Do you want to take your relationship with your Boo to the next level? Then read on.
In this blog post I will be sharing some important steps to do one of the most intimate and exciting things together.. Investing. This is one activity that can bring you closer, secure your future and is fun. Couples Finances is a difficult area of life that causes many other issues especially financial challenges which eventually result in the break down of the relationship. So pour some tea/coffee, relax and enjoy the read as we explore how couples can get started with investing together and gain financial freedom.
Before I list the practical steps couples can take to invest together, let me share the reasons why they should...
Why Couples should Invest together?
#1 - A strong sense of Direction
One of the best strategies for building a strong relationship is to have a joint project and long-term mission. Investing and wealth building enables you to work together on a common goal. This may improve the depth of personal engagement and planning between the two of you.
Since a disciplined investor must have strategy sessions, you may find yourselves having "Business Meetings" for your relationship. These meetings would include speaking about your investment portfolio which opens the door to speaking about assets, liabilities (debts) and ways to make money in a tone that is not critical of each other but focused on building together from wherever you are in your financial journey.
Investing together also creates a clear direction with a measurable destination, so you can always check to see if you are on track or not.
Here is an example of something measurable:
Investing R1000 per month together, targeting R12 000 per year with a 5 year goal of getting to R60 000 invested.
Based on this example, you would know that after 24 months you should have invested R24 000. Thus can see if you are on track, ahead of the goal or behind the goal.
Having a measurable goal will encourage accountability and also putting measures in place to deal with financial challenges and obstacles in a collaborative approach.
You will also learn together how to set priorities that do not negatively affect your investment goals but instead positively contribute to them.
#2 - Encourages Personal Growth
When was the last time you and your person had a conversation about economics, companies, innovations, the environment, impartial political analysis, social issues, human behavior etc ? hahaha..
Investing together will force you to read and acquire skills and insights you may not have previously thought of getting. This can lead to some really fun and engaging conversations (something that ladies enjoy guys). It may also lead to disagreements and debates that enable you to empathize with each other and see the world from your differing perspectives and that can result in a stronger bond and feelings of closeness.
(lol all of that from just buying shares Omega??), yes, investing can get that deep.
As you do research, you will share articles, podcast episodes, videos, blog posts etc with each other. Take a few notes from what you learn and discuss it. Get to understand what each of you thinks about the subject. Great investment ideas don't come from choosing good companies but by spotting trends and insights in much broader themes in the world.
Doing activities like this will have a major impact on other areas of your life and relationship as well. I would argue that it is impossible to not get your mindset affected positively by learning about market behavior, economic data , human nature etc.
But how does that look like at a practical level?
When analyzing how companies navigate economic challenges, you will learn how to navigate your own economic challenges and see opportunities. (this was one of the ways I spotted the social media trends and the importance of building a personal brand. I saw that most of the top performing shares had leadership that had strong personal brands, this made people trust and like those companies more)
Overtime You will eventually read about the people who started the companies you analyze and apply their life lessons into your own life.
You will learn how to properly assess people and various life situations which will cause you to make better decisions.
Most importantly (in my opinion), investing together will improve your communication skills.
How? As you share investment ideas every month, you will get better at communicating those ideas and soon become better at communicating other things in your relationship as well. Understanding the power of words and how to use them effectively will have a major positive impact on your relationship overtime. And because investing has so many challenges, you will grow in your ability to deal with issues in a logical and patient approach.
Lastly, you will learn that "storms and problems" pass. One thing experienced investors know is that all problems in the market eventually pass, including the ones we have ourselves. Most people make permanent decisions based on temporary situations and feelings. Like selling all your shares in 2020 and then missing out on one of the best wealth building events of our lifetime. Many relationships would benefit from understanding that principle.
#3 - Makes Financial Collaboration Fun
Usually when couples speak about money it is in the context of "expenses and wants".
This may make the conversation tense which can decrease the desire to be open and transparent with one another. Why? Because every time you speak about money it feels like you are being financially assessed and your financial capabilities are being tested.
Few relationships can last under that mental and emotional strain.
Instead flip the context of money conversations to "what are we building and what do we currently have to help us start". Focus on the goal and vision and not current circumstances.
This will move your relationship out the dreaded "what do you bring to the table" thinking and into "let us build an amazing table together with what we have".
As you practice this more in your conversations about money, they will become more relaxed, less confrontational and most importantly genuine. You will become two people working together instead of stressing each other out.
Leading to fun conversations about money and investing.
Let us move to the practical stuff now..
How to Invest together?
[Practical Steps]
Getting Started: Separate vs Joint Investment Accounts?
The question of using separate or joint investment accounts is up to you and your current financial set up. My opinion is that you should set things up in a way that supports making more money. However here is my approach that keeps things separate but joint together (huh?) read below...
