How to communicate with wife?! [about investing]
How to communicate with wife?! [about investing]
It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Re: How to communicate with wife?!
When someone is worried about their asset allocation, it is probably too risky for them.
What is your current AA?
Does your wife have her own accounts?
What is your current AA?
Does your wife have her own accounts?
Re: How to communicate with wife?!
It's not uncommon that a spouse may not fully trust the financial judgment of another spouse, especially if it is an area that the spouse doesn't fully understand. It's not entirely unwarranted, there are many stories of husbands making foolish decisions and leaving the spouse to hold the bag. It may be that you can talk till you're blue in the face and it won't make much difference. Given she wants to be involved in the decision making process, it would be helpful for her to become more educated on the subject. Perhaps one of the more tried and true bread and butter financial books by Bogle or others. Nothing fancy, just the basics. Save as much as you can, take some risk, diversify and stay the course.engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
https://www.bogleheads.org/wiki/Book_re ... nd_reviews
Another alternative would be to find a fee only financial advisor that would essentially back up your message. It may have more credibility coming from a "professional".
It is likely something that needs to be addressed or you may be quarreling over it for decades to come.
Re: How to communicate with wife?!
It's gotta be a big worry to draw this poster out for a third time in nearly 10 years!
Your title might be a bit misleading, makes it seem like a relationship issue.
How? By having an investment policy statement that you collectively put together, a roadmap life plan put together long before emotional times. This put together through research, fact finding, weighing in one's risk tolerances.
Your title might be a bit misleading, makes it seem like a relationship issue.
How? By having an investment policy statement that you collectively put together, a roadmap life plan put together long before emotional times. This put together through research, fact finding, weighing in one's risk tolerances.
Pale Blue Dot
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Re: How to communicate with wife?!
Part of this in my mind comes down to what is the money for. Peace of mind in part and the ability to sleep. It may not seem rational to some folks, but many are scared of the market.
I have a good friend whose spouse is the same way, but she thinks that church bonds are safe and hence they eke out a return from church bonds. Those, in my mind, are one of the riskiest niches, since while they are backed by the property, when the real estate market crashes, so does the asset's backing.
But perhaps frame it in the context of the long term viability of the US economy. Does she think long term the US economy will grow or falter? If she lacks the faith in system, then I doubt anything will change her mind.
For more on church bonds:
https://www.dummies.com/personal-financ ... rch-bonds/
I have a good friend whose spouse is the same way, but she thinks that church bonds are safe and hence they eke out a return from church bonds. Those, in my mind, are one of the riskiest niches, since while they are backed by the property, when the real estate market crashes, so does the asset's backing.
But perhaps frame it in the context of the long term viability of the US economy. Does she think long term the US economy will grow or falter? If she lacks the faith in system, then I doubt anything will change her mind.
For more on church bonds:
https://www.dummies.com/personal-financ ... rch-bonds/
"History is the memory of time, the life of the dead and the happiness of the living." Captain John Smith 1580-1631
Re: How to communicate with wife?!
Others have pointed out that a shared plan with a more conservative allocation might help. You are partners after all. I have about 10% more bonds than I would as a single person because my wife prefers it and it's no problem.
Two more thoughts:
- If your portfolio is already reasonable by Bogleheads standards (has some bonds), you might show her a chart of actual performance vs an all-stock benchmark so she can see that despite the blaring alarms on TV the portfolio did just fine over a long period of time. This may not work but if you haven't done it yet it's worth a try.
- You can't stop a spouse from timing with their own accounts, but a market timer's returns drag can be overcome by a consistent high saving rate. My mother let my market timing dad go to cash at regular intervals with her 401k ( ) but also just kept saving. At retirement they still had plenty and since she took an interest they have done great and no longer market time.
Two more thoughts:
- If your portfolio is already reasonable by Bogleheads standards (has some bonds), you might show her a chart of actual performance vs an all-stock benchmark so she can see that despite the blaring alarms on TV the portfolio did just fine over a long period of time. This may not work but if you haven't done it yet it's worth a try.
- You can't stop a spouse from timing with their own accounts, but a market timer's returns drag can be overcome by a consistent high saving rate. My mother let my market timing dad go to cash at regular intervals with her 401k ( ) but also just kept saving. At retirement they still had plenty and since she took an interest they have done great and no longer market time.
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Re: How to communicate with wife?!
Yes smart to find a plan that works for everyone. I can see where a defined IPS as was suggested and / or finding a (hourly paid) third party could be very helpful in this case. Obviously developing that plan with her will help her feel part of that plan.
I recently got a 38th anniversary card from my DW that said communication is of utmost importance in a successful relationship … and 90% of communication in a marriage is yelling ‘What?” from the other room. Lol.
I interned / worked at a fee only advisor for a bit and it was common for couples to seek out a paid advisor (.6%-1% AUM) in order to help communicate / make peace between couples where they were not aligned in their investing philosophies. In a few cases couples had inherited millions of dollars and paid 10-30 + thousand a year in fees (deducted from their account quarterly ) for this marital service. I was somewhat surprised at the marital stress / guilt / burden of responsibility of being a good steward of funds for their family and kids inheriting large sums of money added to their lives. On the other hand, first world problem I like to say.
