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Old 01-11-2018, 07:09 PM   #21
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If I've got this right, in about 18 months, you'll be 32, have a paid-for $500k house, $275k in financial assets, and be saving at a $100k/yr clip. That's very rosy picture.

So, the first thing is that the "wrong" investment doesn't mean you're starving. It means you might have to give up some luxury. That should lower the stress level.

Next, I hear you. I'm married to the most risk averse person I know. Helping her sleep at night has cost us real dollars. She would say it's been worth it.

I wouldn't lecture. I might try splitting the savings. She can put half where she likes, you can put half where you like. You can put a positive spin on this. Her half is the emergency fund you may want if the economy tanks, the market tanks, and you lose your job at the same time. Those things often go together.
Your half generates long term growth and inflation protection (you hope).

The important thing is that this isn't a contest. One of you will have more, the other less, at the end of the first, second, third, fourth, year. Nobody gets to say "I told you so", it's just diversification by an slightly unusual method. And, note that if you buy stocks at the current P/E ratios, you may be the one who is behind.

Over time, she may notice where her co-workers put their money. Or she may read something about CDs or I-Bonds on her own. You've got a lot of years ahead to make changes.
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Old 01-11-2018, 07:29 PM   #22
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Love Independent's answer... asset allocation in a different way

My parents used CDs all their lives... of course it wasn't 1-2% at that time either, but it worked for them.
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Old 01-11-2018, 08:16 PM   #23
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I understand being afraid of losing money in the stock markets. I didn't invest in anything except CDs until 2010. I like the safety and we didn't lose anything in 2008-2009 market drops.

As I read more and learned more I tried investing a little at a time. I picked something in the middle, I think it was Vanguard STAR because it was approx 65/35 and I could open it for just $1000.

I enjoyed the "ups" and I cringed at the "downs" but most importantly I LEARNED. Eight years later and while I'm still an amateur I am investing all the time. I still have a good portion in CDs which feels very good.

See if she will try something small and simple. Read up on asset allocation and see what feels comfortable to her. I read a lot of topics about investing on ER.org and continue to learn.

Ask her to take a small first step and see if she's ok with giving it a try. With the way the markets have been lately, an early success can make a difference. Disclaimer - past performance is not an indicator of future results..yada, yada.
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Old 01-11-2018, 11:08 PM   #24
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You can't change her. Just try to save as much as you can on your own and try to minimize her spending. Maybe she would be interested in acquiring some rental properties.


+1
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Old 01-12-2018, 02:43 AM   #25
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If I've got this right, in about 18 months, you'll be 32, have a paid-for $500k house, $275k in financial assets, and be saving at a $100k/yr clip. That's very rosy picture.



So, the first thing is that the "wrong" investment doesn't mean you're starving. It means you might have to give up some luxury. That should lower the stress level.



Next, I hear you. I'm married to the most risk averse person I know. Helping her sleep at night has cost us real dollars. She would say it's been worth it.



I wouldn't lecture. I might try splitting the savings. She can put half where she likes, you can put half where you like. You can put a positive spin on this. Her half is the emergency fund you may want if the economy tanks, the market tanks, and you lose your job at the same time. Those things often go together.

Your half generates long term growth and inflation protection (you hope).



The important thing is that this isn't a contest. One of you will have more, the other less, at the end of the first, second, third, fourth, year. Nobody gets to say "I told you so", it's just diversification by an slightly unusual method. And, note that if you buy stocks at the current P/E ratios, you may be the one who is behind.



Over time, she may notice where her co-workers put their money. Or she may read something about CDs or I-Bonds on her own. You've got a lot of years ahead to make changes.


Great advice!
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Old 01-12-2018, 03:46 AM   #26
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I like Independent’s strategy.

Over time, DW may learn from the OP about investments in the financial markets. And the OP may learn from DW about real estate investment.
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Old 01-12-2018, 03:58 AM   #27
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Matthew,

Yours are questions you should have asked prior to marrying her.
Hmmm - I wonder how you chose your user name.
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Old 01-12-2018, 04:04 AM   #28
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+1 to Independent's strategy, as well as looking into rental real estate for an income stream. Plenty of retirees have rental income paying their way. Bigger Pockets may help with advice.

I was raised by very risk-averse parents who have only ever invested in CDs. Education was what "turned me to the dark side". Some of the Millennial-focused blogs may be more relatable than the numbers-based stuff I find helpful - try Bitches Get Ritches.
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Old 01-12-2018, 04:16 AM   #29
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She would be! However I know very little about that and I don't want to get in over my head.
I understand your concerns. HOWEVER, she is a prime candidate for learning the ropes of RE investing. She most likely knows people already investing (quite possibly in her same office). Buy a copy of "the millionaire real estate investor", by Gary Keller (of Keller Williams real estate company fame). One of the best RE books ever written, IMO (and I have read dozens). "...represents the collected wisdom and experience of over 100 millionaire investors from all walks of life who pursued financial wealth and achieved the life-changing freedom it delivers. This book--in straightforward, no nonsense, easy-to-read style--reveals their proven strategies.", per Amazon.

My real estate investing life was changed when I became licensed to sell, and began rubbing elbows with fellow investors who were Realtors. She can do the same. And then, after trying it out, perhaps you can convince her to diversify into the stock market a little. Good luck.
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Old 01-12-2018, 05:10 AM   #30
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A few things... many that have been touched on.

