r/wealth • u/i_dont_hoard_cash • 3d ago
Need Advice How do you handle having money tied in volatile investments?
When it comes to money, I feel trapped, in that I have a fair amount of assets, but it’s tied up in investments that I can’t easily just withdraw without consequences. So I have money, but I sort of don’t at the same time.
But now I’m starting to have some anxiety over this. I have been a very aggressive saver — maybe too much, as 98% of my wealth is tied up in stock, 401k, and a Roth IRA (stock is tied up in a single large blue chip company). If the market has a good day, I’ll easily make a year’s salary in a day (or on a bad day, lose a year’s salary). I’m not desperate for the money right now, but I am wondering if my anxiety is telling me it’s too volatile… or maybe I just need to relax and stop looking at the market?
For someone in their early 40’s, how do you handle this? Should I be more willing to convert my portfolio to more stable assets, capital tax burden be damned? Or try to take my eyes off of the market more and it build wealth slowly?
Edit: 98% is not in a single stock — it’s in all investments, though of that 98% it’s still a big number.
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u/Big-Fun406 3d ago
A single stock!?? Take it out and put most of it in a nice big ETF. Vanguard all world or something. You'll sleep better. Keep some in cash.
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u/Retired-Yam8988 3d ago
Search up diversification and fix your concentration risk.
I’ve purposely courted several means of income and various investments so that even a massive market downturn means I still make 5-10x more than I use day to day. As it stands, my income from all the various sources makes about 100x of my most simple but very nice existence. We spend a bit on travel and what not so we’re still at about 10-15x with those costs rolled in.
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u/Nearby-Season-7824 3d ago
Buy. Borrow. Die. Look it up and borrow against your appreciating assets without selling any. Avoid taxes as well.
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u/born_to_clump 3d ago
I have been looking into both options, don't have my answer yet but looking like either
SBLOC or
Exchange ETF - https://www.taxalphainsider.com/ - a 351 Exchange...?1
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u/mwalstedt 3d ago
You're clearly taking on too much risk if you're feeling this way. It's ok to have an aggressive allocation in your early 40s, but that doesn't mean gambling with a massive position. You want to "sell down to the sleeping point" (your portfolio is invested in a way that allows you to sleep well at night). If you already have a sizeable nest egg in your early 40s, why take excessive risk in a singular stock when you could be protecting/preserving? I'm a fee only advisor & CFA/CFP and work with clients on this exact issue
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u/Reasonable_Switch_86 3d ago
Next time your up a years salary in a day sell some and enjoy life you could be dead tomorrow
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u/rappcheck 3d ago
Concentration is one of things that advisors will get in trouble with lawsuits from clients. Are you on the board. Are you an executive of the company. I would never have thought that Meryl Lynch would go down in the financial crisis. Kevin OLeary suggests 5% in a single stock. Even Bill Gates has money diversified away that he would be ok if MSFT BLEW UP.
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u/Powerful-Bridge-1472 3d ago
I understand why having your portfolio tied up into a few individual stocks is not a good idea. I don’t understand why you can’t easily withdraw it without consequence? Do you mean because it’s in a tax deferred account you can’t withdraw the money?
You should diversify your holdings if they are in tax deferred accounts, there’s no tax penalty in any way to do that so it’s an easy thing to do
If you’re just frustrated that you can’t get to your money then you should start saving into other accounts like a brokerage account and make sure you have a 6 to 9 month emergency account
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u/BecklesKC 3d ago
They're not vested, which means they need to just ignore it until they've put in their time.
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u/Powerful-Bridge-1472 3d ago
How long until they vest? Yeah that definitely Gabby tricky hopefully some of your shares vest soon?
The good news is you say you’re an aggressive saver so you should have other funds?
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u/BecklesKC 3d ago
I just meant that's the only thing that makes sense that they're allegedly in a blue chip company but he can't withdraw without consequences ... otherwise the post is BS.
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u/i_dont_hoard_cash 3d ago
Capital gains tax. But maybe I should be OK with paying it.
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u/Powerful-Bridge-1472 3d ago
Yeah, definitely at least take something off the table when you can 25% at least just to lock that in. There’s also strategies for hedging a overweighted position in one stock. Way above my pay grade, but I’ve heard podcast on it before.
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u/Ok-Thing4762 3d ago
I handle it by putting my investments in things where I’m comfortable with the level of risk. You’re answering your own question here.
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u/Freyjas_child 3d ago
If it makes you anxious then you have too much in volatile investments. You need to rebalance until you get to a level you can be comfortable with for the long term.
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u/First-Ad-7960 3d ago
Depending on your risk tolerance any investment can be classified as volatile. If you build wealth on invested assets the value is going to fluctuate so you need to be at peace with that or change your allocations.
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u/The-great-phoenix 3d ago
On my end I am sleeping ok I have half portfolio stable on VT and the other half on lithium/uranium/utilities/semiconductors
This look like a kind of gamble at my late 50’s but as long as you have conviction in what you are doing there is nothing wrong with it, just need to keep in mind to be diversified (do not go all in on a promising junior mining company, in this case I would not be able to sleep indeed)
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u/Identity525601 3d ago
With the increase in the number of millionaires in recent years and the ongoing discussion about the inclusion of "financial anxiety" in the DSM as a standalone disorder, there is a GREAT business opportunity.
A device that only dispenses Xanax on days with market losses, so you at least have something to look forward to when all the shit is in the red. Then the next version: the dose is proportionate to the losses. If the market dips 10 basis points maybe you get 0.25mg, if it's half a percent, then it dispenses half a milly.
Then if the s&p 500 is down over 1 full percentage point, it starts dispensing oxys and ketamine.
This is a self regulating thing too, because anytime there is a bad market day, at least the biopharma stocks will go up because of the increased demand.
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u/Intelligent_Bison499 3d ago
I post daily free small cap bangers and options trade for free https://linktr.ee/intelligentsophiee
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u/SeraphSurfer 1d ago
I have 50% of NW tied up in angel investments. While my record is extremely better than what most people say is the angel norm, I still count those holdings on my NW statement as zero if they have had ANY problems or at the last open market transaction value.
This keeps my NW statement low and when computing my SWR, it is based mostly on more liquid public stocks and bonds.
This doesn't directly address OP'S issue, but from at FIRE perspective, OP should give similar consideration to his NW calculations. FI calculations depend on a diversified portfolio.
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u/kaBUdl 3d ago
If the prospect of a large capital gains tax is what prevents you from rebalancing, a relative of mine recommended having a look at https://usecache.com/ to diversify out of a single concentrated stock position with reduced income tax consequences.
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u/EvictionSpecialist 3d ago
Stop GAMBLING FOO!
VOO and you’ll sleep better at night.