I wish I had videos of clients behavior to share. Two lawyers, both worked for gov, wife inherited a few mil, wife was very stressed about the money from her parents and what to do, husband openly bored, searching web on phone, said he wasn’t really interested in investing and our 4 index fund plan being presented but wanted to play golf and hear about my flying experiences. At one point in discussion, they had a 25K loan to XYZ on their asset sheet … I asked what is that? … she responded our last financial advisor was expanding his office so we made him a loan … and in fact he hasn’t kept up on his payments. Trying to get my head around that I couldn’t help myself and said in my best ex military guy voice - wow if I was going to stiff someone it wouldn’t be two lawyers. My mentor (CFA) I was working with mentioned afterwards he probably would have left that comment out.
BTW If you ever wonder why there is always a good size portion of money market cash earning near zip in a large portfolio with an advisor it may be because it needs to be there in order for them to deduct their quarterly fees.
I recently got a 38th anniversary card from my DW that said communication is of utmost importance in a successful relationship … and 90% of communication in a marriage is yelling ‘What?” from the other room. Lol.
I interned / worked at a fee only advisor for a bit and it was common for couples to seek out a paid advisor (.6%-1% AUM) in order to help communicate / make peace between couples where they were not aligned in their investing philosophies. In a few cases couples had inherited millions of dollars and paid 10-30 + thousand a year in fees (deducted from their account quarterly ) for this marital service. I was somewhat surprised at the marital stress / guilt / burden of responsibility of being a good steward of funds for their family and kids inheriting large sums of money added to their lives. On the other hand, first world problem I like to say.
I wish I had videos of clients behavior to share. Two lawyers, both worked for gov, wife inherited a few mil, wife was very stressed about the money from her parents and what to do, husband openly bored, searching web on phone, said he wasn’t really interested in investing and our 4 index fund plan being presented but wanted to play golf and hear about my flying experiences. At one point in discussion, they had a 25K loan to XYZ on their asset sheet … I asked what is that? … she responded our last financial advisor was expanding his office so we made him a loan … and in fact he hasn’t kept up on his payments. Trying to get my head around that I couldn’t help myself and said in my best ex military guy voice - wow if I was going to stiff someone it wouldn’t be two lawyers. My mentor (CFA) I was working with mentioned afterwards he probably would have left that comment out.
BTW If you ever wonder why there is always a good size portion of money market cash earning near zip in a large portfolio with an advisor it may be because it needs to be there in order for them to deduct their quarterly fees.
Last edited by Parkinglotracer on Thu Dec 02, 2021 5:21 am, edited 1 time in total.
Re: How to communicate with wife?!
This worked for me, with a slightly different path.Parkinglotracer wrote: ↑Thu Dec 02, 2021 5:14 am I can see where finding a (hourly paid) third party could be very helpful in this case.
We got the CFP review from Vanguard Flagship. Had a meeting and explained my AA and plan to the CFP, along with the wife. He validated it with a few tweaks. She was happy.
And then Vanguard took that CFP review benefit away. Oh well.
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Re: How to communicate with wife?!
Tubes wrote: ↑Thu Dec 02, 2021 5:19 amThis worked for me, with a slightly different path.Parkinglotracer wrote: ↑Thu Dec 02, 2021 5:14 am I can see where finding a (hourly paid) third party could be very helpful in this case.
We got the CFP review from Vanguard Flagship. Had a meeting and explained my AA and plan to the CFP, along with the wife. He validated it with a few tweaks. She was happy.
And then Vanguard took that CFP review benefit away. Oh well.
Glad you got yours before the deal ended!
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Re: How to communicate with wife?!
Your spouse can educate herself on investing. Try the BH wiki “Getting Started”.
Consider professional feedback. If your accounts are at Schwab or Fidelity, you may be able to get some portfolio feedback (avoid any AUM arrangement or high-ER fund suggestions). Or Vanguard offers VPAS starting at 0.3% of AUM. Or an hourly fee advisor may be helpful.
Consider posting your portfolio here for feedback in the “Asking Portfolio Questions” format. Your spouse can read all comments for herself.
Compromise on asset allocation, etc. Involve both of you in your portfolio management/daily finances/taxes. Talk monthly or quarterly about your financial situation.
Consider professional feedback. If your accounts are at Schwab or Fidelity, you may be able to get some portfolio feedback (avoid any AUM arrangement or high-ER fund suggestions). Or Vanguard offers VPAS starting at 0.3% of AUM. Or an hourly fee advisor may be helpful.
Consider posting your portfolio here for feedback in the “Asking Portfolio Questions” format. Your spouse can read all comments for herself.
Compromise on asset allocation, etc. Involve both of you in your portfolio management/daily finances/taxes. Talk monthly or quarterly about your financial situation.
