SG Budget Babe
Asked by Anonymous
Asked on 09 Dec 2019
What should I say if my parents ask me to help them invest their money?
Has anyone here done that. What are the problems that you have faced?
Top Contributor (Jan)
If you are fairly certain of your ability to generate returns for your parents, then by all means, go ahead. If not, it might be better to leave the investments to others. If money is lost, they most likely won't blame you as you are their child, but it will sour things, and you will also feel guilt ridden, which is the last thing you want.
If you were to invest their monies, make sure it is not a big amount first. Defiintely don't invest their entire live savings. At their age, they should not be taking undue risk. Perhaps up to 20% of their savings can be placed in defensive equities that generate good dividends.
I have actually done that myself, helping my mom to get some dividend stocks, which I myself hold. Mom is very happy when she gets the dividend twice a year. It was a bit hard at the start since she's never invested, so she was very very skeptical about the whole idea. However, as her son, I personally guaranteed her capital (she wasn't going to put too much anyway) so that extra level of guarantee from me was sufficient to convince her to start.
Top Contributor (Jan)
Well I would because it's my job. But for anyone who either doesn't have the knowledge, skill, or qualification, I'll recommend them to find a qualified and licensed financial advisor to help them invest.
I would also assume that your parents are probably in their 50s, nearing retirement, so a moderately conservative portfolio focused on dividend/income distribution would be ideal. Something along the lines of about 30% Equity, 50% Bonds, 10% Commodity, 10% Cash with monthly dividends to support a possible early retirement.
You also want to make sure they're globally diversified, funds denominated in SGD, and have reduced volatilility and risk.
I am okay to invest my family funds. But of cuz provided i already equipped myself with most of the investment knowledge. Also before helping them, i must have a track record on my own investments 1st.
For me, I haven't done that but I will do it if I got the chance. Not sure if I will face any problems though, but before I do any investments for them, I will "sell" them what I am buying, and with their consent and understanding that a black swan situation might happen, then I will purchase. Thereafter, it would be your duty to update them consistently how it's doing etc.
My parents are very risk adverse as they have "invested" in those MLM and 20%/month returns before, so even showing them my results of investing still creates the layer of doubt in them, but we'll get there!
Top Contributor (Jan)
It doesn't matter whose money that you are investing. In all cases, it will be best to understand the objective before you start. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
What is your objective for investing?
The only difference is the responsiblity that you have to undertake, which is often linked to trust. If you have the knowledge, skills, experience, and have a proven track record, then continue doing what you have done.
Additionally, it will always be valued to do constant review to ensure that the portfolio is not overexposed to unnecessary risk. In like manner, be open to hearing a second opinion from a professional who does investment in a similar fashion. This way, you get to understand the direction that you are heading towards and to keep the blind spots in check.
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It would really depend on what you are know. If you are more well versed in the ETF and are in time in the market camp (as I am) then I would suggest a different approach for your parents and depending on how knowledgeable you are , may want to seek outside help.
Personally, I don’t invest for my parents because of the following main reasons:
What I know and follow may not be the best suited for my parents
Psychologically, losing my parents money is too stressful for me
Hope this helps!
I believe many parents would have asked their children who does investing to help them invest if the parents doesn't know much about investing.
Main issue is if losses, who is responsible.
For me, since money is sensitive, i will prefer not to touch other people's money.
If they want to still invest via you, then is better to have it in black and win about the risk that comes with investing. So that in case the parents decides to dispute, the black and white can be in email serve as a reminder that losses are part of investing.
Also to start with small amount rather than their whole money.
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Investing for others will train you to be especially more mindful in your decisions given how the money belongs to someone else you know. You aren't accountable to yourself but rather to others. I think it'd be good experience to invest a small sum first and see how it goes and grows (hopefully)
If you want to do the investment management for them, ensure that you have the revelant MAS license to do so.
Alternatively you may engage a licensed robo-advisor/digital-advisor or a licensed financial advisor to invest on their behalf.
Yes! I would.
I love it if my parents would ask me to invest on their behalf.
I will help them buy dividend stocks in USA or SG markets and let them collect dividends.
Of course every parent are different, so you need to sit down with them, ask them questions on when do they need the money (in how years time), and whats their risk level, and if they can just sit still there.
Choose some ETF or funds (no insurance ILP please, no insurance cash value plans too) for them, or some decent stocks for the future.
I know of a blogger whose mother is risk adverse so the blogger took her mother's fixed deposit, pays her a much higher rate YEARLY, and then took the money and invest in those funds that he usually invest in.
Every one is different, so do sit down with your parents and talk through this. Emotionally and logically, they must agree with what you proposeing.
Make sure your parents communicate to you their risk appetite.
Before jumping into anything as well, do your research and lastly, never put all your eggs in one basket, diversification minimises potential massive losses.
It really depends on your confidence, and your overall returns. Not only that, you have to know and understand your parents' emotions and mentality about money before deciding to do it for them.
In essence, my thoughts are that at their age, they are not probably looking at long term investing horizon, i.e. 10 to 15 years. So you might want to look at income generating stocks such as REITs and others, as these generate dividends consistently.
Hi, you should sit down with your parents to talk through what their expectations are and what can be done. Are you confident of getting better returns for them as opposed to what they are currently doing? Assuming your parents are approaching retirement age the risks taken should not be so high. Also, consider the amount of money they are going to invest. Make sure they have realistic expectations.
Hi there. If your parents asked you to invest their money, it means they trust that you can generate some sort of returns for them?
It is better to discuss with them and understand their investments objectives and also their time horizon. Is it meant for their retirement or is it their spare savings that they are gifting to you? If you have the skillset and investment experience, go ahead. But it will be good to let them know what you intend to invest their money in and update them regularly :) However, if you do not have the experience, try seeking help from professionals!
Personally no. At your parents' age you may want to look into income generating assets like good reits to give passive income for retirement. Nothing speculative unless you are really confident in achieving good returns.
In my case I would say no. Money is a sensitive issue and I've read/seen a lot of cases where it has ruined family relationships. It's ok when times are good but what if times are bad?
Furthermore, one person's risk tolerance is different from another (even within the family) - especially since parents are in a different stage of life as well. What you buy for yourself may not be suitable for their portfolio.
I wouldn't mind sharing what I bought and letting them decide whether to buy it or not themselves.