Tempted to create a "play" account, which goes against my IPS
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Tempted to create a "play" account, which goes against my IPS
I recently sold a small business and part of me wants to take a fixed amount of those proceeds (not enough to break the bank but enough to make it worthwhile -- let's say $10k for simplicity) and create a new brokerage account at Schwab, deposit those funds, and "see what happens".
This actually isn't because I want to trade, or buy high-risk growth stocks. In fact, I know what I would buy - a bunch of REITs (I am aware of the negatives of REITs in taxable but am OK based on the recent tax law changes), like $O and $WPC, and some $DIS, just because I'd love to own some of the magic and I like where the company is going. I would likely acquire 4-5 things and let them sit there for a few years.
The issue is that I like my IPS. It's simple. I don't really want to change it to add a REIT allocation. Hence why I'm tempted to open this play account with new found funds.
I'm curious to know if this is a slippery slope, though. Curious to know if anyone has any thoughts.
This actually isn't because I want to trade, or buy high-risk growth stocks. In fact, I know what I would buy - a bunch of REITs (I am aware of the negatives of REITs in taxable but am OK based on the recent tax law changes), like $O and $WPC, and some $DIS, just because I'd love to own some of the magic and I like where the company is going. I would likely acquire 4-5 things and let them sit there for a few years.
The issue is that I like my IPS. It's simple. I don't really want to change it to add a REIT allocation. Hence why I'm tempted to open this play account with new found funds.
I'm curious to know if this is a slippery slope, though. Curious to know if anyone has any thoughts.
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Re: Tempted to create a "play" account, which goes against my IPS
For me, it seems like added work/complications down the road for no real upside.
Re: Tempted to create a "play" account, which goes against my IPS
If the amount you're talking about represents 5% of less of your overall portfolio, have at it. It's not like you're YOLO'ing calls on GME. Treat the separate account like a hobby and disregard its existence when managing your main portfolio per your IPS.
Re: Tempted to create a "play" account, which goes against my IPS
Open a paper account instead. Take the real money you were willing to risk and go on a nice vacation.
Re: Tempted to create a "play" account, which goes against my IPS
I have the following in my IPS:
I review my IPS to ensure my risk tolerance remains the same:
- annually
- after a significant non-market driven increase or decrease in my portfolio
- after a significant life event
If you don’t want the complexity considered in your IPS it would be Ill advised to create the account as your investment approach will begin creeping away from your IPS
Do you keep the IPS and avoid the change or,
Do you modify the IPS because your IPS has really changed.
I review my IPS to ensure my risk tolerance remains the same:
- annually
- after a significant non-market driven increase or decrease in my portfolio
- after a significant life event
If you don’t want the complexity considered in your IPS it would be Ill advised to create the account as your investment approach will begin creeping away from your IPS
Do you keep the IPS and avoid the change or,
Do you modify the IPS because your IPS has really changed.
Re: Tempted to create a "play" account, which goes against my IPS
This is just about the most wrong advice you could get. How about this--- Why not treat it like an investment? $10K is not chump change.
Set up the account, research and buy what you want. Manage it, see how you do? This is investing, not playing around. Why not treat the $10K as an investment? You will find out soon enough if you are going to be successful and enjoy it. And by success, I dont mean watching your balance sky rocket. People dont buy REITs for capital gain mostly they buy them for income (tho many do provide cap gains). People do buy DIS for Cap gains, but not income.
What is your strategy for these REITs? What is your goal? That is a strange mix.
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Re: Tempted to create a "play" account, which goes against my IPS
I agree, if < 5% then have at it. If you've already come to the point of creating a thread and asking about it, obviously you want to do this, and that's fine so long as < 5%.
I recently slashed my FM to be 5% and I'm glad I did.
Re: Tempted to create a "play" account, which goes against my IPS
I agree (even if you WERE YOLO'ing GME, as it's your fun money account). I've got about 1/2 that amount II just recently moved to a "play" investment that based on my knowledge in the field, I THINK will payoff. It won't move the needle either way in our holdings (it represents far less than 1%), but it will be interesting to see how it plays out. No impact on us even if it goes to zero, and if it pays off, while we could have afforded to anyway, maybe upgrade seats on future air travel or something.Marseille07 wrote: ↑Thu Jul 29, 2021 10:21 pmI agree, if < 5% then have at it. If you've already come to the point of creating a thread and asking about it, obviously you want to do this, and that's fine so long as < 5%.
