Author Topic: Help With Wife and Investing  (Read 4437 times)

Paul C.

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Help With Wife and Investing
« on: April 19, 2013, 03:54:28 PM »
Hello everyone!  I have been reading MMM for a while, but just now joined the forum...this is my first post.

I need some help talking to my wife about investing.  First, we have no debt except a small mortgage.  My wife is on-board with minimal spending and big savings (we are currently saving almost 60% of our income).  The problem is that all she is comfortable doing is putting money in a low-interest bearing savings account.

We have about 6 months worth of expenses in savings/checking accounts, the rest I'm putting into ETF's, Mutual Funds and a little into Lending Club.  I knew that she was uncomfortable with the stock market, however last night we had a discussion that downright shocked me. 

She said that putting most of our money into stocks, bonds, anything that isn't a "safe" savings account is not wise at all, the stock market is a gamble, it'll all go down to zero and we'll lose everything.

No matter what I tell her or show her (I have plenty of spreadsheets and graphs that tell a story of 7-10% returns on our current investments) she won't believe that we need to be investing, and that putting all our money in savings accounts would be wasted.  I get the feeling she wants me to sell everything and put the proceeds into these "savings" accounts.

We've had similar discussions before, but I thought I could convince her over time by showing her numbers and reports; that's not working.  I must not be presenting my side very well, so I need some help explaining things to her.  I've sent her links to MMM posts before, but I don't think she has read them.

Anyone have any ideas of how I can better present my data and hopefully bring her around to thinking differently about investing?

Thanks.

yolfer

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Re: Help With Wife and Investing
« Reply #1 on: April 19, 2013, 04:46:58 PM »
Good question! Sounds like she's not analytical person, so the spreadsheets aren't working. I'd put them away immediately, and figure out how to best get through to her the dangers of "inflation risk" in her preferred asset allocation. Chapter 5 in the book "The Gone Fishin' Portfolio" explains why low-risk/low-interest savings accounts are actually very risky because of inflation risk. Maybe read that, and try to summarize it in a way you feel will resonate best with your wife? (Just to be clear, I'm not advocating the asset-allocation in the book. Just saying that the author explains the risk of poor allocation very eloquently).

Figuring out the best way to talk to your wife about serious topics will be challenging, but will pay huge dividends (pardon the pun) in the long run. Do you know her Myers-Briggs Type? Have you done any couples activities like "All About Us"? (http://www.amazon.com/All-About-Us-Philipp-Keel/dp/0767905016)

You have the facts on your side, so it's just a matter of figuring out the best way to communicate them to her.

daverobev

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Re: Help With Wife and Investing
« Reply #2 on: April 19, 2013, 04:47:51 PM »
Perhaps the reverse - show her how LITTLE her saved money will be worth in 20 years if it only earns less than inflation.

Another alternative - invest in a real thing, namely, a rental property?

And/or take her to a financial advisor. Or find someone in the family, or a friend, she trusts, and ask them to talk to her..

Mathematics: Helping people get rich since ????

Spork

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Re: Help With Wife and Investing
« Reply #3 on: April 19, 2013, 05:20:32 PM »
Don't think all or nothing.

Talk to her.  Find an investment instrument she is comfortable with.  (Let's say it's a CD, but find what works.)  Invest 50% in the CD.
Now take the other 50% and invest it in a something with reasonable risk.  (Let's say an index fund.)

Wait a year, investing this way.

Now, when the year comes around, bring up the topic again.  Maybe she's willing to go 60/40.  Or maybe she's now willing to throw in another index fund and go 33/33/33.

Make her feel comfortable.  Listen to her.  It's not a competition between you. 

My mom and dad fought this battle their entire lives.  She wanted nothing more than a passbook savings account.  He wanted the uber-fast get-rich-quick scheme with super high risk (that never worked).  Between the two of them, they did terribly.  (His income was high enough that they actually did fine... but they could have been super rich and were not.)

Find a compromise that works. 

seanquixote

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Re: Help With Wife and Investing
« Reply #4 on: April 19, 2013, 05:50:27 PM »
Don't think all or nothing.

Talk to her.  Find an investment instrument she is comfortable with.  (Let's say it's a CD, but find what works.)  Invest 50% in the CD.
Now take the other 50% and invest it in a something with reasonable risk.  (Let's say an index fund.)

Wait a year, investing this way.

Now, when the year comes around, bring up the topic again.  Maybe she's willing to go 60/40.  Or maybe she's now willing to throw in another index fund and go 33/33/33.

Make her feel comfortable.  Listen to her.  It's not a competition between you. 

My mom and dad fought this battle their entire lives.  She wanted nothing more than a passbook savings account.  He wanted the uber-fast get-rich-quick scheme with super high risk (that never worked).  Between the two of them, they did terribly.  (His income was high enough that they actually did fine... but they could have been super rich and were not.)

