A 24-year-old college student, who experienced the financial challenges of the 2020 pandemic like many others, faced a troubling turn of events when she entrusted her unemployment benefits to her father for investment. With her store closed due to the shutdowns and while living at home, her father suggested that they invest the money into what he described as “stable stocks.” However, the young woman now claims that instead of growing her funds, her father gradually depleted them to nearly nothing.
In a candid post on Reddit’s r/investingforbeginners, she detailed the grim outcome of her father’s investment decisions. What was initially a promising strategy swiftly spiraled into despair as her father purchased stocks that began in the $30 range but fell to mere pennies over time. Whenever she inquired about the performance of these stocks, she was met with dismissiveness. Her father assured her with phrases like “it’s fine,” and even encouraged her to invest more money into his questionable strategies.
The college student described a troubling cycle where her father would regularly liquidate losing positions just to dive into other high-risk markets, which soon also plummeted. As a result, her portfolio now stands at a dismal value of just under $200—a stark decrease from her initial investment.
Among her holdings, one stock remains above $1 but has plummeted by 70%, while the remaining stocks have all fallen to under a dollar, exhibiting losses ranging from 20% to 70%. The only position she feels some level of confidence in is linked to precious metals, which she intends to hold onto for the foreseeable future.
Realizing the need for action, she took control of her investment account by changing the password, admitting that she should have done it sooner. Her hesitation stemmed from a deep-seated family trust that delayed her intervention.
Commenters on her Reddit post voiced strong opinions regarding her father’s actions, with many insisting that her father’s strategy was more akin to gambling than investing. They cautioned her against chasing penny stocks, suggesting a shift towards diversified exchange-traded funds instead. One commentator offered a mental strategy: to consider the initial investment as a loss and to move on.
The conversation intensified as opinions diverged on whether to retain the remaining shares or sell them entirely. Some argued that holding onto failing investments risked falling into the “sunk cost fallacy,” while others noted that capital losses could be beneficial in the long run for future tax deductions.
The overarching consensus was that her approach needed a significant reevaluation. “You don’t ‘average down’ on garbage,” one commenter warned, emphasizing that adhering to poor investments could lead to further losses. Many encouraged her to prioritize long-term growth strategies by investing in index funds and ETFs rather than chasing high-risk stocks with uncertain futures.
Investment experts have pointed out alternatives such as the newly launched factor-based ETFs by Motley Fool Asset Management, which offer a structured yet passive approach to investing compared to the volatility of individual stock trading.
As discussions continued, one commenter reframed her experience as a valuable lesson, suggesting that it’s better to encounter such financial lessons early on, rather than later when the stakes are significantly higher.