I recently slashed my FM to be 5% and I'm glad I did.
I didn't and don't see the need to open up an entirely new account to do this, just used our existing taxable account. I know which investment is which.
"No man is free who must work for a living." (Illya Kuryakin)
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Re: Tempted to create a "play" account, which goes against my IPS
I do some algotrading on the side, not OTM on GME though. I actually have a dedicated account because I need a margin account for this, whereas I just need a cash account to run a Boglehead portfolio. Plus, it's easier for me to separate the concerns between FM and BH.Elric wrote: ↑Thu Jul 29, 2021 10:43 pmI agree (even if you WERE YOLO'ing GME, as it's your fun money account). I've got about 1/2 that amount II just recently moved to a "play" investment that based on my knowledge in the field, I THINK will payoff. It won't move the needle either way in our holdings (it represents far less than 1%), but it will be interesting to see how it plays out. No impact on us even if it goes to zero, and if it pays off, while we could have afforded to anyway, maybe upgrade seats on future air travel or something.Marseille07 wrote: ↑Thu Jul 29, 2021 10:21 pmI agree, if < 5% then have at it. If you've already come to the point of creating a thread and asking about it, obviously you want to do this, and that's fine so long as < 5%.
I recently slashed my FM to be 5% and I'm glad I did.
I didn't and don't see the need to open up an entirely new account to do this, just used our existing taxable account. I know which investment is which.
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Re: Tempted to create a "play" account, which goes against my IPS
I am 100% bought into the bogglehead mentality of the 3 fund portfolio. But I use 1%-2% of my net worth in individual stocks/investments. It's my play/gambling money. I don't have expectations for it and don't include it in my portfolio calculations. It keeps me engaged in the "financial" world, it feels exciting when a bet pays off, etc... Great entertainment and much better for the pocketbook than non-financial purchases that are guaranteed to be depreciating assets.
I think most people would agree this is reasonable.
I think ultimately it may depend on knowing yourself though. I set limits and it isn't tough for me to stick by them. You mentioned a slippery slope... If you know you have an addictive or gambling personality, then it is likely a BAD idea.
I think most people would agree this is reasonable.
I think ultimately it may depend on knowing yourself though. I set limits and it isn't tough for me to stick by them. You mentioned a slippery slope... If you know you have an addictive or gambling personality, then it is likely a BAD idea.
Re: Tempted to create a "play" account, which goes against my IPS
While some will say OK if the amount is relatively small (i.e. < 5%), I don't believe it is a good idea. Probably you are not the only one thinking about trying their hand at active investing. Particularly when the market is near an all time high.
If you have some degree of success that is probably the worst outcome. You may talk yourself into something like, heck, 10% is still a relatively small amount. I would keep to my IPS. Don't let a strong market lure you as the Sirens song lured Ulysses.
If you have some degree of success that is probably the worst outcome. You may talk yourself into something like, heck, 10% is still a relatively small amount. I would keep to my IPS. Don't let a strong market lure you as the Sirens song lured Ulysses.
Re: Tempted to create a "play" account, which goes against my IPS
I did this several years ago....took a $50k bonus and parked it in fidelity as my What The Heck fund. It was less than 5% of my total portfolio. I purchased stocks for 5 companies that I admired (Apple) and loved (Chipotle) and a couple of others in the same vein. It's been fun watching the mostly ups and some downs, and gives me something to do other than rebalance between S&P 500 and Total Bonds. It's now north of $200k, mostly due to the Apple and a biotech, and I just let it ride. I've lately thought that I'll donate all to a Donor Advised Fund at some point and let the benefits flow that way. I'd do it again, with my hindsight of course. I include it in my IPS but it doesn't move the needle much so I don't really worry about it.
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Re: Tempted to create a "play" account, which goes against my IPS
I went through a "phase" of this about 20-25 years ago. Invested some "fun" money in a few individual stocks for 4-5 years or so. Had a few that did really well, and a few went to "zero". I still have a couple stocks left over from those days that did well. And I add employer stock to the individual stock pile from ESPP/RSU's.
My tentative plan is to use some of the appreciated shares to fund a Donor Advised Fund. And take some of the dividends to help fund my lifestyle in retirement (still working now and hope to for a few years).
