Investing With Your Significant Other


Today’s post is a very personal story about investing.  

It’s a story about when Mrs. Tako and I were still very young.  We both started our lives as very different people, from very different backgrounds.  I had piles of debt, and she had piles of cash uninvested.  I grew up in the country, brought-up on a regimen of hard labor.  Mrs. Tako grew up in the city and spent her time on education, language, and travel.

Despite the financial differences we started with, we’ve found a way to come together financially.  We save together, we spent together, and through all the minor differences we’ve found a way to share the same big financial goals in life — financial independence and escape from the 50 hour work week.

 

Two Kinds of People

In a relationship, there’s almost always two kinds of people:  A Saver, and a Spender.  The Saver focuses his or her time on saving money and investing it.  The Saver views money as precious commodity meant to be put to work (earning even more dollars).  The Spender views money as a useful commodity to be traded for the purpose of enjoying life.  For Spenders, they believe there’s always going to be more dollars coming-in because of work paychecks, so why bother saving?

I’m drawing broad lines here, but the reality is that both Spenders and Savers actually do a little of both, spending and saving.  The key difference, is how they view the money supply in their life.

Perhaps Savers come from backgrounds where their family had large periods of unemployment, disability, and other economic related tragedies.  Savers learned the “value of a dollar” at key developmental periods in their life, and those kinds of experiences tend to stick.

Spenders on the other hand, may have come from a background of plenty…an uninterrupted supply of cash that just kept flowing their way.  There was no need to worry about where the next meal would come from, and absolutely no lack of comfort in their lives.  Living in wealthy countries can do that to a person.

Spenders might also have the blinders on when it comes to the monetary needs of retirement.  For many, spending that uninterrupted fountain of cash has the effect of putting the focus on the present, not the distant future.  Even Savers can be ignorant of the costs of retirement, and who can blame them — Predicting investment returns, housing, and healthcare costs 40 years from now seems like an impossible task.

So which are you on this spectrum of extremes?  Are you a Spender or more of a Saver?

 

Getting Started Together

When Mrs. Tako and I first met, I was more of the Saver.  I’ve had my fair share of economic difficulties in life, and I didn’t wish to revisit them.  Saving was in my blood.  I saved for the bad times (always a priority in my mind), and hoped for a financial future free of the 50 hour work week.

Mrs. Tako (in contrast) might have had an easier “go” at life economically.  In our relationship she tends to be more of the Spender.  (Let’s be clear though: she might be more of a spender, but she still manages to save a significant amount of money.)

When Mrs. Tako and I first started our relationship, I was already big on investing.  In addition to a small but growing 401k, I owned mutual funds and individual stocks in my taxable account, and had already build a pretty decent dividend income by that time.

Mrs. Tako put most of her money in a checking account.  Like most young people our age, she wasn’t exposed to investing concepts in school, and she certainly didn’t have a business background.  

For many young people, this story sounds entirely all too common.  To them, the stock market looks like a giant casino — like you might find in Las Vegas.  A wretched hive of scum and villainy.  A place to gamble money on “investments”, but not a safe place to keep it.

All that changed after Mrs. Tako and I started dating.  We talked about money.  She was quite curious about what I was doing with my money, and I was very happy to answer questions for this cute young lady in my life.  

(Maybe it was all my talk about passive income sources that won her over…)

Eventually, after weeks of discussion, I convinced Mrs. Tako to make a small investment of her own, with excess cash.  An investment in her taxable account intended to educate her on the basics of investing and to get all that cash working.  

But what would she invest in?  She already had some savings in her 401k, but it wasn’t really doing a great job of educating her…and that certainly wasn’t doing much for her post-tax money.

No, what we needed wasn’t a big blended investment milkshake, what we needed was an investment she could watch, grow and harvest the fruit from over time.

 

A First Investment

Ultimately we decided Mrs. Tako’s first investment should be something she would be interested in.  A company that produced products she liked, and she wouldn’t mind reading about for years.  The kind of company she could get behind and follow…

But where to start?  Mrs. Tako’s main interests in life have always revolved around just a few key things: Food, Clothes, and Mr. Tako (I might be a little optimistic on this last one).  We clearly needed to take advantage of her interest in the first two.