Re: How to communicate with wife?!
My experience is that except in rare circumstances, you cannot change the way people respond to market gyrations. It's part of their personality, their genetic makeup, and the sum of their financial experience. I think it would help if she felt "safe." If she knows that even in the worst-case scenario, that you have "enough" (assuming that is true), I think it would help her in staying the course.
On the bright side, I think it's actually helpful to have a spouse who's a little more conservative by nature. My husband, who's an investment banker, is always tinkering with his portfolio and under-performing the indexes. I'd be quite happy for him to be fully indexed, or partially indexed with the rest in cash-equivalents. So more "financial" education doesn't necessarily help. It's hard for people to change who they are in terms of their financial personality.
On the bright side, I think it's actually helpful to have a spouse who's a little more conservative by nature. My husband, who's an investment banker, is always tinkering with his portfolio and under-performing the indexes. I'd be quite happy for him to be fully indexed, or partially indexed with the rest in cash-equivalents. So more "financial" education doesn't necessarily help. It's hard for people to change who they are in terms of their financial personality.
Re: How to communicate with wife?!
engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back.
Wife's idea is definitely not a good one--no one can correctly time the market for optimal returns.
I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss.
She is risk-averse, which is not uncommon. What is your current allocation to stocks? Some people have a risk-taking gene, and some people are inherently uncomfortable with monetary risk. The problem is risk must be taken to create a successful retirement. The risk vs reward thing always involves a tradeoff/compromise. Maybe you should try letting her manage part of assets and you manage another part. You also might try additional education on the subject.
Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?!
Why isn't rebalancing applicable, or do you mean with 100% cash? Rebalancing is a fundamental part of portfolio maintenance and risk control. If you are seeking to buy at a discount, it implies timing. You simply rebalance when allocation gets off target by a certain %,
Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Yes, an investment policy statement is needed.
https://www.bogleheads.org/wiki/Investm ... _statement
Risk Tolerance
https://www.bogleheads.org/wiki/Risk_tolerance
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Re: How to communicate with wife?!
Consider paying a fee only advisor. Maybe hearing some of the same things you are telling her from a "professional" will helpengtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Re: How to communicate with wife?!
Show her this thread.
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
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Re: How to communicate with wife?!
I find it helpful to show my wife the rolling return chart from PortfolioVisualizer (link below). The chart below, which includes data from the last 50 years, shows 100% stock vs more diversified portfolios of stocks, bonds, and a little gold as an inflation hedge. I cover up the labels on the top that say what the allocations are and I ask her which of the four options seems the most reasonable for us by comparing the average occurrences against the worst case scenarios for each one. If your time horizon is 15 years, she will hopefully see that it is unreasonable to be in cash, especially considering you know cash is returning 0% right now.
If she says she wants to be in the one with higher average but wait until the next market drop, try to go through a thought exercise that puts you back in March 2020. Does she think that y'all would have really been able to time the market just right and buy back in at the bottom when the whole world was shut down? Even professionals can't time the market. Therefore, the best thing we can do is choose an asset allocation based on our risk tolerance and stick with it.
edit: Also keep in mind that the forward looking returns are all less that the historical average returns shown in the chart due to the low interest rate environment. Cash has averaged 4.5-5% over the last 50 years and it is now at 0%. So I think it's reasonable to assume all average returns of all allocations are also lower by a similar amount.
https://www.portfoliovisualizer.com/bac ... tion3_3=10
If she says she wants to be in the one with higher average but wait until the next market drop, try to go through a thought exercise that puts you back in March 2020. Does she think that y'all would have really been able to time the market just right and buy back in at the bottom when the whole world was shut down? Even professionals can't time the market. Therefore, the best thing we can do is choose an asset allocation based on our risk tolerance and stick with it.
edit: Also keep in mind that the forward looking returns are all less that the historical average returns shown in the chart due to the low interest rate environment. Cash has averaged 4.5-5% over the last 50 years and it is now at 0%. So I think it's reasonable to assume all average returns of all allocations are also lower by a similar amount.
https://www.portfoliovisualizer.com/bac ... tion3_3=10
Last edited by EfficientInvestor on Thu Dec 02, 2021 9:06 am, edited 3 times in total.
Re: How to communicate with wife?!
One problem is this: eventually she will be right.
The market hits an all time high, or there’s some headline.
She wants to sell all. You say no.
Market drops 40%.
How’s the marriage at this point?
Do you then capitulate to the market and your wife?
Some solutions:
1) education
2) advisor to keep peace
3) revisit AA and/or keep more cash on hand
The real value of an advisor is in preventing behavioral error (panic selling), which is what your wife needs.
I might also show your wife charts of the past few years, particularly the covid crash and the following bull run.
Good luck.
The market hits an all time high, or there’s some headline.
She wants to sell all. You say no.
Market drops 40%.
How’s the marriage at this point?
Do you then capitulate to the market and your wife?