Find a compromise that works.



Great advice here...

I would just add to make certain you don't talk "down" to her (and I'm not saying you are or did) but I find alot of times when I'm "convinced" this or that  is the way to go, I speak in ways that may sound to the other person as if I think they are stupid if they don't see it MY way.  Even if that was not my intention.  I would nix the spreadsheets...they look cool to nerds/geeks..but to the average person, they look like your trying too hard to convince them.  And so automatically red-flags go up.  Keep an open mind yourself as well.  I would say since her hang-up is that she is worried that you could "lose it all", definitely feel out her risk limit and ask her to compromise and go just a bit past it ...if just this once.

Good luck


Spork

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Re: Help With Wife and Investing
« Reply #5 on: April 19, 2013, 05:57:26 PM »
Don't think all or nothing.

Talk to her.  Find an investment instrument she is comfortable with.  (Let's say it's a CD, but find what works.)  Invest 50% in the CD.
Now take the other 50% and invest it in a something with reasonable risk.  (Let's say an index fund.)

Wait a year, investing this way.

Now, when the year comes around, bring up the topic again.  Maybe she's willing to go 60/40.  Or maybe she's now willing to throw in another index fund and go 33/33/33.

Make her feel comfortable.  Listen to her.  It's not a competition between you. 

My mom and dad fought this battle their entire lives.  She wanted nothing more than a passbook savings account.  He wanted the uber-fast get-rich-quick scheme with super high risk (that never worked).  Between the two of them, they did terribly.  (His income was high enough that they actually did fine... but they could have been super rich and were not.)

Find a compromise that works.



Great advice here...

I would just add to make certain you don't talk "down" to her (and I'm not saying you are or did) but I find alot of times when I'm "convinced" this or that  is the way to go, I speak in ways that may sound to the other person as if I think they are stupid if they don't see it MY way.  Even if that was not my intention.  I would nix the spreadsheets...they look cool to nerds/geeks..but to the average person, they look like your trying too hard to convince them.  And so automatically red-flags go up.  Keep an open mind yourself as well.  I would say since her hang-up is that she is worried that you could "lose it all", definitely feel out her risk limit and ask her to compromise and go just a bit past it ...if just this once.

Good luck

...just to add a tiny bit to this...  People "see" things differently. 

My wife is extremely mustacian and is really good at money/investing/etc.  (She is much better than I am.)  But we "see" things differently.  I graph everything.  Graph, graph, graph, graphity-graph.  It took me ages... to realize that's not how she visualizes numbers.  She wants a big ass sheet of figures.  The big-ass sheet of figures is AWFUL for me.  I might as well look at Aramaic writing.

Spreadsheets work for you.  Maybe some other visualization works for her.

Paul C.

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Re: Help With Wife and Investing
« Reply #6 on: April 19, 2013, 06:12:39 PM »
Good question! Sounds like she's not analytical person, so the spreadsheets aren't working. I'd put them away immediately, and figure out how to best get through to her the dangers of "inflation risk" in her preferred asset allocation. Chapter 5 in the book "The Gone Fishin' Portfolio" explains why low-risk/low-interest savings accounts are actually very risky because of inflation risk. Maybe read that, and try to summarize it in a way you feel will resonate best with your wife? (Just to be clear, I'm not advocating the asset-allocation in the book. Just saying that the author explains the risk of poor allocation very eloquently).

Figuring out the best way to talk to your wife about serious topics will be challenging, but will pay huge dividends (pardon the pun) in the long run. Do you know her Myers-Briggs Type? Have you done any couples activities like "All About Us"? (http://www.amazon.com/All-About-Us-Philipp-Keel/dp/0767905016)

You have the facts on your side, so it's just a matter of figuring out the best way to communicate them to her.

Great advise! Thanks.  I actually do not know her Myers-Briggs Type, but that may help.

Paul C.

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Re: Help With Wife and Investing
« Reply #7 on: April 19, 2013, 06:19:23 PM »
Don't think all or nothing.

Talk to her.  Find an investment instrument she is comfortable with.  (Let's say it's a CD, but find what works.)  Invest 50% in the CD.
Now take the other 50% and invest it in a something with reasonable risk.  (Let's say an index fund.)

Wait a year, investing this way.

Now, when the year comes around, bring up the topic again.  Maybe she's willing to go 60/40.  Or maybe she's now willing to throw in another index fund and go 33/33/33.

Make her feel comfortable.  Listen to her.  It's not a competition between you. 

My mom and dad fought this battle their entire lives.  She wanted nothing more than a passbook savings account.  He wanted the uber-fast get-rich-quick scheme with super high risk (that never worked).  Between the two of them, they did terribly.  (His income was high enough that they actually did fine... but they could have been super rich and were not.)