I wouldn't open any new accounts to do this, BTW; just use a brokerage account you already have.
My tentative plan is to use some of the appreciated shares to fund a Donor Advised Fund. And take some of the dividends to help fund my lifestyle in retirement (still working now and hope to for a few years).
I wouldn't open any new accounts to do this, BTW; just use a brokerage account you already have.
“Now shall I walk or shall I ride? |
'Ride,' Pleasure said; |
'Walk,' Joy replied.” |
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Re: Tempted to create a "play" account, which goes against my IPS
"Investor, know thyself"manlymatt83 wrote: ↑Thu Jul 29, 2021 7:57 pm I recently sold a small business and part of me wants to take a fixed amount of those proceeds (not enough to break the bank but enough to make it worthwhile -- let's say $10k for simplicity) and create a new brokerage account at Schwab, deposit those funds, and "see what happens".
This actually isn't because I want to trade, or buy high-risk growth stocks. In fact, I know what I would buy - a bunch of REITs (I am aware of the negatives of REITs in taxable but am OK based on the recent tax law changes), like $O and $WPC, and some $DIS, just because I'd love to own some of the magic and I like where the company is going. I would likely acquire 4-5 things and let them sit there for a few years.
The issue is that I like my IPS. It's simple. I don't really want to change it to add a REIT allocation. Hence why I'm tempted to open this play account with new found funds.
I'm curious to know if this is a slippery slope, though. Curious to know if anyone has any thoughts.
Everybody is different and may be subject to different behavioral issues when it comes to where this may lead. Some, as you're concerned about, would easily slide down that slippery slope. Others are capable of creating solid, walls in their minds about such things and would never let one interfere with the other. Only you can figure out where in that continuum you might fall.
And regarding your IPS, it's not like there's never been a case of somebody editing their IPS. To me, an IPS is a contract to yourself, but first and foremost it's there, in written form, to make you think before you change your investing strategy. Seems like it's serving that purpose for you already.
Cheers.
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Re: Tempted to create a "play" account, which goes against my IPS
OP, you probably already own the stocks you like from your (presumed) boglehead-style mutual fund holdings.
Side note: I just don't get the concept of "fun money". Before I converted to the BH philosophy *ALL* of my money was "fun money", and it sucked. I was stressed out, I under-performed the market over time, etc.
Side note: I just don't get the concept of "fun money". Before I converted to the BH philosophy *ALL* of my money was "fun money", and it sucked. I was stressed out, I under-performed the market over time, etc.
Re: Tempted to create a "play" account, which goes against my IPS
I believe that is the answer to your dilemma.manlymatt83 wrote: ↑Thu Jul 29, 2021 7:57 pm The issue is that I like my IPS. It's simple. I don't really want to change it to add a REIT allocation. Hence why I'm tempted to open this play account with new found funds.
One of the key points of an IPS is that it is intended to keep you from making investment decisions that are unwise, spur of the moment, or simply not in accordance with your well-considered path towards achieving your financial goals.
So my recommendation is to avoid the "temptation" to invest those funds in a manner not in line with your IPS. It simply doesn't fit who you are as an investor.
Re: Tempted to create a "play" account, which goes against my IPS
I agree with this! The OP didn't say what percentage of his NW this would represent but I think you can look at this as play money as well as an investment. If you're okay with the potential downside then go for.anonsdca wrote: ↑Thu Jul 29, 2021 10:10 pmThis is just about the most wrong advice you could get. How about this--- Why not treat it like an investment? $10K is not chump change.
Set up the account, research and buy what you want. Manage it, see how you do? This is investing, not playing around. Why not treat the $10K as an investment? You will find out soon enough if you are going to be successful and enjoy it. And by success, I dont mean watching your balance sky rocket. People dont buy REITs for capital gain mostly they buy them for income (tho many do provide cap gains). People do buy DIS for Cap gains, but not income.
What is your strategy for these REITs? What is your goal? That is a strange mix.
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Re: Tempted to create a "play" account, which goes against my IPS
I agree with this. Treat it like a hobby, but like a hobby in all respects, and be honest with yourself that you're spending it on a hobby with no expectation of gain. I occasionally toy with the idea of setting aside ~$10K to "gamble" with on stock picks. I like gambling! But if I go to the casino and lose more than a few hundred dollars, I feel pretty crappy. And I'd never go to the casino enough in a year to lose several thousand dollars, something I could easily do making stock picks with $10,000. So I don't roll even $10,000 into a "play" account, because I'd never gamble that amount of money in something that's more transparently gambling and I don't think I'd get the same experiential enjoyment I'd reap from a vacation or even an old beat up sports car.