Some solutions:
1) education
2) advisor to keep peace
3) revisit AA and/or keep more cash on hand
The real value of an advisor is in preventing behavioral error (panic selling), which is what your wife needs.
I might also show your wife charts of the past few years, particularly the covid crash and the following bull run.
Good luck.
51% US / 34% ex-US / 15% “bond”
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Re: How to communicate with wife?!
Have her explain why using only facts about investing and not subjective reasoning.engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Re: How to communicate with wife?!
Hold enough cash for comfort. Agree on a big number.
Acquire a financial advisor.
I suspect many couples use a financial advisor to further their goals and eliminate friction.
Acquire a financial advisor.
I suspect many couples use a financial advisor to further their goals and eliminate friction.
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Re: How to communicate with wife?!
Good advice from @camillus. I don’t often think advisors are a worthwhile expense, but in this case (maintaining marital harmony) it’s a bargain.camillus wrote: ↑Thu Dec 02, 2021 9:01 am One problem is this: eventually she will be right.
The market hits an all time high, or there’s some headline.
She wants to sell all. You say no.
Market drops 40%.
How’s the marriage at this point?
Do you then capitulate to the market and your wife?
Some solutions:
1) education
2) advisor to keep peace
3) revisit AA and/or keep more cash on hand
The real value of an advisor is in preventing behavioral error (panic selling), which is what your wife needs.
I might also show your wife charts of the past few years, particularly the covid crash and the following bull run.
Good luck.
Otherwise, you and you alone will be the target of anger and recrimination when the inevitable happens; your charts won’t be much help then in the thick of it. Your wife’s feelings are valid feelings, even if her strategy isn’t.
Last edited by TomatoTomahto on Thu Dec 02, 2021 9:48 am, edited 1 time in total.
I get the FI part but not the RE part of FIRE.
Re: How to communicate with wife?!
Communication is a two-way street. Now ignore which way is correct for a moment, did you really listen and understand her point of view? If she is afraid of loss, it won't help if you keep throwing statistics and how awesome long term investing at her. What is more important here? Long-term stock growth or working together with your spouse to achieve common goals? Show her that you are willing to listen and understand first.engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Maybe you both need to save more money to compensate the lower rate of return.
Maybe she can go to 100% cash in her investment accounts. Maybe you can increase to 100% stocks in your accounts as a temporary hedge. Maybe in a few years, you can show her the brokerage statements indicating that market timing is a losing strategy. It's very easy. Cash has 0.06% to 0.10% return. Stocks have 10% or so return. Show her the amount of return that you were missing because of staying on the sideline.
Maybe she trusts a "credential" financial advisor more than you.
Don't just come into a conversation with your wife with a mindset that you are right on this topic.
Time is the ultimate currency.
Re: How to communicate with wife?!
We are currently in the midst of a dip, so your spouse wants to buy now? Sounds good to me.
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Re: How to communicate with wife?!
If y’all agree that you want to keep a large portion in cash or products with no or little risk, consider using Multi-year Guaranteed Annuities (MYGA). A 5-year MYGA is currently paying around 3% per year. You could just keep rolling them every 5 years. There are some MYGA threads on the forum that discuss the particulars. You will want to understand things like state guarantee fund limits and the rules about withdrawals, penalties, etc.
If you approach her with using MYGA’s, you could agree to keep a large portion of the assets (50%+) in a collection of MYGAs and maybe the other portion can be invested. This way over half of your portfolio is protected against loss and still earning a return and the other half can be “at-risk”. You could still use the rolling return chart I posted to help determine the appropriate allocation for the at-risk portion.
If you approach her with using MYGA’s, you could agree to keep a large portion of the assets (50%+) in a collection of MYGAs and maybe the other portion can be invested. This way over half of your portfolio is protected against loss and still earning a return and the other half can be “at-risk”. You could still use the rolling return chart I posted to help determine the appropriate allocation for the at-risk portion.
Re: How to communicate with wife?!
As others have said, this is a situation where actually paying for an advisor to manage your money might be wise. Yes there is a cost to it, but it's certainly less than the cost of going all cash. Plus it gives someone else to "blame" and it's an "expert" to listen to. Some people will take advice from experts even if you have said the exact same thing (appeal to authority).
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Re: How to communicate with wife?!
Agree with the others who suggested a fee only financial planner.
I worked with a young guy who had exactly this problem. Their solution, ultimately, was that they each managed their own investment accounts. They had similar incomes and amounts of money to invest. For him, it meant he went 100% stock, because he knew she was 100% cash. So the AA between them was initially 50/50, then became more stock heavy over time as his portfolio increased in value.
I worked with a young guy who had exactly this problem. Their solution, ultimately, was that they each managed their own investment accounts. They had similar incomes and amounts of money to invest. For him, it meant he went 100% stock, because he knew she was 100% cash. So the AA between them was initially 50/50, then became more stock heavy over time as his portfolio increased in value.
Re: How to communicate with wife?!
Tell her about TINA and to quit watching the news... nothing but fear mongering garbage.
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Re: How to communicate with wife?!
