was the fact that they are pretty much set up for success even if Apple went bad and that I will inherit their Newfy Dirty Harry if they both pass. I am super proud of their saving and work at their age so I guess if they love Apple who cares....Thanks all for you help.
You were able to convince them to see a professional about estate planning. What about convincing them to have a session with a fee only financial planner that may tell them the same thing about single stock risk? It may help to hear it from another source.
MattB
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Re: Talk my daughter out of this plan

Post by MattB »

Johny Fever wrote: Wed Jun 29, 2022 5:58 pm Honestly about the only thing to come out of the chat was the fact that they are pretty much set up for success even if Apple went bad and that I will inherit their Newfy Dirty Harry if they both pass. I am super proud of their saving and work at their age so I guess if they love Apple who cares....Thanks all for you help.
You got lucky. I hope my DD turns out so well.
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

Wanderingwheelz wrote: Thu Jun 30, 2022 6:22 am How could you possibly just be finding out about his now?

If my daughter had been investing in Apple for 18 years, contributing new money all along the way and never selling a share, surely I’d be hearing about how amazing her investment returns have been at least once before now. This is especially true since she knows I have an interest in investing.

Assuming you have known this for a long time, what makes you think they’ll change things up now when they didn’t take your advice before?
Well I guess I am a bad father, I was thinking that her balances kept going up, she was doing great in her profession, getting a PhD, buying cars with cash, nailing a great job, buying a few more rental properties with her wife, and generally doing well it really wasnt my business. I tend to worry about kids that are doing well enough to breakdown their finances. I asked her about Apple vs just doing the S&P 500 and her bottom line was basically well if Apple crashes 40% I am still ahead and if Apple crashes do you think that the S&P 500 is not going down at well.
They have their estate planning all done with the same lawyer that does mine so I think they are fine in that area. Life insurance is set.
We dont tend to talk much about money in our family. We talk about health, fun and grand kids and dogs...trust me...the money will come if the other stuff is tight.
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

MattB wrote: Thu Jun 30, 2022 7:06 am
Johny Fever wrote: Wed Jun 29, 2022 5:58 pm Honestly about the only thing to come out of the chat was the fact that they are pretty much set up for success even if Apple went bad and that I will inherit their Newfy Dirty Harry if they both pass. I am super proud of their saving and work at their age so I guess if they love Apple who cares....Thanks all for you help.
You got lucky. I hope my DD turns out so well.
Was luck and great Mom!! Thank you.
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

jatwell wrote: Thu Jun 30, 2022 6:59 am
Johny Fever wrote: Wed Jun 29, 2022 5:58 pm Honestly about the only thing to come out of the chat was the fact that they are pretty much set up for success even if Apple went bad and that I will inherit their Newfy Dirty Harry if they both pass. I am super proud of their saving and work at their age so I guess if they love Apple who cares....Thanks all for you help.
You were able to convince them to see a professional about estate planning. What about convincing them to have a session with a fee only financial planner that may tell them the same thing about single stock risk? It may help to hear it from another source.
Planning is all done and they have met with advisors a few times. TIAA , Fidelity and and Mark Zoril. So far..well...you know...

Sometimes the best thing is to just love your kid and worry less. They are both great human beings. And who knows...maybe they are right and we are wrong...LOL..now a days NOTHING else makes sense. Thank you!
halfnine
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Re: Talk my daughter out of this plan

Post by halfnine »

Short Apple with her future inheritance money. Problem solved.
Rex66
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Re: Talk my daughter out of this plan

Post by Rex66 »

Not a great decision to get involved with this. They have pretty much 95% of their ducks in order and you want to quack about apple. Let’s just say apple goes to zero. They are still fine. You won’t get brownie points “for being right”. If anything the opposite.
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JupiterJones
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Re: Talk my daughter out of this plan

Post by JupiterJones »

burritoLover wrote: Tue Jun 28, 2022 6:50 am Do they realize they already have 6% in AAPL via the rest of their equities being in the S&P 500?
I was about to say the same thing.

Maybe at the very least the OP could convince her to dial back the direct AAPL investments to 33% or so, or whatever it takes so that the overall AAPL percentage in the entire portfolio hits her 40% target?
"All of this has happened before, and all of this will happen again."
drk
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Re: Talk my daughter out of this plan

Post by drk »

Johny Fever wrote: Thu Jun 30, 2022 9:07 am buying a few more rental properties with her wife
Wait, they have rental properties, too? That makes the Apple stock even less of a concentrated holding. I fear you're missing the forest for the trees here.
Wanderingwheelz
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Re: Talk my daughter out of this plan

Post by Wanderingwheelz »

Johny Fever wrote: Thu Jun 30, 2022 9:07 am
Wanderingwheelz wrote: Thu Jun 30, 2022 6:22 am How could you possibly just be finding out about his now?

