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Love struck and need assistance!!!
Old 09-02-2008, 10:25 AM   #1
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Love struck and need assistance!!!

Hey everybody:

I recently met what appears to be the love of my life.

I was hoping folks here can convince my girlfriend, that at 34 years of age, FDIC savings are NOT the way to go.

She is VERY conservative with her investments while I am not afraid of a little risk. I am not suggesting she goes ALL out and invests in ALL stock mutual funds. However, a blend of stocks/bonds would not seem so bad?

I know I can convince her to see things my way but a little nudge from this forum I believe would go a long way.

Heck, even if we end up NOT becoming soul mates, I would like to see her planning for her future and NOT losing out to inflation.

If I need to provide more information, simply ask and I will oblige.

Thanks everybody!!!

Space Mountain
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Old 09-02-2008, 10:28 AM   #2
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Books are your salvation, Space Mtn. If you can get her to read about asset allocation then she'll come to the answer herself. What is the old saying: "those convinced against their will are of the same opinion still."

Good luck! Sometimes it is good to have a conservative invester married to a less-so one. Yin and yang and all that. My DH is the more conservative one, and without his pushing for it, we'd never have paid off our house.
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Old 09-02-2008, 10:51 AM   #3
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I'm going to be a little less romantic. Financial incompatibility can end relationships or at least create a permanent tension in a relationship.

Someone who invests totally in cash to be "safe" never ceases to amuse me. You're basically losing every year. Its like a football team punting on first down because them there offensive plays can be dangerous.

At least with something as boring as target retirement income or wellesley you've got half a chance of staying ahead of inflation. If those are too scary for someone, they might want to take a close look at why they're okay with definitely and consistently and permanently losing money vs a small chance of temporarily 'losing' value with an excellent chance of regaining it.

Someone in their 30's thats 'investing' in bank deposits isnt going to have a very comfortable retirement.
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Old 09-02-2008, 11:07 AM   #4
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I hope you have known this woman a long time. Because if I were her, I would maybe wonder why you are so fired up about my money.

Do you also tell her how to dress, use makeup, or make love? Presumably she is an adult with some experience in the world and has reasons that to her at least seem sufficient to lead her to do things the way she is doing them.

Ha
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Old 09-02-2008, 11:19 AM   #5
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Quote:
Originally Posted by haha View Post
make love
I'm not above throwing out a few suggestions and ideas
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Old 09-02-2008, 11:24 AM   #6
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I hope you have known this woman a long time. Because if I were her, I would maybe wonder why you are so fired up about my money.

Do you also tell her how to dress, use makeup, or make love? Presumably she is an adult with some experience in the world and has reasons that to her at least seem sufficient to lead her to do things the way she is doing them.

Ha

Clearly, you don't make any executive decisions in your household.
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Old 09-02-2008, 11:28 AM   #7
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Maybe the best thing to do is introduce her to some different ideas. Sounds like you may have already done that. Others mentioned literature (books on investing). If she is receptive to change, then help her pursue a change. If she is not receptive, then desist.

Be aware that by convincing her to change you would be taking some risk yourself.
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Old 09-02-2008, 11:30 AM   #8
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Clearly, you don't make any executive decisions in your household.
Well, I do. But there is a low bar, since it's a houshold of 1.

Ha
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Old 09-02-2008, 11:32 AM   #9
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Clearly, you don't make any executive decisions in your household.
Since it sounds like maybe you havent been married before, you might be surprised to find out that you wont be making any either
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Old 09-02-2008, 11:38 AM   #10
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Since it sounds like maybe you havent been married before, you might be surprised to find out that you wont be making any either

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Old 09-02-2008, 11:42 AM   #11
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I think books and graphics on compounding interest can go a long way. When I first started saving, I was all in cash, too. It takes a while to get used to the idea of risk. She has to be interested enough to choose to educate herself.

There is the almost cliche graph of someone who saved between the ages of 20-30, and another person who saved the same amount per year between the ages of 30-60, and the two ended up with the same amount of money. That was a really important message to me. And you don't get there with 2.5% saving accounts.
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Old 09-02-2008, 11:44 AM   #12
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I have to agree with Ha. You are giving her the info and she can decide.

Members of my family lean strongly towards very secure investments, FDIC insured (CD's/savings) because of family members who lived during depression era times.

I am currently beefing up FDIC insured investments now - where before everything was in mutual funds before. I kinda feel like I'd be the foolish one to see everything go down the drain, when I could've had a nice insured cushion if the economy were to truly go bad.

Just keep putting the info out there. She will more than likely begin to see it your way AFTER she feels secure enough with what she has done for herself.
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Old 09-02-2008, 11:53 AM   #13
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I'll bet Ha makes ALL the executive decisions--he lives alone, Space Mtn.

But don't discount his information, because he's got a point in his missive. Maybe she just needs to hear some info about inflation and it's effect on conservative portfolios in order to see the light. Who knows? How long has she been investing? Has she lost money in past down markets in more aggressive stuff, or is the whole idea of investing foreign to her? What are her parent's ideas about investing and money? You get the drift--if you know where she comes from, you'll know where she's going.

