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Hello once again! Today, we are going to discuss on the topic of "Should you invest your partner's money?"

Money is the root of all evil. Similarly, money issues not handled appropriately will often lead to unnecessary conflicts. It is not like you avoid such conflicts at all. Hence, unnecessary conflicts they are.

I am probably not the best person to share on this. I am still at Stage 2 of the Singaporean Couple Life Cycle. However, I do have friends who help manage a shared couple portfolio, and also people who prefer to have separate finances.

So, should you, or not, invest your Partner's money?

1. Financial literacy level of your Partner
If your partner is someone who prefers to keep the money in bank. It will be difficult for you to manage the relationship. Yes, it is easy to convince your partner to contribute Funds to invest.

In good times, there will be no issues. How about bad times? Will you be able to explain to your partner on concepts of 'paper losses', or 'Dividend freezes'?

Not having financial literacy will mean that your partner is relying on the ideas you are selling, and potential returns you promise. Will you be able to live up to that?

I would say it is beneficial for a relationship if you and your partner both have good financial knowledge, and is able to agree on investment decisions together. At least, you both know what to expect when the market turns sour, and you cut losses.

2. Personal Investment Styles
Punter, gambler, better.. are you one of them?

There are a myriad of opportunities for short-term hot profits. Options trading. Contract-for-differences. Contra-trading. Worse, binary options.

If you wish to use your partner's money in these 'investments', best of luck to you!

(Options trading - An extremely volatile instrument that track generally share prices. A small change in the underlying share price will effect a large price change in the Options. Often leveraged.)

(Contract-for-differences - Leveraged investments. Depending on your credit worthiness, you can trade up to multiple times of your base sum. If investment value falls against you, a margin call is triggered. Not being able to obtain more Funds causes you to lose your whole sum.)

(Contra-Trading - Trading more cash than you actually have, and hoping by the end of T+3 days, share prices rise. If it drops, you lose money.)

(Binary Options - Shady. These instruments are not even regulated by Monetary Authority of Singapore.)

3. Is your partner's Funds considered spare cash?
There are way too many financial bloggers that emphasize on having at least 6 months of Salary as a Rainy day fund.

Your partner's contribution to investment should not undermine his/her own personal expenses. It should be something that he/she can well afford to.

4. Are you ready to bare all and share with Transparency?
Every investor comes with a certain level of pride on their own investment decisions. Believe it or not, when talking about investments, people tend to focus more on their victory trades!

Hence, are you willing to share your investment performance and portfolio with your partner?

Are you also, confident of your own game plan in both Good and Bad times?

Having good communication removes all the awkwardness between you and your loved one. After all, if you love each other, I believe your partner will support you regardless of the investment performance.

5. Stage of Singaporean Couple Life Cycle
I feel that it is more appropriate for your partner to access your money if you were married. It shows some stability, and wish to be with your partner forever. You and your partner are most likely mature enough to understand consequences of your actions too.

If you are still Dating, it is best to avoid touching your partner's money. It is best to let the relationship grow organically, and keep Greed under control. Invest your own money first!

Make use of this time to show your partner that you are capable of making sound investment decisions :)

Dating couples (most probably aged 20-26) can still be facing financial issues such as School loans, Low Monthly Income, and many other issues that young adults feel. Should you really be stretching your partner's finances that much? I guess not.

6. Ownership & Rewards + Gameplan
Okay, this is tricky. Because you are partners, there is most likely no binding contracts between you and your partner.

Do you require a lump sum from your partner? Or a monthly contribution?
How much do you and your partner own in the portfolio?
In terms of capital gains, or dividend pay-outs, how much do you distribute to your partner?

I feel it is good to layout all the plans and review them regularly on the onset. I have read from Turtle Investor that he initiated a mini $4,000 portfolio for his wife to get her started.

The cool thing he did was that he guaranteed any capital gains for his wife, and allowed her to keep gains from selling of Shares and dividends.

Yes Mrs Llama, this is what I am planning to do too!

7. To commingle the Investments or not?
I would say not. And, efforts have to be made to ensure proper accounting is in place.

With DBS Cash Upfront, brokerage fees are as low as 10SGD per trade, or 0.12%, you will not require a huge sum from your partner to start a portfolio for him/her. 

A sum of $5,000 to $10,000 is good enough. Any payouts should be paid to your partner, most probably in cheque for SGX listed shares.

Update your partner regularly of worldly events, and price movements of the 2-5 counters the portfolio has. It is best to allow your partner to decide whether to buy more, or sell any shares. 

If your partner requests that you make the decision for them, you can then do so. Well, I am assuming you are at least as good as me, or better, in terms of financial knowledge for the fact that you are reading :)

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Investments vs Life
Well, investments are pretty much like life.. There are ups and downs, and you just got to deal with it. If a couple can work together to solve small differences, and accept each other. I do not see why you are unable to help your partner invest their money.

To those who are asking your partner to invest your money, just make sure he/she does not run away!




1 Comments

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