If my daughter had been investing in Apple for 18 years, contributing new money all along the way and never selling a share, surely I’d be hearing about how amazing her investment returns have been at least once before now. This is especially true since she knows I have an interest in investing.

Assuming you have known this for a long time, what makes you think they’ll change things up now when they didn’t take your advice before?
Well I guess I am a bad father, I was thinking that her balances kept going up, she was doing great in her profession, getting a PhD, buying cars with cash, nailing a great job, buying a few more rental properties with her wife, and generally doing well it really wasnt my business. I tend to worry about kids that are doing well enough to breakdown their finances. I asked her about Apple vs just doing the S&P 500 and her bottom line was basically well if Apple crashes 40% I am still ahead and if Apple crashes do you think that the S&P 500 is not going down at well.
They have their estate planning all done with the same lawyer that does mine so I think they are fine in that area. Life insurance is set.
We dont tend to talk much about money in our family. We talk about health, fun and grand kids and dogs...trust me...the money will come if the other stuff is tight.
Nice try, but I wasn’t calling into question your parenting skills, not was I questioning whether or not your daughter and her wife are killing it.

I was curious why you hadn’t heard anything about it before now, that’s all. They literally made one of the greatest investments of all time.
Tamalak
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Re: Talk my daughter out of this plan

Post by Tamalak »

What if you talk them out of it, and apple goes up 1000% in the next 5 years? Don't endanger your relationship with your girl for something that's not even a problem. They will be 100% fine even if apple goes to 0!
tvubpwcisla
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Re: Talk my daughter out of this plan

Post by tvubpwcisla »

Inform them to go all in on their plan and then let you know how it works out in a few decades. In the meantime, let them know you are sticking with low cost Index funds.
cjking
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Re: Talk my daughter out of this plan

Post by cjking »

I watched something featuring Warren Buffet on Youtube earlier this week. He showed a list of the worlds 20 biggest companies, with Apple at the top. He then pointed out that from the equivalent list 30 years earlier, not one of those companies is in the list today. (As an aside, in the current list nearly all the companies at the top of the list are American. In the 30 years ago list, nearly all the companies at the top were Japanese.)

https://www.youtube.com/watch?v=XNV1F5RapB4
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8foot7
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Re: Talk my daughter out of this plan

Post by 8foot7 »

I missed how old your younger family members are.
I think at 25, you can offer more advice than you can at 30.
At 35 you can offer perhaps a statement of what you do and why you do it.
I would err toward staying out of it after that.

I am over 40, married, with 4 kids. I enjoy discussing investments and the market with my dad. We have different approaches, which is OK because we have different needs now. I know that I could always ask him anything and he would give me his honest opinion. On an unsolicited basis I am absolutely uninterested, however, in being talked out of my investments by him.
SouthernInvestor
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Re: Talk my daughter out of this plan

Post by SouthernInvestor »

Look, I am not going to accuse you of a humble brag, but it sounds like your daughter is doing very well.

It isn't boglehead planning, but I suspect many even on this forum would be very happy with this level of financial responsibility from their kids. Take a bow, Dad!
moneyflowin
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Re: Talk my daughter out of this plan

Post by moneyflowin »

Why are you trying to talk them out of a great decision and excellent investment?

If I were them, I wouldn't listen to you either. Maybe you're the one who should have done what they did 18 years ago.

And who cares if Enron went bankrupt. What about the HUNDREDS of companies that haven't? Like McDonalds, Chase, 3M, IBM?
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Johny Fever
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Re: Talk my daughter out of this plan

Post by Johny Fever »

8foot7 wrote: Thu Jun 30, 2022 11:38 am I missed how old your younger family members are.
I think at 25, you can offer more advice than you can at 30.
At 35 you can offer perhaps a statement of what you do and why you do it.
I would err toward staying out of it after that.

I am over 40, married, with 4 kids. I enjoy discussing investments and the market with my dad. We have different approaches, which is OK because we have different needs now. I know that I could always ask him anything and he would give me his honest opinion. On an unsolicited basis I am absolutely uninterested, however, in being talked out of my investments by him.
Daughter is 41 and her wife is 42...they have no kids but are involved as the best aunts on the planet. And yea I dont give much advise..I just gave them my opinion when they asked for it...they disagreed...all good no worries...point was to see of anyone had any great ideas that I have missed...frankly they are fine...and I am proud as I can be for them.
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8foot7
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Re: Talk my daughter out of this plan

Post by 8foot7 »

Johny Fever wrote: Thu Jun 30, 2022 2:10 pm
8foot7 wrote: Thu Jun 30, 2022 11:38 am I missed how old your younger family members are.
I think at 25, you can offer more advice than you can at 30.
At 35 you can offer perhaps a statement of what you do and why you do it.
I would err toward staying out of it after that.