My Approach...
- register a company.
Simply register an account with bizportal (the CIPC website for registering companies).
Once you both have Bizportal accounts, you can use any of your profiles to register a company where both of you are directors and shareholders. This is the legal entity you will use as a vehicle to hold your investments.
[Cost: R175 to R200 maximum]
- create a shareholder agreement
Decide what will happen if you have to part ways, how will you wind down the company, decide on rules for exiting the agreement, decide how much you will contribute to the company, decide equity and ownership etc. Once you have a clear shareholder agreement that you are both happy with and it is clear how much you guys will contribute to fund the establishment of your company then get started.
This step is not necessary but recommended, so don't make excuses saying we got stuck at this step, if you cannot draft a shareholder agreement, move on to the next.
[Cost: Free unless you decide to use an attorney]
- get a bank account for the company.
Open a bank account under the company's name, both of you should be able to access the bank account. As a security precaution, keep withdrawal limits for both of you extremely low.
This will prevent the withdrawal of money without the other person's approval and also keep you guys focused on depositing and investing, not withdrawing funds.
Both of you should be account signatories as well.
Make sure you choose an account with very minimal fees. All you want is a tool to deposit money into, transfer to your brokerage account (investment account) and transfer back to, that is all. So, do not get anything fancy and bulky. You don't want monthly fees that eat away at your investments. The reason you don't want to use your own personal bank accounts is that you want to create a clear financial record of contributions, transfers to the broker, income , withdrawals etc. This is very handy information to have on a clear paper trail.
[Cost: your first bank deposit, usually R50 at most banks to activate the account]
- contribute money to the company
Contribute money to the company's bank account. I believe flexibility is important so don't pressure each other. This should be a fun and exciting activity and not feel like something that puts you under pressure. At the same time you want to take it seriously, wealth building is fun but serious. Set a minimum contribution amount and then also contribute any amount whenever you can. Your contributions should be on a monthly basis in order to build the habit of focusing on the endeavor.
Even if you start out with R300 per month, that is great. Starting is what matters. Build from there and imagine the story you guys are writing together. Plus the wisdom and knowledge you will gather over the years. Try to contribute to the company's bank account for at least 2 months before investing. During the two months, you can learn using free resources on the internet or purchase my mentorship program (and if you are a couple, you can both attend for the price of one)
[Cost: It is up to you]
- open an investment account for the company.
Open an investment account for your company and transfer the money into the brokerage account. I recommend using Easy Equities and IBKR for international shares. Both brokers are low cost to start and highly regulated and recommended. Once you have your brokerage accounts set-up, then the fun part begins.
It is time to invest and grow. If you get stuck then just book a 30 Minute Free Coaching Session with me.
[Cost: less than R100]
move to the next step below....
How to Establish Investment Goals
This an important part of the journey. Your goals have to be clear and you both have to be on the same page at all times. Few things are worse than misaligned goals in a relationship. Thus you must establish this before starting.
Are you investing to just grow your money with a financial target at the end?
Are you investing to just have assets that you own?
Are you investing for income?
Are you investing with the intention to one day spend the money?
Are you investing for a wedding?
Are you investing for children?
What are you investing for?
This must be clear. Discuss it, assess your needs and wants, discuss where you would like your finances to go. Set numbers, set actions and clear destinations.
The goal of this conversation is to both end up in agreement about what the money is for, why you are investing and what is the destination you are measuring your progress against.
Once this part is done then creating an investment strategy is crucial. Your strategy must align with your goals, risk tolerance, personalities and desired outcomes.
Creating an Investment Strategy
This part really does depend on your goals, I will assume you want to grow your money and create a new stream of income as well. In that case then you are looking for a mix of assets (shares, ETFs etc) that have growth potential and those that pay dividends/rent and interest while having stable prices.
To find these assets, you would need a research approach that generates investment ideas.
You may start by looking at the world and figuring out what companies and assets will have value in the future. You could then invest in those today and have their value grow your money overtime. You could also look at bonds and investing in property online to generate income.
The common investing styles are
- growth
- preservation
- income
- value investing
- short-term trading
and much more.
You will have to choose the style that works for you the best.
Final thoughts
Don't just read this, take action and begin. Use the parts that matter to you, do Google searches, YouTube .whatever you do.. TAKE ACTION.
Share the blog post with your significant other. Learn together, invest together and grow together. It really is not that difficult.
I would hope by the end of the year you can say
"yeah babe, we bought a bank, your favorite clothing store and a company building a spaceship, plus loaned money to the government. It's been a good year"
Happy Investing.
- Omega
Remember: Opinions expressed in this article do not and never will constitute financial advice. Every person's financial situation is different, I recommend you speak to a financial adviser about yours.
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