There are a couple risks with cash. One is the risk of theft if we are talking about coin of the realm. The other, more stealthy risk, is inflation risk. Perhaps you can explain it to her as someone who has enough cash to buy a $500,000 home but the time isn't right but will be in 10 years so they put the cash in a safe. 10 years later they open the safe and take the $500,000 out and go to the real estate office but are disappointed as that $500,000 house now costs $650,000 [$500,000 * (1+2.75% inflation)^10 years]. Perhaps she'll understand inflation risk better if you frame it that way.

At a minimum, you should get into an online FDIC insured savings account... they pay ~1.3% or more these days.

The next level is savings for things that you will need the money for in the near term... and on that she is right... you want to keep that money safe from market downs and ups so it will be there when you want/need it.

The next level is savings for long-term things like retirement... that money can be wisely invested in stocks because in the long term it will grow despite constant ups and downs. Have her pick five 25-year periods at random from the last 100 years... and show her how stocks with dividends reinvested have compared to cash with interest reinvested.

And buy a subscription to Kiplinger's Personal Finance or Money magazine and have her read it each month while waiting for clients to show up for appointments. Eventually she will understand and come around.

One other angle is to explain that investing saves you a bundle in taxes. If you invest and collect qualified dividends and long-term capital gains from the sale of appreciated stock then your federal tax is 0% or 15% depending on your income level. If you invest in CDs then your tax is at ordinary rates... which is 22% or more. It is better to pay 15% than 22%.... that should be math that she can understand.
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Old 01-12-2018, 05:23 AM   #31
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Try showing her a multi-decade chart of the stock market.
Find a good post or thread here about other people's results with their investing, or their recommendations.
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Old 01-12-2018, 06:39 AM   #32
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Maybe show her a market chart going back 100 years and some graphics illustrating how her cash savings will dwindle to half their value in 15-20 years. Explain that the objective is to keep a mix of equities and bonds that will allow you to get through the inevitable market troughs.

Edit: I see DrRoy beat me to it. +1 to his suggestion.
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Old 01-12-2018, 09:58 AM   #33
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Thank for you all the valuable advice and suggestions. I like Independents suggestions and will be going that route as I think it makes sense and will be something she will go for!
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Old 01-12-2018, 10:38 AM   #34
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My 2c:

She understands housing & savings because she is incredibly risk adverse. (Don't flame me that real estate has risks, I know it does but women interpret the roof over their head in a different light) So she ramps up savings + wants a pretty place to live in while it'll be worth more in a decade or so and (for one reason or another) strongly remembers 2001 / 2008.

You have a grasp on the value of the stock market and remember 2011.

Let each of your put away in your retirement accounts as you see fit then share info in 2 yrs. Bet that'll work even if she continues to save / you continue to invest
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Old 01-12-2018, 10:47 AM   #35
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Sounds like the perfect reason for a 50/50 asset allocation!
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Old 01-12-2018, 10:55 AM   #36
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A few more thoughts- I also like Independent's suggestion but it may not have to be split 50-50. Is it possible that your wife will be happy if just $X,000 (or $XX,000) is in a cash equivalent investment? It may be that she'd be happy with something less than half the assets in cash, but enough to make her feel secure that the two of you will be OK in a downturn.

Second- you may want to occasionally share with her the results on what you've invested- the ups AND the downs. Over the long run, she may become more comfortable with downturns after seeing that the good stuff rebounds eventually. Finally, you SHOULD share with her anything especially risky you might want to do. My late husband was a dear man with modest spending habits and a high IQ, but zero interest in investing. He was still my common-sense test. If he didn't like the idea of something I was planning to do, I either didn't do it or took a lower stake, because the outcome affected him, too. A friend once told me her husband the doctor lost half their retirement savings (they were in their 40s) by buying on margin just before the dotcom bubble. She had no idea that was what he was doing till it was too late.
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Old 01-12-2018, 11:09 AM   #37
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I like Independent’s strategy.

Over time, DW may learn from the OP about investments in the financial markets. And the OP may learn from DW about real estate investment.
+1 and commit to invest 50-50 in both RE and Equities. Both sides will learn valuable lessons.
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Old 01-12-2018, 11:14 AM   #38
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Independent hit a nail on the head. My DW is risk hesitant and has a hard time trusting the markets.

When we put some money in our individual Roths she want to be conservative. I told her to pick whatever she wanted. After a couple of years my balance was 2.5x hers. She decided to take on more risk.
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Old 01-12-2018, 11:18 AM   #39
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Just a few general things to add to the good advice already given:

- Patience is a virtue. Rome was not built in a day. It may take time for her to be comfortable with investing, so exercise patience.

- Display calmness at times of market downturns. My DW once remarked that seeing how calm and "business as usual" I stayed during the market downturns we lived through kept her from panicking at all the dire news being broadcast.

- Position investing within your overall financial plan. Do not focus so much on the future monetary goal as the role it plays in those plans. My DW got scared when a couple of acquaintances husbands passed away suddenly and within a few months the families had to sell their homes. Showing her how I had the bases covered addressed those fears.

- Be open about you investing actions. Give her regular, honest updates. Do not get too giddy when times are good, or down when times are bad. Do not hide anything.
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Old 01-12-2018, 07:53 PM   #40
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She would rather buy CD's than invest in the stock market.
I hope you mean Certificates of Deposits and not Compact Discs?

I'm going through something similar with my mom. She started buying CD's back when they earned good interest. But now she's only earning about .15% which is worse than many regular savings accounts. It's what she knows and is comfortable with, so it has taken some effort to convince her there are better options. She had a stroke back in May and has blown through her checking with assisted living costs. Now she's going to get hit with a several hundred dollar early withdrawal penalty to have enough to last until the CD matures. I think that finally convinced her it's not a wise option in her current situation.
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