Find a compromise that works.



Great advice here...

I would just add to make certain you don't talk "down" to her (and I'm not saying you are or did) but I find alot of times when I'm "convinced" this or that  is the way to go, I speak in ways that may sound to the other person as if I think they are stupid if they don't see it MY way.  Even if that was not my intention.  I would nix the spreadsheets...they look cool to nerds/geeks..but to the average person, they look like your trying too hard to convince them.  And so automatically red-flags go up.  Keep an open mind yourself as well.  I would say since her hang-up is that she is worried that you could "lose it all", definitely feel out her risk limit and ask her to compromise and go just a bit past it ...if just this once.

Good luck

...just to add a tiny bit to this...  People "see" things differently. 

My wife is extremely mustacian and is really good at money/investing/etc.  (She is much better than I am.)  But we "see" things differently.  I graph everything.  Graph, graph, graph, graphity-graph.  It took me ages... to realize that's not how she visualizes numbers.  She wants a big ass sheet of figures.  The big-ass sheet of figures is AWFUL for me.  I might as well look at Aramaic writing.

Spreadsheets work for you.  Maybe some other visualization works for her.

Thanks Guys!  Lots of good points here.  I think I probably do tend to talk down, which doesn't help.  I also more than likely need to change my thinking a little and not try and go for the "all or nothing" position.

I just hate the thought of all those little workers sitting idle in a savings and checking account.


happy

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Re: Help With Wife and Investing
« Reply #8 on: April 19, 2013, 06:42:22 PM »
This is a bit of a guess, but it may be that your wife is looking at/responding to things in an emotional way and you are trying to connect with her by logic - since she cannot seem to grasp what is logically obvious.  The savings account feels safe and secure, but the stock market feels risky and scary.  Try some persuasion around feelings: how does it feel  that the money in the savings account is actually losing money because its not keeping up with inflation?   Won't it be exciting/freeing etc to be FI? Some success stories and cases  about people just like you ( i.e. her) might be helpful. If she can grasp that the savings account won't keep up inflation, then can she move one of two steps higher up the return/risk...index funds feel a lot safer than picking stocks.

Second the idea behind doing a Myer Briggs...if she is an "F"  and you are a "T" ,  the above applies. You can use a free  look alike version at http://www.humanmetrics.com/cgi-win/jtypes2.asp or google Myer Briggs and pay a small amount online for the full, well researched/validated version. Differences in N and S may also be relevant here. (willl explain it you want but post is getting long)

OF course her reticence may be something else entirely: did she have some bad experience around the stock market growing up or were her parents dead set against it? If she is of a religious background she may believe that lusting after more money  in the form of higher returns is evil and will lead to no good. etc etc.

In a nutshell I would try to understand her position better, in order to move forward.

Paul C.

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Re: Help With Wife and Investing
« Reply #9 on: April 19, 2013, 07:01:41 PM »
This is a bit of a guess, but it may be that your wife is looking at/responding to things in an emotional way and you are trying to connect with her by logic - since she cannot seem to grasp what is logically obvious.  The savings account feels safe and secure, but the stock market feels risky and scary.  Try some persuasion around feelings: how does it feel  that the money in the savings account is actually losing money because its not keeping up with inflation?   Won't it be exciting/freeing etc to be FI? Some success stories and cases  about people just like you ( i.e. her) might be helpful. If she can grasp that the savings account won't keep up inflation, then can she move one of two steps higher up the return/risk...index funds feel a lot safer than picking stocks.

Second the idea behind doing a Myer Briggs...if she is an "F"  and you are a "T" ,  the above applies. You can use a free  look alike version at http://www.humanmetrics.com/cgi-win/jtypes2.asp or google Myer Briggs and pay a small amount online for the full, well researched/validated version. Differences in N and S may also be relevant here. (willl explain it you want but post is getting long)

OF course her reticence may be something else entirely: did she have some bad experience around the stock market growing up or were her parents dead set against it? If she is of a religious background she may believe that lusting after more money  in the form of higher returns is evil and will lead to no good. etc etc.

In a nutshell I would try to understand her position better, in order to move forward.

Thanks Happy.

I'm an ISTJ, I think she's taken the MB test before, so I'll just need to ask her.  I think there are a couple main points for her:

  • The stock market (really anything but savings accounts) are an unknown and she doesn't really understand it.  I on the other hand have been investing since I was 19, so I don't understand that she doesn't understand :)
  • Fear.  She points to the financial crisis of 2008.  I tell her that our investments have not just recovered, but also gained a lot since then, but it doesn't seem to get across to her.

The one big thing I don't get is that her dad is an MBA and we talk about investing all the time.  It doesn't seem like my father in law has ever talked to my wife about it.

But anyway, I like your suggestion about talking to her from a feelings perspective.  Thanks!