You could agree to hire a fee-only Certified Financial Planner. This would be an "outside" expert who could help review your current plans. Finding one would delay your move to cash. And, while you might not 100% agree with what they advise it will be unlikely their advice is to move 100% to cash.
Re: How to communicate with wife?!
I used to be like that, and then I read the Simple Path to Wealth and it opened my eyes. Maybe she'll find it useful too?
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Re: How to communicate with wife?!
Well said.
If one of the stakeholders doesn't buy into the idea of staying the course i.e. not selling into a downturn, that's a huge problem, and a formidable risk for being in the market.
One suggestion I have is: maybe keep stock exposure at a minimum, only what you need to satisfy your financial goals. In Jason Zweig's book Safe Money, he puts forth three commandments for "guidance on how to add stocks safely to your portfolio." The first commandment is: Thou shalt take no risk that thou needst not take.
That might make a downturn more palatable, with less risk of a panic sell.
But, honestly, if a stakeholder cannot commit to staying the course on that remaining stock exposure, I'm unsure if you should be in the market.
Re: How to communicate with wife?!
Don't go 100% cash. A someone else pointed out, if she has a separate account, let her go to 100% cash there and then you go to 100% stocks (or enough to get back to your desired AA assuming your retirement fund is larger than hers.)engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Here's an article from Schwab showing the effects of different strategies: https://www.schwab.com/resource-center/ ... iming-work.
The short of it is that even someone who invested once per year at market peak would up with about 3x as much as the cash-only person. That person managed 80% of the money of someone with perfect market timing and about 90% of the lump sum / DCA people.
There are similar examples floating around on this board, but I am not sure what magic set of keyword will find them.
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Re: How to communicate with wife?!
What really helped me to understand how investing long term has paid off is when I ran Portfolio visualizer for a TSM fund and then looked at when the market tanked. And then what happened in the months or years afterward. It might be eye opening for her to see what history has shown.
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Re: How to communicate with wife?!
“How to communicate with wife/spouse” is the source of infinite material for stand up comedians. (Kidding)
“Also…a contradiction in terms?” (Kidding)
People are motivated by:
Data
Fear
Concrete verifiable results
Reassurance from a trusted person.
Knowing your spouse, pick the above.
j
“Also…a contradiction in terms?” (Kidding)
People are motivated by:
Data
Fear
Concrete verifiable results
Reassurance from a trusted person.
Knowing your spouse, pick the above.
j
Re: How to communicate with wife?!
I doubt it matters what stock allocation you hold. Yes the losses are bigger with a higher allocation but the sentiment that you should have been in cash doesn't change. Go back and read the 2008-9 meltdown and my impression was that you could hold a conservative allocation and panic just as much as someone 100% stocks... And lets not talk about the people who went to cash in 2009 and have over the past decade+ have asked if it is time to buy back in...Robot Monster wrote: ↑Thu Dec 02, 2021 10:02 amWell said.
If one of the stakeholders doesn't buy into the idea of staying the course i.e. not selling into a downturn, that's a huge problem, and a formidable risk for being in the market.
One suggestion I have is: maybe keep stock exposure at a minimum, only what you need to satisfy your financial goals. In Jason Zweig's book Safe Money, he puts forth three commandments for "guidance on how to add stocks safely to your portfolio." The first commandment is: Thou shalt take no risk that thou needst not take.
That might make a downturn more palatable, with less risk of a panic sell.
But, honestly, if a stakeholder cannot commit to staying the course on that remaining stock exposure, I'm unsure if you should be in the market.
Investing early helps a lot with this. It is one thing to learn by losing 300 bucks out of 1000. It is another to lose 300k out of a million...
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Re: How to communicate with wife?! [about investing]
Oh boy!!! Short lived topic??
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Re: How to communicate with wife?! [about investing]
OP,
Nothing is a better teacher than experience.
I assume that you are investing in tax advantaged accounts: 401k's and IRAs.
I approached this as "I will offer advice, and assist if asked, but you will manage
your own individual accounts, they are after all individual, and we will share the account statements"
My wife originally though that the only safe investment was CDs in a bank.
As she saw the growth that my nearly 100% stock balances experienced, she
basically went full stock, and has maintained a slightly more aggressive portfolio
than I have.
She had me open her statements during the 2008/9 downturn, because she couldn't
bear to see losses greater than what she was putting in. We were down about 50% from the
high then, but things rebounded, and she is happy with our current balances.
Nothing is a better teacher than experience.
I assume that you are investing in tax advantaged accounts: 401k's and IRAs.
I approached this as "I will offer advice, and assist if asked, but you will manage
your own individual accounts, they are after all individual, and we will share the account statements"
My wife originally though that the only safe investment was CDs in a bank.
As she saw the growth that my nearly 100% stock balances experienced, she
basically went full stock, and has maintained a slightly more aggressive portfolio
than I have.
She had me open her statements during the 2008/9 downturn, because she couldn't
bear to see losses greater than what she was putting in. We were down about 50% from the
high then, but things rebounded, and she is happy with our current balances.