I get nowhere fast when I try to push my DH of 15 years into some financial decision or another--only when I can get him to learn and read do I get buy-in on our financial plans.
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Old 09-02-2008, 12:05 PM   #14
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Heres a couple of visual aids...

You can pick the investment that lost 89% of its value over 50 years or the one that made ~2300%.



Attached Images
File Type: jpg real rates of return.JPG (72.1 KB, 11 views)
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Old 09-02-2008, 12:56 PM   #15
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My father diid and my brother does invest only in principal-guaranteed interest-bearing instruments. I have had many conversations and sent them stuff, all to no avail.

The best advice would be to:
1) congratulate her on being able to save so much money, and
2) mention that you will both be on a journey to discover how to maximize your opportunity for early retirement.

If you can show her that option A needs 10 more years of working than option B, then you have something tangible to discuss.
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Old 09-02-2008, 01:00 PM   #16
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Quote:
Originally Posted by Space Mountain View Post
Hey everybody:
If I need to provide more information, simply ask and I will oblige.
I think you can use this issue for you as a great opportunity to get to know your GF.
A couple of suggestions.
1. The way to get a handle on you GF is not to address the result - her investment strategy.
2. Try to find out what led her (past experiences) to this strategy.
3. Try to find out what her long term desires are - ER, work for the rest of her life, children - what type of life does she what to provide for them, etc
4. Don't judge; or try to convince her of anything; don't talk about money - just try to understand
5. Take a couple of days break
6. Prepare a simple chart with savings and investing scenarios that show what she would have to fulfill her desire
7. Don't judge; or try to convince her of anything - Ask her how you can help her to meet her goal.
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Old 09-02-2008, 07:51 PM   #17
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I am a year older than the GF and wife is same age as GF.

First- when it is BF-GF, I do not think it is your place to tell her how to invest or her place to tell you how to invest.

Second- if you get engaged, start the discussion on asset allocation. But realize the allocation is not the most aggressive of the 2 preferences, or the most conservative- but something in between.

Third if you get married, then and only then is it appropriate to be giving each other advice. You will both need to compromise your asset allocation. Probably going 60-40 if you are 80-20 now for example, to account for her lack of willingness to take risks. But maybe some of that 60% gets invested more risky than it is now. Maybe some of the 40% is in higher yield than GF would have otherwise chosen- compromise on many sides.

I am lucky in that wife trusts me to choose allocation across all accounts. She does not give input other than where we should spend the money we don't invest. My wife doesn't even know the login ID or password to her 401k or Roth accounts- she relies on me to make all decisions. If GF did this- then do what you wish, but if she wants input her input needs to be respected.

In my letter of instruction to my wife if something were to happen to me, among the first things I advised her to do is sell x stock funds and buy y bond funds because I have the accounts invested quite aggressively. But we each have the other to fall back on (meaning we can contribute 2X as much to make up for market losses right now or closer to retirement). Once there is only one investor and retirement is sink or swim on the one income, the methods chosen need to be more conservative.

In addition to this, wife's Roth is the most aggressive account we have (non diversified mutual funds and sector mutual funds), so clearly that strategy would not fly if she was investing for her own retirement and did not have my accounts to fall back on.

Ironic thing here is my wife administers 401k plans, among other benefit plans, for a living.

LOL

**edit** second point- no one should ever take on a risk because someone else tell them to. A person needs to do what they are comfortable doing risk wise.

If I told everyone to pump money into financial sector funds and tech sector funds because they need to take that risk now before those sectors surge... some would call that timing and others would say that is too much risk. The same way if someone told me I needed to add a gold fund or a silver fund because I need to lessen/increase/change my current risk profile would be bad advice to me as well- I won't do what others say is appropriate, I will do what I am comfortable doing.
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Old 09-03-2008, 03:00 AM   #18
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Ditto... educational issue.

Common investments ( balanced portfolio of stocks and bonds) and associated risk does not equate to total loss... rather volatility in the short-term.

More risk in with short-term fixed instruments not keeping up with inflation... or helping to prep for retirement.

Consider asking her to read a Dummies book on stocks and bonds. That series usually provides a decent overview on subject matter without getting too deep.
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Old 09-03-2008, 07:33 AM   #19
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...............
Third if you get married, then and only then is it appropriate to be giving each other advice. ............
I have a different perspective. When I was dating, I gave financial advice to several women, who asked, and they are richer for it now. I think the key is their willingness to take advice.

On a humorous note, after dropping one woman when I realized she was an alcoholic, she called me up and asked if the financial advice offer was still good!
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Old 09-03-2008, 10:37 AM   #20
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Clearly, you don't make any executive decisions in your household.
With the exception of minor issues, I hope you're not planning on making any unilateral "executive decisions" in your relationship. If you are, it probably won't last long.

Ha has offered good advice, and your response was immature.
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