Looking for input on my sister's financial situation

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Nvielbig
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Looking for input on my sister's financial situation

Post by Nvielbig »

This might end up being a somewhat long post, and will all boil down to a pretty simple question in the end: what is the proper way(s) to suggest the Boglehead approach to investing to somewhat who is on the opposite side of the spectrum?

Now that that tl;dr is out of the way, a little backstory: I was on vacation with my sister and parents a few months ago. My sister's boyfriend (she is 34 just for background) is a finance consultant, I don't really know what he does... but he has a high income and yada yada yada, in the end you'd think his advice concerning money and investing would be foolish to not adhere to.

Me: I am a new Boglehead... at this time, I was not one. I still had my investments in [expletive removed by admin LadyGeek] Principal mutual funds with like 1.9-2.2% expense ratios -- since then, I have moved to VFFVX 100% (401k), VTI 100% (Roth) and VTI 60%/VXUS 40% (taxable).

She was telling me about how she invested like $7,000 into Ally into probably 15-20 stocks and it had grown to like $10,000. I was like nice, let me talk to him and see what this is all about. Basically, he went over investing with me on the phone and the overall strategy that he goes by is:

- Invest in 'stable', historically strong companies that payout dividends. Also, "invest in big companies that you like, or that you personally have a good perception of, or that you just like".
- "Diversify": his definition of diversification is approximately 20-30 stocks, all US, all very large companies that payout dividends.
- Focus on the long-term and do not invest money that you need... okay this one is sound.

Thankfully, I didn't have any money to invest in at the time because it was in Principal. Thankfully, the Boglehead world somehow founds its way into my life at the right time. As I said, I liquidated those funds, and invested them according to Boglehead advice, not according to his.

My sister is not stupid, and has a good income, but I feel obligated to at least show her the Boglehead investing strategy somehow. We don't come from a family of financial gurus - not poor or anything, but also, we'd generally let someone who works in finance on a daily basis explain to us what to do and not know any better.

If you were in my shoes, what would you do? She likes to read... should I just lend her my copies of The Bogleheads' Guide to Investing and The Little Book of Common Sense Investing? If it wasn't my sister, I wouldn't try to influence their investing at all, but since it is, I don't want her to [offensive phrase removed by Moderator Misenplace] when she has a super undiversified portfolio down the line that just doesn't do well for her, and years prior, I had the opportunity to say something.

Thanks :confused
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AnnetteLouisan
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Re: Looking for input on my sister's financial situation

Post by AnnetteLouisan »

Strategy will depend on if she’s your younger or older sister. Please advise.
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Nvielbig
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Re: Looking for input on my sister's financial situation

Post by Nvielbig »

She's my older sister.
palaheel
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Re: Looking for input on my sister's financial situation

Post by palaheel »

Nvielbig wrote: Tue Jun 28, 2022 7:33 pm She's my older sister.
I'm still the snot-nosed idiot little brother to my older sister, and I'm 68.
Nothing to say, really.
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Nvielbig
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Re: Looking for input on my sister's financial situation

Post by Nvielbig »

palaheel wrote: Tue Jun 28, 2022 7:38 pm
Nvielbig wrote: Tue Jun 28, 2022 7:33 pm She's my older sister.
I'm still the snot-nosed idiot little brother to my older sister, and I'm 68.
There's a future goal of mine :)
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AnnetteLouisan
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Re: Looking for input on my sister's financial situation

Post by AnnetteLouisan »

Older sister here.

In that case, the only way I’m aware of is to occasionally sigh how lucky you were to have found BH and how much you’re saving in fees or how well you’re doing. But just let it hang there. Pique her curiosity but don’t try to explain, teach or encourage. Leave a book or two around or read one in front of her.

But it has to be reverse psychology. It may take days, months or years. The slightest whiff that you know better or are trying to help her for her own good and the bubble is popped. Are you up to the challenge?

Good luck!
Last edited by AnnetteLouisan on Tue Jun 28, 2022 7:43 pm, edited 2 times in total.
boogiehead
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Re: Looking for input on my sister's financial situation

Post by boogiehead »

If she didn't ask for help I wouldn't interject since her strategy could be a lot worst (i.e. crypto, arkk funds, leveraged funds, etc...). I only interject if someone asks for help or if I feel like the person is going down a path of destruction (which I feel like this isn't in your sister's case), but I'll only interject once to warn you and its up to you to decide if my warnings are warranted or not.

Yes, her strategy is a bit more risky compared to the boglehead 3 fund portfolio, but it could also potentially payoff greater than the 3 fund portfolio.
swylie
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Re: Looking for input on my sister's financial situation

Post by swylie »

Many years ago a banker friend of mine told me there are basically two investing philosophies : you invest in the economy (basically the Boglehead approach) or you play the horses (try to pick winning stocks). That's an oversimplification, but to me--who knew nothing about investing at the time--it made a lot of sense.

You shouldn't try to persuade your sister to follow your philosophy, you can only share your own experience and the ideas you've embraced and the rest is up to her. If she seems interested, turn her on to some of the things you've read that made sense to you.
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JoeRetire
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Re: Looking for input on my sister's financial situation

Post by JoeRetire »

Nvielbig wrote: Tue Jun 28, 2022 7:19 pm My sister is not stupid, and has a good income, but I feel obligated to at least show her the Boglehead investing strategy somehow. We don't come from a family of financial gurus - not poor or anything, but also, we'd generally let someone who works in finance on a daily basis explain to us what to do and not know any better.

If you were in my shoes, what would you do? She likes to read... should I just lend her my copies of The Bogleheads' Guide to Investing and The Little Book of Common Sense Investing?
So give her a copy of the book and point her to this forum. I'm assuming this is where you learned whatever Boglehead investing strategy you like. You said she's not stupid - she can learn everything the same way you did.

And if she isn't interested, you won't need to evangelize any further.

Not everyone needs to be a Boglehead. There are many paths to success in life.
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jj45
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Re: Looking for input on my sister's financial situation

Post by jj45 »

As much as I subscribe to Bogelehead investing, in the range of possible paths your sister's is pretty high on the list. On a scale from Boglehead (10) to criminal (0), I would give her a 9 or 9.5. Without the dividend tilt it might be the 2nd best strategy to Boglehead, with the tilt it's a close 3rd. She is in no way at the opposite side of the spectrum, that honor goes to "all in on bitcoin."

The overlap between your sister's strategy, 20-30 large historically strong US companies, and the SP500 or Total Stock Market must be large. Anyone have a guess? Her advisor is a closet indexer.

With the potential of damaging relations, I would not intervene and I would sleep well knowing she has a good plan. Her saving rate will be a much bigger factor in her success than the difference between her strategy and Boglehead and I would engage in conversations about that.
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Nvielbig
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Re: Looking for input on my sister's financial situation

Post by Nvielbig »

Thank you very much to everyone for your level [Bogle]headed advice.

I was honestly just so relieved to have found the BH plan for myself (especially coming from mutual funds with ~2% ERs), and got narrow sighted into thinking that it’s BH or bust.

I will sleep soundly knowing that her plan isn’t a bad one either.

Cheers!
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