What happens if, in 30 years when I have hundreds of thousands or even millions of dollars in shares, nobody wants to buy them?

Wow this question has layers. I think there are a few ways to think about this.

1. If stock markets don’t exist, or the idea of owning part of a business no longer exists; and no one wants to buy shares, then something very very strange or very very bad has happened. It’s hard to wrap my head around this, so let’s just assume in this scenario we all have bigger problems than stock portfolios…

2. What if no one wants to buy shares in «Company X» – OK this is easier to consider. Companies come and go and history has shown that even superstar companies can go to zero… So what I found helpful in this scenario was that, we may not always know what companies will exist or thrive, but if you invest in an index of the top 200, 300, 500 companies then you are effectively always holding the top companies. This means if another Enron happens, in your index fund (or ETF), its replaced by another company.

3. 3, 4, 5 + – there are a range of more technical considerations about how markets work, buyers vs sellers and how markets have evolved over time and will continue to evolve etc… But I’ve just focused on what I see are important themes here like diversification, portfolio rebalancing etc.
   

So in summary, a way to mitigate the risk that noone wants to buy your shares in Company X in 30 years, is to buy and hold more than just one company… A way this is possible is to buy an index fund or ETF where it is always holding the largest companies.

Note: ETFs can come and go as well, so when considering if an ETF is right for you (just like if a company is right) people check how large it is and who the manager is, plus other factors, to try and get comfortable that the ETF is going to be around for the long term… Hint: The most-invested ETFs on Pearler for any given category will generally be with the largest ETFs and by the most well established managers…https://pearler.com/invest/shares

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Hi Jay, great question! It’s an understandable concern, though I don’t believe there’s anything to worry about. Because…

• Dividends from a portfolio often make up most of the passive income (say 3% or more), meaning very little selling required.
  
• The number of Aussies investing is growing each year (as the population grows and also as investing becomes more accessible).
  
• The number of super funds which are buying every fortnight no matter what is also growing each year.
  

Hope that helps.

Jay, I’d say… you won’t even need to worry about that because the passive income will be AMAZING on millions of dollars :)

But seriously, the answer to your question isn’t all that frightening at all: provided you have a decent level of diversification (e.g. through reputable ETFs, Super, managed funds, some cash, etc.) you won’t need to worry because you could do what just about every retiree does and slowly, over the course of 5-10 years, ‘transition’ your portfolio towards less volatile and more ‘liquid’ (easy to buy and sell) investments.

For example, imagine a $3 million portfolio. If that portfolio had 60% in the stock market (through ETFs, funds, Super, whatever) that means 40% ($1.2 million) would be in ‘lower risk’ investments like term deposits and bonds. When it comes time to sell part of the portfolio, you could start first with the defensive side (e.g. $50,000 parcels) and slowly (e.g. $5,000 a month) sell shares — that way your small sell order will easily be met by other investors (let’s get real, in 30 years… $5k will be like… who knows… the price of a cup of coffee ☕️?).

You’re not alone in this fear, a lot of investors think this way when they approach retirement. But remember, you have 30 years to slowly make your transition.

Cheers!
Owen Rask

P.S. if you’re worried in 30 years, just give me some 😉

P.P.S. my first P.S. was a joke… or was it… (as Nick said, this one has many layers)

Hi Jay ,

That is a very good question and not at all a silly one.
Many an investor has been caught out by what was once referred to as a draw full of share certificates. Before everything went digital, investors were sent a paper certificate of ownership for shares. The share certificates in that drawer for people old enough to have them usually represented a company that didn’t make it or came to nothing.

Think of that speculative mining company or speculative bio-tech company. The story that was so good but came to nothing.
This is one of the reasons, all share investors need to separate buying long-term quality shares, the companies that keep on keeping on, versus the smaller (usually) speculative trading companies.

From a risk perspective it is important to separate what are long-term investments versus the «I am just going to have a punt/trade».
Alternatively as the other responses suggest you can buy an ETF, a group of stocks represented in an index or a sector. The theory is if you are buying an index fund, the companies that don’t make will be removed from the index and replaced with a more successful company which means you do not need to assess which companies are the winners and losers.
Sector or thematic ETFs are more risky as themes and sectors can go in and out of fashion so to speak for investors and they often (but not always) can represent smaller companies, that are higher risk.

With direct stock picking and investing, one always needs to keep an eye on the stocks and learn when to sell if necessary. This is one of the best plans to make sure you don’t end up with a whole lot of stocks that no one wants and you can’t sell.

I hope this helps.
Cheers
Danielle Ecuyer

Hi Jay,
Brilliant question. This actually happened to me. I used to work for a company who gave me a bonus in the form of shares in the company. It was a ‘dot com’ company and the year was 2000. You may know what happened next. By the time I had left the company and was able to sell my shares there were no buyers. The shares were essentially worthless and my old company got absorbed into another company. In my opinion it was all very dodgy. I felt pretty ripped off by my former employer but am now grateful for that early lesson in the importance of ‘market depth’.

These days I stick to ETFS and feel mostly confident that I’m not in the shallows with the sharks.