I am over 40, married, with 4 kids. I enjoy discussing investments and the market with my dad. We have different approaches, which is OK because we have different needs now. I know that I could always ask him anything and he would give me his honest opinion. On an unsolicited basis I am absolutely uninterested, however, in being talked out of my investments by him.
Daughter is 41 and her wife is 42...they have no kids but are involved as the best aunts on the planet. And yea I dont give much advise..I just gave them my opinion when they asked for it...they disagreed...all good no worries...point was to see of anyone had any great ideas that I have missed...frankly they are fine...and I am proud as I can be for them.
Congratulations on raising a daughter with a good head on her shoulders. What a fine accomplishment. :sharebeer
deikel
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Re: Talk my daughter out of this plan

Post by deikel »

There is a realization about the world that really only comes with age and that is that things actually do repeat themselves all the time. I don't think it can be taught, its like pattern recognition, you eventually just realize it and see it.

There may always be small differences and the situation is never exactly the same, but the general happenings are similar enough.

APPL will go the way of any large entity, they will eventually decline. Maybe because of the market shifting (postal mail), maybe because of disruptive technology they missed or ignored (Kodak), maybe due to fraud (Enron) - its a 100% fact that it will happen, but the time line is unclear.

Berkshire Hathaway will decline, its inevitable - their sheer size may make that take years, but it will happen, because the same thing has always happened and whatever gave them an advantage at one point in time will fade, be duplicated, loose patent protection ect

Re-inventions like Nokia (from rubber boots to cell phones) are extremely rare, its what facebook is trying with meta, its what google is trying with alphabet/cloud computing - some are smarter to look for it early, most go under and never even try.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Zedon
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Re: Talk my daughter out of this plan

Post by Zedon »

They may just out gain the average bogle head and that's not just a small chance.

I see a lot of people say they are wrong but that's not a fact. They are just not using the bogle head way which is a safer, slower, and steadier path. They are able to absorb more risk.

I do the same thing, I have a pension and a 401k and 457b which all use essentially the boglehead strategy. The tiny amount I put in the roth ira I will buy some individual stocks knowing they could go big or be a dud.

At least they aren't in crypto or some other Ponzi scheme.

It's likely the pensions will cover all of their retirement needs so anything besides that is gravy.
ChrisC
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Re: Talk my daughter out of this plan

Post by ChrisC »

So, what's the problem that needs to be fixed here? That the daughter, financially sound and in great shape, might lose her investment in Apple stock or that returns from the stock might diminish over time? It's not that her financial independence and security is at risk from this one investment, since she draws good income, has other diverse investments and has a vested pension.

I think the financial academic approach to demonstrate that an over-concentration in one asset is not a good idea will not likely resonate with the daughter; it's been working for her for 18 years and we generally trend towards staying put! What might work, which has worked with my son who is over-concentrated in his employer's stock because of generous stock grants once the company went public, is to suggest that daughter start taking advantage of the rise in stock value by taking some profits from the appreciated value -- perhaps she needs to start enriching her lifestyle with experiences or material possessions that add to her enjoyment. Taking some profit from the stock to upgrade her housing sounds like a great idea, especially if some of the Apple stock is in taxable accounts. Or even if in tax deferred accounts, she could take money from her taxable accounts and rebalance or cash in the Apple stock in the deferred accounts.

Don't make perfect the enemy of good for your daughter. She's doing fine. We all can do better but is the juice worth the squeeze for the OP to lecture about the over-concentration to his daughter.
WhyNotUs
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Re: Talk my daughter out of this plan

Post by WhyNotUs »

Johny Fever wrote: Mon Jun 27, 2022 7:24 pm They both said show us a better plan and we will sure take it to heart but..Dad we think you are wrong...BTW...NOT the first time old dad has been wrong...about a lot of thing....Thank you all!!
What a great response by them!!!

Hard to see a reason for you to worry. Bogle principles

Living below means- seems like it
Saving for retirement early and often- Big time, all signs point to a financially secure future
Low cost investments- seems like it
Diversity- Maybe a B here instead of an A but still....
Too little/much risk- given their time horizon and pensions, I would argue that the past supports their weight toward equities at this point in life
Time in the market over timing the market- seems like they are doing good here as well.

Seems like a congratulations is in order to me. Apple's day may come and go if they lose their premium markup but overall seems like they are headed to financial security.
I own the next hot stock- VTSAX
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