Thursday, 23 October 2014

Is It Better To Invest Alone or as a Couple?



It got me thinking for quite some time, if you are a budding investor but your significant other isn't interested or knowledgeable about it, what should you do?

Maybe your boyfriend is not aware that you have an existing portfolio. Or your wife is focused on her day-to-day life and not willing to take the risks.

Or let us even assume that both you and your partner have seen the benefits and risks of being invested and chosen to invest together.

What then? Should you invest together? Or have your own separate portfolios?

Let us first talk about the various benefits of investing as a couple.

1. Having more capital / dividends

This is the first benefit. When you invest together as a couple, you are able to invest in more shares from the beginning as your purchasing power is doubled. For example maybe you have $2,000 and your partner has $2,000. I'm sure you'll agree that $4,000 can buy more than what $2,000 can. Therefore a higher amount of shares owned will result in a increased amount of dividends as well.

2. Incurring less Commissions/Expenses

Depending on your broker, buying from one account would result in lower expenses overall compared to two separate accounts.

3. Closer Relationship (?)

Notice the (?). This depends on your relationship status. For example, it could work out if both of you have the same strategy, mindset and goals. In this case, it would potentially bring you closer as you plan strategies together. It may give off the impression and satisfaction that you're working as a "team".

There are some of the various benefits that I can think off. But unfortunately, I can think of more negative consequences when deciding to invest together as a couple.



CONFLICTS, CONFLICTS, CONFLICTS.

Maybe you're more aggressive, willing to take higher risks for higher returns. But your partner is more conservative. Therefore this may result in conflict along the way.

 Or maybe you're happy with your portfolio. Even in bear markets you're okay with seeing your investments decrease in value knowing you're in this for the long term. But your partner freaks and wants to sell off everything to minimise losses. Conflict.

Investing styles are mostly dependent on your personality as a whole. Therefore expecting your partner to adapt to your style may not be the best way. Nor should your partner expect you to comply with his/her styles no matter what. Conflict.

You're a person focused with saving and investing. She's more obsessed with buying the latest handbag. Arguments about how much each person should contribute to your investment fund may result in negative consequences. Or you're a person that believes in saving regularly. Your husband prefers to spend his cash on booze and socialising. Again, conflict.



Notice that most of these problems stems from incompatibility as a couple. Your thinking may be different from one another and this would not help. A couple should understand each other's fears and work towards a common goal. Taking the lead is not wrong, completely deciding the direction of the portfolio and investments is not wrong either.

I guess what I'm trying to say there's no right or wrong answer here. It all lies in your common understanding as a couple.

It's all about whether they have agreed on a common goal and both are equally aware of what direction they are heading towards to.

So would it better to invest alone or as a couple? The answer is up to you to decide. Only you and your partner will know what's best for the both of you.

Signing off,
Teenage Investor

11 comments:

  1. Hi TI

    The best is to have both separate accounts and each accounts for his or her own strategies. This way you can hv the best of both world. Sure the commission is one thing but how much is that compared to all the other negatives. It is negligible.

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    1. Hi B. I really agree! The negatives far outweigh the positive benefits!

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  2. When we come to the market, we will all think differently to complete the transactions.

    Any different from thinking as couple?

    Both will have different level of emotion. Right?

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    1. Hi Uncle! I believe that most couples will have different personalities, mindsets and goals. Maybe the husband more aggressive but the wife scared lose money, not willing to take high risks. So ultimately, believe that separate portfolios is better.

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  3. Hi TI,

    Always separate it. Unless one couple is more boh chup and relies on one person to direct the investment direction (in other words, it's really just one person with larger account), don't try it. Money can break the relationship.

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    1. Hi LP!
      I agree too. Quarrelling over money and the risks day in day out will put a strain on the relationship. Separate portfolio has so much more benefits. Maybe if use CPF money to invest, husband invest high risk but high yield cause he wants to hit minimum sum faster (assuming husband is much older) and wife purchase low yield but lower risk stocks in her CPF account cause she has time.

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  4. If the spouse risk profile is conservative and you are aggressive, it could very well create conflicts should the investment tank! Different level of tolerance.

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    1. Hi Lizardo! Agreed, the conflicts are not worth it when it's totally avoidable.

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  5. Hi TI,

    Just sharing my experience. My wife and I hold separate accounts. We have separate duties. I invest my monies and take all the calculated risks. She monitors the day to day cash flow and expenditures within the family.

    If my wife is not good at managing cash in the family, i do not think I will have the confidence to focus100% in investing.

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    1. Hi SRS! That's a really great way to divide up the roles and asset accumulation in the relationship. Certainly it could be more efficient that way. What do you think about both couples having their own separate portfolios though?

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  6. Hi TI,

    We both had our separate stock portfolios before we were married. But she admitted she isn't good at picking stocks, so she took on the cash management role.

    You can say she is my CFO while I am the CIO. :)

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