Welcome to Ask the Bills, where every two weeks Helaine Olen answers readers’ questions about their most nagging personal finance and financial etiquette dilemmas. Seeking advice on a money issue? Email helaine.olen@slate.com.
Helaine,
This might be the most 2016/All the Single Ladies question ever: Should I sell my shares in Apple, currently worth about $4,000, to help cover the costs of freezing my eggs? I am 34, have about $100,000 in retirement accounts, and am in year one of buying my apartment on a 15-year mortgage. I put 9 percent of my earnings in a 401(k). There’s not a whole lot extra after the mortgage, bills, and other normal expenses to put toward egg freezing, which will cost at least $10,000. Having $4,000 would mean the difference between doing it this year and waiting another 12 months or so while I save. (My mom doesn’t care for babies and has repeatedly turned down my proposals to go halfsies.) I really want to make the momlette happen this year and not have to think about it anymore. My eggs are deteriorating by the millisecond! Is it shortsighted to sell these shares?
It’s more than a bit fitting that the shares involved here are Apple’s. Apple is one of the companies that raised the profile of egg freezing a few years back when it announced it would cover the procedure as a benefit to female employees. But egg freezing, while not quite technological snake oil, is far from a guarantee. As Slate’s Nora Caplan-Bricker wrote last week, “frozen eggs may result in a live birth as little as about one-quarter of the time for 30-year-old women and a tenth of the time for women aged 40.” Those aren’t great odds.
Why might you not know this? Here’s a thought: The fertility industry is a big business, with estimated annual revenues between $3 billion and $4 billion in the United States. Not only does it make money charging you for the initial egg-freezing procedure; it charges egg storage fees of anywhere between $500 and $1,000 annually. That adds up! Critical articles on egg freezing often rightly bemoan how women are still—in 2016!—put in the position of choosing between career and parenthood in a way that men are not, but we read far less about the procedure’s high failure rate.
So, no, I can’t recommend selling any stock to pay for this. I know it would put your mind at rest. But that would be a false calm. Still, let’s not end this on a down note. Your finances appear to be in great shape. Should you want to sell the Apple shares to take a vacation or any other special treat, you have my permission. Relax and remember you still have time to get pregnant, either the old-fashioned way or through (nonfrozen!) in vitro fertilization. As for your mom not liking babies? I can’t help with that one.
Helaine,
Three years ago, I sold a house I bought in my mid-20s and made about $15,000 on my original investment. I put that money in the stock market and, after some good trades, am now at $68,000. The housing market where I live is blowing up, houses are going for more than the asking price, and nothing stays on the market more than a week. The risks of stock trading are starting to wear me out, and the whole reason to have this money is to buy another property to live in. But I fear the timing isn’t right and another housing bubble is imminent. Real estate won’t net me the same gains as stock trading, but I do think it’s a “safer” investment, as I intend to rent out a room. Should I keep playing the market and wait until real estate comes down a bit, or should I go at it sooner rather than later?
Stop the madness! No more stock trading! Studies have repeatedly shown that less than 1 percent of us have the ability to trade stocks and repeatedly beat the markets. Chances are you don’t have a special skill. You’ve just gotten lucky. And since the risks you’re taking are wearing you out, it’s not like you’re having fun anyway.
So should you take your money and buy a house or condo? If you think you’ll stay in place for at least five years, you should consider it—if you want to own. But as a “safer” investment? That’s something else.
My ability to predict the future is as well-developed as anyone else’s, which means it’s nonexistent. I can’t know whether we’re witnessing a housing bubble or not. But I can tell you that real estate is an expensive investment. In my years of homeownership, I’ve dealt with emergency roof links and boiler breaks. In one never-to-be-forgotten week, my dishwasher and my fridge died. Taxes go up, too. A few years ago, economist Robert Shiller ran the numbers and came to the conclusion that the Standard & Poor’s 500 index beat homeownership as an investment. It wasn’t even close. Of course, past performance doesn’t predict future returns, as they like to say in the financial industry, but it is something to keep in mind.
Buy a home if that’s what you want to do. If you don’t, get in touch with the Vanguard Group or TIAA-CREF and look into putting your money into low-cost index funds. And then find a hobby other than stock trading.
Helaine,
My spouse and I are in our late 30s. We have decent salaries, use our company 401(k)s, and have $60,000 in fairly liquid savings. For the past couple of years we’ve been putting most of my salary toward our fairly sizable student loans and now have them down to $30,000. This fall, I’m going back to school for four to five years. Tuition will be covered. Though I will work part time, our income will take a hit. We’re also about to have a child, and though it looks like child care will be covered for the first couple of years, unexpected things can happen. We have one older car and would love to buy a home after I’m finished with school and we can move to a more affordable region. Given all this uncertainty, what’s the best use of the $60,000 nest egg? Should we use it to supplement our income while I’m in school? Or is it better to hold onto it for emergencies or long-term plans, and take out more student loans? And what’s the best investment advice for these funds?
Congratulations! This is all exciting—especially the baby. It sounds like you’ve worked awfully hard to reduce the amount of money you owe for your education. Why would you want to undo all that effort and take on more loans? My advice? Use the $60,000 to supplement your income as needed, and only take on student loans if you need more than that. It’s not, after all, like you need to make an immediate decision. You can take on a student loan at any point while you are in school. Since you’ll likely be tapping into your nest egg, I suggest you look for a high-interest bank savings or money market fund (or as high interest as you can find!) and park the money in it. If you think you might be too tempted to use it, you could consider placing a portion of it in a one- or two-year CD—you’ll likely get a little bit more interest in return for agreeing not to remove the money for the lockdown period—but don’t do this unless you’re sure you won’t need the money for the entirety of the contract. If you withdraw it early, you’ll pay a penalty. Sites like DepositAccounts.com can point you in the right direction.
Finally, one bit of unsolicited baby advice: Take $28.99 from your savings and purchase a baby bouncer seat. You’ll thank me in the very near future.