Re: Tempted to create a "play" account, which goes against my IPS
If you have more than $500,000 invested elsewhere then taking $10,000 to buy stocks with is just fine, IPS be darned. Some people think buying AAPL or GME is the equivalent of lighting bills on fire. Well, buying GME might be. Plenty of people have a "play the market" fund that outperforms their other investments, so the concept that it's all "going to zero" is hogwash. It might. Your other investments might, too.
I confess I've never really seen the point of an IPS. Either you believe in the superiority buy and hold indexing or you don't. If you need an IPS to keep you from not buying and holding index funds, then you don't really conclude that it's best for you. If you think indexing is the best option, the IPS is superfluous, because you're going to buy index funds and cash them in. The rest is noise with tilts and factors and three month waiting periods and other nonsense.
I confess I've never really seen the point of an IPS. Either you believe in the superiority buy and hold indexing or you don't. If you need an IPS to keep you from not buying and holding index funds, then you don't really conclude that it's best for you. If you think indexing is the best option, the IPS is superfluous, because you're going to buy index funds and cash them in. The rest is noise with tilts and factors and three month waiting periods and other nonsense.
Last edited by 8foot7 on Fri Jul 30, 2021 8:13 am, edited 2 times in total.
Re: Tempted to create a "play" account, which goes against my IPS
If you have money, there are much more fulfilling things you can do rather than play the market. If you sold a business you may be confronted with having a lot of free time and not knowing quite what to do with it. If you sat on your hands for a couple months and let your imagination go, you'll think of things to spend your time on that will make you much happier than trading stocks.
Re: Tempted to create a "play" account, which goes against my IPS
For some, play money avoids making larger, impulsive decisions, for others it may be a slippery slope. That is the nature of complicated issues dependent on personal psychology among other factors. For us, it is enjoyable to follow a couple of stocks we have chosen because we "know" they will go up. Numerous decisions can be both practical and fun.
Tim
Tim
Re: Tempted to create a "play" account, which goes against my IPS
Technically, if you do something different than is on your IPS, you are changing your IPS right? Even if you don't physically write it down correct?manlymatt83 wrote: ↑Thu Jul 29, 2021 7:57 pm
The issue is that I like my IPS. It's simple. I don't really want to change it to add a REIT allocation. Hence why I'm tempted to open this play account with new found funds.
I'm curious to know if this is a slippery slope, though. Curious to know if anyone has any thoughts.
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Re: Tempted to create a "play" account, which goes against my IPS
If I were to create a play account, my very first purchase would be a small amount of Charles Schwab Corporation Common Stock (SCHW). This would give me a good response to all our Vanguard fans who claim that Vanguard is investor-owned.
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Re: Tempted to create a "play" account, which goes against my IPS
Money is money. You shouldn't treat this "new found" money any different than your other sources of income. I do believe that you're heading down a slippery slope if you proceed to "see what happens".manlymatt83 wrote: ↑Thu Jul 29, 2021 7:57 pm Hence why I'm tempted to open this play account with new found funds.
I'm curious to know if this is a slippery slope, though. Curious to know if anyone has any thoughts.
My advice would be to get a new hobby or something to take your mind off this. Buy a new bicycle, or get that table-saw that you've had your eye on, or whatever it is that floats your particular boat. But don't buy a boat!
Maybe read or re-read some of the Boglehead recommended books on investing. Maybe a reminder would do you some good.
Link: https://www.bogleheads.org/wiki/Books:_ ... nd_reviews
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Tempted to create a "play" account, which goes against my IPS
sorry I won't talk you out of it
just have a plan / strategy and keep the TOTAL of your single stock positions at a certain percentage or less -- my rule is under 10% of investments
i don't leverage / borrow. i enjoy participating in the markets at a 'small' level. the rest is in TDFs, index funds, etc.
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just have a plan / strategy and keep the TOTAL of your single stock positions at a certain percentage or less -- my rule is under 10% of investments
i don't leverage / borrow. i enjoy participating in the markets at a 'small' level. the rest is in TDFs, index funds, etc.
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