My son, 23, pays me rent. He has saved $10,000 living with me. Should I ask him to leave when he hits 26?
Dear Moneyist,
I have a 23-year-old son who lives at home and works a full-time job. He pays $300 a month, which I put in a savings account. Is it unreasonable to tell him that once he turns 26, he will need to move out? It makes me uncomfortable that I have to tell him this.
I feel like it is wrong, but a part of me knows that he needs to explore life and I don’t want to hinder him. He is a good young man, but he also needs to learn. I also talk to him about money management, savings and investing, but the investing I am learning myself, so I can’t really teach.
He has saved $10,000 and it’s in a money-market account. What can he do to help maximize the money he has saved? And how should I invest the money he is giving me so when he does leave, he will have something to fall back on? He doesn’t know I am saving the money.
Thank you for your help and attention in this matter.
Unsure Mom
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Dear Unsure,
This is an opportunity for him, and you can present it as such.
Start by asking questions: “Where do you see yourself in three years? Are you happy in your job? How would you like to progress?” It may be that he decides to take advantage of this time at home to further his education, or save up for a down payment on a home to buy, or a deposit on one to rent.
And then you can tell your son where you would like to see him in three or five years’ time. “You’ve worked hard and saved enough to have your own place soon. Have you thought about where you’d like to live? Rents are falling, so we should take a look and see what’s out there.”
There’s no perfect way into this conversation. Any inelegance brought about by our own awkwardness can be eased by good intentions, honesty and directness. It’s a balance and a trade off. You don’t have to get there in one conversation, but start the ball rolling now.
You could seek out “higher quality” dividend growth stocks and consider alternative assets and asset classes, ensuring to diversify your portfolio and reduce all your exposure to equities. You could continue on the road you’re on, play it safe and hold your money in cash for now (though with interest rates so low, savings accounts are not making money), or look into gold, real estate and other commodities. If you’re considering value stocks, check out these industries.
These are options, NOT recommendations. I don’t even recommend Broadway shows to people, let alone what they should do with their money.
As MarketWatch columnist Mark Hulbert wrote: “The odds of making money over this turn-of-the-year period are close to three-out-of-four, which means that there is a one-out-of-four chance you will lose. So don’t throw caution to the wind.” Amen to that.
Proceed cautiously. Do not expect quick gains.
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Quentin Fottrell is MarketWatch’s Moneyist columnist. You can email The Moneyist with any financial and ethical questions at [email protected]. By emailing your questions, you agree to having them published anonymously on MarketWatch.