Re: How to communicate with wife?!
+1, we are good at different things. I recognize the things that DW is good at and knows about and we go along with her on those, she does the same with my strengths and interests.Tubes wrote: ↑Thu Dec 02, 2021 5:19 amThis worked for me, with a slightly different path.Parkinglotracer wrote: ↑Thu Dec 02, 2021 5:14 am I can see where finding a (hourly paid) third party could be very helpful in this case.
We got the CFP review from Vanguard Flagship. Had a meeting and explained my AA and plan to the CFP, along with the wife. He validated it with a few tweaks. She was happy.
And then Vanguard took that CFP review benefit away. Oh well.
I own the next hot stock- VTSAX
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Re: How to communicate with wife?! [about investing]
I used all the online models I could find (FireCalc, etc) and I made some highly detailed Excel models of my own, complete with possible second homes, unexpected medical expenses, lost jobs, etc., with both conservative, deterministic return assumptions and some Monte Carlo simulations. I used all these to walk her through a bunch of scenarios that all showed, convincingly, that we’d both have to work a lot longer if we didn’t invest more.
Also, we keep a healthy emergency fund (6 months, not included in our AA) plus a sizable allocation to cash in our AA (10%). The high level of cash is not great of course, but it gives her the comfort she needs to invest the rest, so I think it is an important part of keeping us on the same page.
Of course, timing is everything. If things had gone south right after we entered the market, all those efforts to convince might have come undone.
Also, we keep a healthy emergency fund (6 months, not included in our AA) plus a sizable allocation to cash in our AA (10%). The high level of cash is not great of course, but it gives her the comfort she needs to invest the rest, so I think it is an important part of keeping us on the same page.
Of course, timing is everything. If things had gone south right after we entered the market, all those efforts to convince might have come undone.
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Re: How to communicate with wife?! [about investing]
Like many, it sounds like your wife hates losing more than she enjoys winning. It is difficult, next to impossible to change the way someone emotionally feels. Like religion and politics money is right there with 'em in that regard. As many have suggested speaking with a financial advisor, or even paying a small fee might be more productive than going all cash. Then of course there is the you manage yours, I'll manage mine and end up is a 50/50 AA. But that might not go over well either.
When communicating with my spouse KI generally get better results when food is involved. ha. In all seriousness however she needs to feel herd, not be convinced. She needs to feel like she has equal say rather than be convinced. It is not easy... good luck!
When communicating with my spouse KI generally get better results when food is involved. ha. In all seriousness however she needs to feel herd, not be convinced. She needs to feel like she has equal say rather than be convinced. It is not easy... good luck!
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Re: How to communicate with wife?!
she should do a couple things:engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment.
1. keep a diary of her market timing decisions or intuitions and then after some future time period look back and see how she would have done. She wants to sell because she's nervous. Ok, write down on paper what she'd walk away with if she sold today.
Then the next part, the hard part is two fold: a. determine what that "better time (dip) to buy back" would be. How far does the market have to fall. Have her write it down. 20%? 30%? 27.76? What exactly?
Then wait and see how long it takes to reach that predetermined dip. Perhaps it doesn't if she's waiting for a very large decline. Or maybe she misses the mark. A few years ago the market declined by 19%. What happened to those folks who were waiting for the market to fall 20% or more? They wouldn't have gotten back in until last year. But then they might not have because while the market fell 32%, most were talking Great Depression 2.0, waiting for stocks to fall 80%, not 32%.
2. The second thing she should do is see if she can Outsmart The Market. Because that's what she's trying to do. After playing that market timing game, how did she do? If she didn't do well with past, known data, ask her how she thinks she can do better with future, unknown data.
Then she either needs to continue learning or you need to hire a manager. At least then she has someone else to blame besides you.
Here's a good article that explains why It's Better To Face the Correction.
Have a conversation about that article. Show her it's not you saying this about market timing, it's the experts.
It's not just the 15 years leading to retirement. What if you're in your 60s in 15 years but you live to your 90s? Then you're talking about investing for another 45 years, right? Show her that 45 years is a long time to be out of the market and what would happen to your cash due to inflation over the next 45 years? If she's keeping up with the market, is she keeping up with what's been happening at the supermarket?
why is rebalancing not applicable? Rebalancing is always applicable unless you're 100% in stocks. Are you 100% in stocks? If you are, are you prepared for a 50% decline at any time? You should be prepared for certain declines, based on asset allocation. These are examples of what happened to different AAs in the Great Recession:
pick an allocation that keeps you at the sleep well at night point
writing down an IPS is definitely warranted so you have a plan and stick to it.engtogo wrote: ↑Thu Dec 02, 2021 2:49 am Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
what do you think?
what does she think?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
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Re: How to communicate with wife?! [about investing]
Worst comes worst, you might have to manage your own accounts and let her manage hers.
Combining finances is beautiful in theory but not when they aren't on the same page. There are some tips on getting an advisor and all that, but some people don't listen or change their mind.