While everyone does need to eat, I wasn’t convinced low margin food businesses would make a great first investment.  Apparel companies were the other option, and ultimately the sector we decided on.  

After doing our research, we decided she would invest in a “clothing and beauty” products company, known as Limited Brands (now renamed L. Brands).  She purchased 300 shares at $11.46 per share in early 2003.  It was her very first investment.

Victoria's Secret Bag
Mrs. Tako enjoys being a Limited Brands owner. There’s a happy little smile we share every time we see these pink bags in the mall.

 

Limited Brands

Over the years, Mrs. Tako’s investment in Limited Brands has turned out to be a very smart first investment…not because she’s made huge amounts of money (she has), and not because it was a stable ride (it wasn’t).

The key reason it was a great learning investment was because she follows it.  Even today, when we hold dozens of other investments, she follows that company far closer than any of the rest.  

Every time Limited Brands publishes a 10Q or 10k we talk about it as a couple.  We talk about the progress of the company, what management is doing, and how they’re spending our earnings.

Yes, we still hold those same 300 shares today.  We never sold, despite recessions, business difficulties, and a constantly evolving apparel industry.  We continued to believe the company is well managed, and invests capital well.

This first investment also taught Mrs. Tako some of the key differences between investing and gambling, and why the stock market itself is not something to be feared — it’s just a place to buy and sell companies.  

Some days Mr. Market is going to think your company is wonderful, and he’ll quote you a high price.  Other days, he’s going to think it’s garbage, and he’s going to quote you a low price.  For long term investors, what Mr. Market thinks on a daily basis is irrelevant.

Ultimately, buying good companies at the right price and holding-on is what makes all the difference.

Over the years, Limited Brands has changed names, sold brands, bought others, and transformed itself to fit with the times….all while being a shareholder friendly company.

Thirteen years later, Mrs. Tako’s original $11.46/share investment in Limited Brands has returned over $27.47 dollars per share in dividends alone (More than twice the initial purchase price in dividends!), and the stock price itself has risen over 5 times the original purchase price.

Through it all, we held on (and realized some very acceptable returns).

LB Stock chart
Limited Brand’s stock price has been all over the place, but the general direction has been up.  While the S&P 500 returned 90% during that time period, Mrs. Tako’s investment has returned almost 800% (including dividends).

 

Trust, It’s Important

Ultimately, that first investment built a significant amount of financial trust between us, and it’s lead to many more investments as a couple.  Today, we’re worth over 2 million dollars together (and growing).

Trust is important between couples when it comes to finances — Something I can’t stress enough.  Learn to trust each other when it comes to money, and you’ll both sleep better at night.

I know Mrs. Tako’s not going to go out and spend hundreds of dollars on haircuts and designer handbags, and she knows that I’ll continue to do what I’ve always done — read like crazy, count our pennies, and make smart investments for our future.

How do I know this?  Practice.  We’ve built that trust up over time.  We each trust each other to work toward our shared goals, and not screw it up with dumb financial moves.  

 

Talk About It:  Shared Goals

One of our greatest assets as a couple has absolutely nothing to do with finances, and everything to do with how we communicate.  We talk about money…a lot.  It is absolutely NOT a taboo subject in our household.  

We’ll talk about money whenever something financial comes up — on vacations, car trips, restaurants, on the beach, when I’m blogging, and even when I’m cooking.  Money knows no boundaries in our household, and that’s a key distinction in our relationship.

While we might not always agree on individual purchases, we do eventually find common ground….because WE TALK ABOUT IT.

I can’t recommend this enough to other couples — either those just starting out, or more established couples.  Talk about finances.  Talk about investing.  Talk about money together until you’re blue in the face.

Ice cream
We talk about financial stuff all the time — like how we managed to spend so much on groceries in July. We spent way more than normal that month.  I think Mrs. Tako went a little crazy on ice cream purchases.  Six months later…still talking about it.

