Investing Family Money Can Be A Tough Full-Time Job

I finally clearly understand why I haven’t been able to shake some of the stress I’ve been feeling lately. Despite writing less, doing less business deals, and exercising more, I still feel this gnawing stress because I’m responsible for investing the family’s money.

When you invest family money, family money always feels more important compared to simply investing your own money. If you make a wrong investment decision with your own money, you may feel bad. However, you’ll either work harder to recoup your losses or just internalize the pain and move on.

But if you mess up investing your partner’s money, your children’s money, or your parents’ money, then you feel like a big donkey! Not only will you be disappointed in yourself, but more importantly, you will feel like you have let your family down.

That feeling of shame is why I don’t want to manage anybody’s money outside of my own. It’s also why I don’t want to give readers specific investment advice. I’m just sharing what I’m doing with my money. It’s up to you to decide what you want to do with yours.

Too Many Financial Accounts To Manage And Questions To Ponder

For our family of four, I have to manage and keep track of over 25 accounts. And sometimes, managing them all feels overwhelming.

Take for example the two 529 plans we opened for our children in 2017 and in 2019. Here are some decisions I’ve had to ponder over the years:

  • To superfund or not to superfund our son’s account in 2017? The stock market was looking dicey then, and indeed sold off in 2018.
  • If I superfund, should my wife superfund as well? Or should she spread her contributions out due a potential correction or bear market?
  • Should we accept contributions from my parents? If so, what is the right amount? Will my parents have enough money left over to feel comfortable in retirement given I don’t know exactly how much money they have. They were government employees, hence, did not make large incomes.
  • Should I invest the 529 contributions in a target date index fund or a target date actively managed fund by our provider? The answer is clearly a target date index fund due to lower fees and the difficulty of outperforming an index. However, only years later did I realize we had to make a choice.
  • Is it OK to start contributing again to my son’s 529 plan November 2022 since it’s been five years? Or do I have to wait until 2023, the following calendar year?
  • How much more should we contribute to our daughter’s 529 plan so that her balance will end up roughly equal to our son’s 529 plan balance when she turns 18? I ended up writing the 529 plan amounts by age to provide every parent a guide.

Luckily I run a personal finance site to answer these questions and get reader feedback! Otherwise, I might go mad with all these considerations!

The Financial Contribution Snafu

My mom has always been generous with her money. Since 2017, she has regularly contributed the maximum gift tax amount to fund both children’s 529 plans. This is despite her never making more than $50,000 a year in her life.

For 2023, she wrote me two checks and asked me to deposit them. When you receive money from a family member, it might feel great. But to me, it adds an extra level of responsibility.

The one thing I do have is enough money to not rely on my parents for help. As a result, I always initially decline the offer. However, I also want to honor my parents’ wish to contribute.

With one of the two new $17,000 checks, I had to decide when was the right time to deposit the check into my daughter’s 529 plan. I wasn’t worried about the other check for my son’s 529 plan because I don’t plan on depositing it. His 529 plan has enough and I don’t want to accept so much money from my mom.

Despite my mother regularly reminding me to deposit her checks, I patiently waited for two month until the S&P 500 had corrected down to 3,950 from a high of 4,195 before depositing. Psychologically, even if the S&P 500 headed still lower, it felt better to deposit below 4,000.

Upon depositing the check through my Fidelity mobile app, I immediately e-mailed my mom so she could transfer funds from her savings account to her checking account. Her savings account pays a much higher interest rate.

She wrote back, “Thanks for letting me know about depositing her 529 check this week.”

It Wasn’t Meant To Be

After depositing the check, the S&P 500 began to rebound. I felt great! In just four days, the $17,000 check was in the money by 3%. That’s $510! Whoo hoo!

Then I got an e-mail from Fidelity saying the check BOUNCED! The $17,000 in funds was debited from our daughter’s 529 plan account. How sad.

When I told my mom the news and asked her what had happened, she said she wasn’t notified I was going to deposit the check.

When I forwarded her e-mail acknowledging my notification, she said “Ah, that was the time I spent hours trying to open the kids’ dancing video you sent using a different app.” She had been distracted.

Lesson learned. When sending important information, keep the message as simple as possible!

Try Again, Maybe?

My mom wants to write another check, but I told her to hold off. I still have her bounced check.

Now that she has transferred enough funds into her checking account, maybe I can try to redeposit it. But if so, I will have have to wait several days to see if it gets rejected again.

If it bounces, do I ask my mom to write another check? The answer is NO.

Forcing destiny is not the way. I did my best to wait for the right time to invest. I gave her a heads up. Yet the check still bounced. It was not meant to be.

Besides, what if I deposit her check and the S&P 500 starts to go down again? Then I’d feel like the stock market gods were laughing at me. Forget it! It’s best my mom spends her money as she sees fit.

Although my daughter’s 529 plan will be invested for the next 15 years, it still irks me to have missed the rebound. The entire process reminds me that day trading is a waste of time and money. I experience too many emotions when investing in public equities, which is why I limit my exposure.

Investing Family Money Is Stressful

The larger your family and the more you want to take care of them financially, the more stressful it is. The more you care about your parents, the more you will worry about their well-being.

There’s something to be said about keeping your finances as simple as possible. There’s also a benefit to not always having excess cash to invest. Imagine just spending all your money every time it comes in and never investing for the future. How freeing!

The way things are going now, I sometimes feel like investing family money is a full-time job. As someone who wants to re-retire and live a relaxing life, I’m somewhat stuck. I’ve got to come up with a solution to maintain a happy balance.

Fortunately or unfortunately, I’ve got too much money exposed to risk assets to not pay close attention. One wrong decision could cost our family in one year, five years of living expenses.

Alternatives To Managing Your Family’s Money By Yourself

Investing in private funds has been my main solution for stress relief. It’s nice to have someone else manage my money.

Once I’ve committed a certain amount of capital to each private fund, there’s no turning back. As the capital calls come due, I happily pay them. It’s also nice to not see the fund’s daily value.

If managing your family’s money in the stock market is causing you too much stress, here are some alternative solutions to consider.

Be Kind To The Family’s Money Manager

The next time you find your partner or spouse more stressed than normal, maybe it’s because they’re busy investing the family’s money.

Maybe they screwed up a trade or are second-guessing one of their rebalancing decisions. Or perhaps they’re doing their best to make up for investment losses they haven’t told you about.

When the family’s money manager is in capital preservation mode and it’s a bear market, they will likely be going through some mental upheaval. So try to be understanding and cut them some slack.

Don’t take what your family’s money manager is doing for granted. Instead, be as supportive as possible. After all, they are investing for everyone’s future.

Reader Questions And Suggestions

Do you manage your family’s finances? If so, do you ever get stressed doing so? Do you ever feel like managing your family’s money is a full-time job? What are some strategies for reducing stress when managing your family’s finances?

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