Combining finances is beautiful in theory but not when they aren't on the same page. There are some tips on getting an advisor and all that, but some people don't listen or change their mind.
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Re: How to communicate with wife?! [about investing]
Spot on. Once we started communicating and listening to each other about money our investing and saving strategy made a lot of progress. As a point of reference, we had a recent windfall. She wanted to pay off a car with the money. I wanted to invest it. There was a lot of discussion, she didn't feel like I was listening because I generally always default to investing windfalls. She wanted one less bill. We agreed to pay off the car. I rationalized it with myself as saving on the remaining interest. She was happy, I was happy she was happyMonsterflockster wrote: ↑Thu Dec 02, 2021 1:55 pm In all seriousness however she needs to feel herd, not be convinced. She needs to feel like she has equal say rather than be convinced. It is not easy... good luck!
Last edited by snapvestor on Thu Dec 02, 2021 2:23 pm, edited 1 time in total.
Re: How to communicate with wife?! [about investing]
My wife is the same as the OP. "Unless it is green, it could all be gone." Fortunately, she's so disinterested in all things investing that she just lets me do what I want. I periodically try to update her, but more often than not we don't get far before she says "ok, I don't need to know any more". If I try and show her a current brokerage statement, that usually results in "it could all be gone tomorrow". On another current thread, I have used ESPlanner and now MaxiFi planner for years and I reported to her, "we're ok" and I think that has helped her feel better.
Re: How to communicate with wife?! [about investing]
The desire for cash is based on fears, so it is really a matter of discussing and finding out what actions can help manage those fears.
One potential trick is for all her income to go towards tangible things, paying the bills, groceries, etc, and for only [some of] your income to go towards investments. Use separate accounts where none of her earnings are ever lost to the markets.
By listening to her fears and listening to how various actions help control the fear you should be able to come up with a workable plan for both of you. I would avoid trying to get her to feel the same way as you, but that is just my $0.02 of advice.
One potential trick is for all her income to go towards tangible things, paying the bills, groceries, etc, and for only [some of] your income to go towards investments. Use separate accounts where none of her earnings are ever lost to the markets.
By listening to her fears and listening to how various actions help control the fear you should be able to come up with a workable plan for both of you. I would avoid trying to get her to feel the same way as you, but that is just my $0.02 of advice.
Re: How to communicate with wife?! [about investing]
There are a lot of approaches, but I’d start with a discussion of inflation. The point being that you have to find a vehicle to keep up with inflation. Unless you are over capitalized today, then hey, live off savings.
Then I’d talk about growth, and ways to grow funds. Individual stocks, index funds, savings, etc.
I would then put my data into Firecalc, separately from her data, and demonstrate how those funds would have performed historically. Read the background pages on firecalc for historical perspective.
I’d also talk about a mix of investing 90/10, 50/50, and 10/90. And show how these determine growth or shrinkage. And keeping up with inflation, or not.
It may not change her fear, but at least you can have an objective conversation.
Then I’d talk about growth, and ways to grow funds. Individual stocks, index funds, savings, etc.
I would then put my data into Firecalc, separately from her data, and demonstrate how those funds would have performed historically. Read the background pages on firecalc for historical perspective.
I’d also talk about a mix of investing 90/10, 50/50, and 10/90. And show how these determine growth or shrinkage. And keeping up with inflation, or not.
It may not change her fear, but at least you can have an objective conversation.
Re: How to communicate with wife?! [about investing]
Maybe this is an opportunity for an new sub-forum: Personal Romance?engtogo wrote: ↑Thu Dec 02, 2021 2:49 am It's quite difficult for me to communicate with my wife about investment for retirement. She believes that some crisis is quite obvious and we should sell all the funds and hold cash, and then wait for a better time (dip) to buy back. I have told her all the knowledge I know about market timing and long-term investment. I can sense that it would be a disaster if we manage our retirement fund by instinct based on news and various sources. However, I can't convince her enough. Actually, she is afraid of loss. Given that we are at least 15 years away from retirement, I can't imagine an allocation with 100% cash. Re-balancing is not applicable and so how can we buy at a discount?! Once in a while, as the stock market goes up or down, I have to hold my breath, listen to her and calm myself for a rational communication. Honestly, I don't know if I make a mistake not following her to time the market at a specific moment. However, I just believe the statistical long-term average return and risk of a asset class. Maybe writing down a investment policy together a good practice?! Thanks!
Seriously, all you can do is tell it to her a number of different ways and then if she still doesn't get it just put your foot down. I know that sounds Draconian but I'd give the same advice if the genders were reversed.
Re: How to communicate with wife?! [about investing]
OP, have you agreed with your spouse on your long term goals, particularly retirement planning? Agreeing on this can serve two purposes:
1. It will help establish the goals part of your investment policy statement. The next step is planning on how to achieve your goals.
2. It will build a base of collaboration that the two of you can build on. Agreeing on retirement goals will generally be easier because you're more likely to be aligned with her. You can build on this positive experience when you move on to the planning.