Don’t give up if you initially disagree.  Keep talking.  Finding common ground on your financial goals isn’t going to be easy, and it isn’t going to happen until you talk it through in great detail.

Mrs. Tako and I do this at least once a month.  When I publish our regular Dividend Income and Expenses report, I take that opportunity to go over the numbers with her.  We talk about the changes we’d like make, and how that’s going to affect our finances too.

 

Final Thoughts

Relationships, like investments, don’t always move in straight lines.  It doesn’t matter if you’re the Saver or the Spender.  There will be disagreements, and financial downturns….just like investing.  

Don’t get discouraged if your significant other doesn’t always see eye-to-eye on all things financial.  Keep talking, and always try to keep things in the context of your shared goals and common ground.

Allow each other to make mistakes too. We all make mistakes, and it’s normal.  Without mistakes we can’t continue to improve.  

Like two people rowing a boat, you’ll make better progress when you row together.  We certainly did.

Communicate, educate, and share goals with each other.  Keep doing that, and eventually something really wonderful will happen. 

 


27 thoughts on “Investing With Your Significant Other

  • November 30, 2016 at 3:41 AM
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    I’d love to hear how you guys merged your finances. What seems easy at first turns out to be a little difficult. I’m in the process of merging finances right now and I’d describe it as we’re both rowing in the same direction, but our strokes are at different times! It seems like it’ll take us a few months (at least) to get in sync.

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    • December 1, 2016 at 2:10 AM
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      Our finances were quite simple in fact. We merely opened a joint account and set up direct deposit into that account. That’s all there was to it really. 401k’s and whatnot still remain in our individual names.

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    • December 1, 2016 at 6:45 AM
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      I don’t know if this will help you, but when we merged finances, we created a Joint Checking Account, where all household expense were paid from- rent, utilities, food, tolls, insurance etc., a Joint Savings, where a predetermined amount was deposited each paycheck and not to be touched unless invested or a large purchase (car size). Finally, we each had a small checking account where we put our monthly allowance/spending money. This allowed us to each get an amount to spend as we wished. We are both good savers, but not 100% of the time. It wasn’t a lot, but it was enough that as an individual, we could go to the pub with friends, or buy those expensive shoes, or whatever. It was enough that it provided some “do as you want” money without worry what the other would think, while still maintaining our budgets. This amount has always been based on how much we had leftover after saving and budgets. Sometimes it was very small, now it’s larger. Good luck.

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  • November 30, 2016 at 4:13 AM
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    I’m also in the talk-about-money-incessantly-with-your-spouse camp! Last week Mr Chedda bought a $12 block of cheese that wasn’t on the shopping list and we had a heart to heart afterwards about grocery expenses 🙂

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  • November 30, 2016 at 5:55 AM
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    Mr. Picky Pincher is definitely more of the spender in our relationship. 😉 But even though we’re different in many ways, we come together with a unified financial strategy. It wasn’t easy, but it does help that we have the same goals of getting out of debt and retiring early. I think it’s much more difficult if you have different goals and spending styles!

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    • November 30, 2016 at 8:42 AM
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      Yep, absolutely. Water and oil don’t usually mix….but having common goals makes for a decent emulsion.

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  • November 30, 2016 at 7:13 AM
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    My wife agreed we should go to the beach shown in the top photo… can you tell us where that beach is? I told her I’d splurge on the ice cream.

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      • November 30, 2016 at 11:48 AM
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        Oooh!!! It’s on the bucket list for us!

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        • November 30, 2016 at 12:24 PM
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          One of the most beautiful places I’ve visited in the world. Worth the trip!

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          • November 30, 2016 at 3:11 PM
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            I’ve traveled all over the world and Australia was my favorite. I flew over the Whitsundays.

      • December 1, 2016 at 4:50 AM
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        We are getting our “bareboat” charter certification in Thailand over the Christmas holidays later this month. Once we have the license, a charter in the Whitsunday Islands is definitely on the bucket list!

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  • November 30, 2016 at 8:00 AM
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    Nailed it. We may not always agree, but with communication you can find common ground. And if you want to have smooth sailing in your financial future your significant other is going to have to be on board. Whatever success we’ve had, it’s been because Mrs CK and I are a unified team.