It'll probably be easier for you to jointly visit a fee-only financial planner to get an objective view. Another option is to talk to someone about a low-cost roboadvisory service. You'll have to have the sales resistance to avoid being sold on the service itself, but they should be able to create a proposal for you that you can use to establish the credibility of avoiding market timing. And who knows, maybe this is a good first step for the two of you?
1. It will help establish the goals part of your investment policy statement. The next step is planning on how to achieve your goals.
2. It will build a base of collaboration that the two of you can build on. Agreeing on retirement goals will generally be easier because you're more likely to be aligned with her. You can build on this positive experience when you move on to the planning.
It'll probably be easier for you to jointly visit a fee-only financial planner to get an objective view. Another option is to talk to someone about a low-cost roboadvisory service. You'll have to have the sales resistance to avoid being sold on the service itself, but they should be able to create a proposal for you that you can use to establish the credibility of avoiding market timing. And who knows, maybe this is a good first step for the two of you?
Re: How to communicate with wife?! [about investing]
Not to hijack the thread, but I have the opposite problem: wife wants to be 100% stocks (even <gasp> individual stocks!) because the thought of minimal gains with bonds makes her cringe. At 5-10 years from retirement, I'm happy with my (to me) fairly aggressive 70/30 allocation. She thinks we should "swing for the fences".
Both are difficult issues to deal with...
Both are difficult issues to deal with...
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Advise = verb |
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Re: How to communicate with wife?! [about investing]
70/30 is pretty aggressive with a potential 5 year retirement timeline. The market went sideways for over a decade not all that long ago.KingRiggs wrote: ↑Thu Dec 02, 2021 3:54 pm Not to hijack the thread, but I have the opposite problem: wife wants to be 100% stocks (even <gasp> individual stocks!) because the thought of minimal gains with bonds makes her cringe. At 5-10 years from retirement, I'm happy with my (to me) fairly aggressive 70/30 allocation. She thinks we should "swing for the fences".
Both are difficult issues to deal with...
Re: How to communicate with wife?! [about investing]
Have you agreed with your spouse on your long term goals, particularly retirement planning? Agreeing on this can serve two purposes:KingRiggs wrote: ↑Thu Dec 02, 2021 3:54 pm Not to hijack the thread, but I have the opposite problem: wife wants to be 100% stocks (even <gasp> individual stocks!) because the thought of minimal gains with bonds makes her cringe. At 5-10 years from retirement, I'm happy with my (to me) fairly aggressive 70/30 allocation. She thinks we should "swing for the fences".
Both are difficult issues to deal with...
1. It will help establish the goals part of your investment policy statement. The next step is planning on how to achieve your goals.
2. It will build a base of collaboration that the two of you can build on. Agreeing on retirement goals will generally be easier because you're more likely to be aligned with her. You can build on this positive experience when you move on to the planning.
It'll probably be easier for you to jointly visit a fee-only financial planner to get an objective view. Another option is to talk to someone about a low-cost roboadvisory service. You'll have to have the sales resistance to avoid being sold on the service itself, but they should be able to create a proposal for you that you can use to establish the credibility of avoiding the risks of swinging for the fences with individual stocks and a 100% equity allocation. And who knows, maybe this is a good first step for the two of you?
Re: How to communicate with wife?! [about investing]
I generally like to DIY, but I also meet with my Schwab guy for a complementary financial plan every year which includes their Monte Carlo simulation. It's another data point, and I like making sure I'm not making any egregious errors in my DIY planning. I also like that the Schwab plan gives me an after-tax spend for each year of retirement.DouroBound wrote: ↑Thu Dec 02, 2021 1:37 pm I used all the online models I could find (FireCalc, etc) and I made some highly detailed Excel models of my own, complete with possible second homes, unexpected medical expenses, lost jobs, etc., with both conservative, deterministic return assumptions and some Monte Carlo simulations. I used all these to walk her through a bunch of scenarios that all showed, convincingly, that we’d both have to work a lot longer if we didn’t invest more.
Also, we keep a healthy emergency fund (6 months, not included in our AA) plus a sizable allocation to cash in our AA (10%). The high level of cash is not great of course, but it gives her the comfort she needs to invest the rest, so I think it is an important part of keeping us on the same page.
Of course, timing is everything. If things had gone south right after we entered the market, all those efforts to convince might have come undone.
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Re: How to communicate with wife?! [about investing]
When in accumulation, downturns are your friend as long as you don't lose your job-- monthly contributions buy more shares at lower prices. But everyone is entitled to their own level of risk aversion.
The analysis that may be helpful is answering the question: what is the maximum acceptable drawdown in a bear market? Use that to establish the percentage of stocks in the asset allocation by assuming a 50-60% drawdown for stocks.
The analysis that may be helpful is answering the question: what is the maximum acceptable drawdown in a bear market? Use that to establish the percentage of stocks in the asset allocation by assuming a 50-60% drawdown for stocks.