    Great post!

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  • November 30, 2016 at 8:17 AM
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    It is definitely a 2 person path forward, and you must make sure your both on board. A lot of studies show money stress is one of the top reasons for divorce. Ultimately divorce is one of the largest destroyers of wealth. Couple that with the need to pull with both oars going the same direction (rather then spinning your boat in a circle) and getting on the same page is critical. There was a post a few weeks ago by Steve at Think Save Retire that hit the nail on the head. Talk about the goals rather then the methods first. You can’t define how to get there without first agreeing on a destination.

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  • November 30, 2016 at 10:42 AM
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    You’re so right Mr. Tako. The key is to behave and act as a team, working towards a common goal. Mr. BITA and I are both Spenders and Savers – we tend to spend on different things and be frugal about different things, so that works well for us as a system of checks and balances.

    The key, we’ve found, is to communicate, and to ensure that neither of us is feeling put upon or deprived. Deprivation is the enemy of the long term sustainability of a financial plan. If we feel the urge to splurge we talk about it to each other. Sometimes we decide the happiness factor is worth the splurge. Other times we help each other find an appropriate sacrifice in another area to compensate for the splurge.

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  • November 30, 2016 at 10:42 AM
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    Great story. It’s so important to talk about money with your significant other. I’m so glad that my wife and I attended Millionaire Mind Intensive when we first got married and it really got us on the same page when it comes to money.

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    • December 1, 2016 at 11:26 AM
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      Actually, it’s getting closer to 2.5 MM bones these days.

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  • November 30, 2016 at 12:02 PM
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    Mrs. R2R is more the spender in our relationship, but the good news is that she is still pretty darn frugal! Not quite as much as me, but not many people are. 🙂

    Even though she’s not a big spender, she doesn’t really care about money – maybe I should say that it’s not a main focus for her. She’ll listen when I talk about it, but she’s not big into it. I pretty much need to offer her a glass of wine to get her to sit down and go through our finances with me. So I don’t know if that’s good or bad, but we do keep trucking along and building up our way closer to FI together, so that part’s definitely working well!

    — Jim

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    • December 1, 2016 at 11:27 AM
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      Mrs. Tako said to me tonight, “Jim’s wife sounds like me…except you’d have to offer me ice cream”.

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  • November 30, 2016 at 3:18 PM
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    Your financial savvy is very impressive. Like Financial Veloceraptor, I also FIRE’d on much less. Being a minimalist, saving was automatic. I do love to spend money on travel though, but I actually can’t stand luxury resorts… so boring. Like you say, too much comfort, what’s the fun in that? One day of pampering, yes. An entire week, forget it. So, I naturally, and effortlessly save on travel also.

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  • December 1, 2016 at 3:28 AM
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    Great post Mr. Tako. You (and several people commenting) hit on the most important aspect of a marriage – COMMUNICAITON! Sounds obvious, but is not always easy to put into practice. I count myself very lucky to have found an open minded, thoughtful and inquisitive mate.

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  • December 6, 2016 at 7:41 AM
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    Glad to see you compromised and were very succesful together. Go Team Tako!
    For us it was somewhat similar, but we were not as far apart as you two. Since finding FIRE, Mr. CF made a very big turn around and got more on the same frequency as Mrs. CF, albeit I may have overshot a bit…..something to do with my all or northing attitude. She still loves me…i think.
    Big difference is that Mrs CF is a big fan of real estate, i’m more of the stock and dividend type of guy. It’s a nice compromise 😉

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    • December 6, 2016 at 3:32 PM
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      I agree…that *is* a nice compromise! Kind of a yin and yang situation you’ve got going on there!

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  • December 17, 2016 at 10:36 PM
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    We are not married yet, but she was really on board with me starting my blog and trying to focus my debt away. She even used it as an opportunity to figure out where she stood. It was a little hard for her, but she actually checked into her retirement accounts that she hadn’t in 5 years and was happy with where they stood. She’s in a better boat than me currently, but I am working hard to be an asset to our relationship.

    Reply

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