What to do when DW doesn't understand investing

[MDC86]

Hi everyone. My name is Matthew and I'm 31 years old. I had a very successful start to life up north in Boston where my wife and I met. After we got engaged we decided we wanted a clean slate and decided move to South Carolina to escape winter and have a better quality of life. I work for a large company so I had the ability to continue to work for them down here. The downside is this is a slower territory so I have taken a hit in income. On the upside, DW is starting a new career in real estate which is already off to a great start and this will be the first time I've ever been in a dual income situation. When I liquidated all my physical assets in Massachusetts between the house and couple of additional cars we didn't need we walked away with about $450K.

I wanted to get a smaller and cheaper home in Summerville SC for about 250k and invest the rest but DW wanted the bigger house we are more accustomed to in Mt Pleasant (A move expensive town in a different part of Charleston SC on the ocean) for $500k. I wanted to get a small mortgage and invest some money but DW doesn't understand the market and doesn't trust what she doesn't understand. After a lot of debate I took 70k from a BofA credit card that I have a 100k limit on at 0% for 18 months and paid cash for the house. The fee to do it was 3% but I chalked that up to a "closing cost" which would have been similar if we had went with a traditional mortgage. I took a bit extra so I had a buffer and once it is paid back by the end of 2018 we will be debt free with about 625k in assets plus my IRA worth about $150k. Once its paid for we will have anywhere between 7-15k a month to invest.

My question is once this debt is paid for how to I get DW on board with investing money. Or even better how do I convince her to invest our savings over the course of this year and pay the CC with 0% off at in early 2019 when the 0% promo expires. She is scared because she doesn't want to "risk losing money". Shes an great saver but her idea of saving was to stick cash in a safe. She managed to save 33k in cash (Yes cash) before we met by working as a pre school teacher for 5 years. She had zero debt when we met and for a 28 year old she is very mature with not spending like traditional America does. I just don't know how I'm going to get her to change her way of thinking to put our money to work for us in the market. Any insight would be greatly appreciated!

 

[braumeister]

DW is starting a new career in real estate
...
DW doesn't understand the market and doesn't trust what she doesn't understand.

I sense a disconnect here. How can a person succeed in real estate without a good grasp of finances?

 

[Katiek]

Can you have some discussions with her regarding the risk of inflation and that her "safe" savings aren't really safe? Also, maybe she'd feel better if you kept a larger than usual emergency savings in liquid assets to ensure you don't need to sell the investments in a down market.

A simple investing book - maybe something like "If you can" may also help without being overwhelming. Helping her to understand that the market will go down at various times, but that over time, it's the only way to beat inflation.

 

[MDC86]

I sense a disconnect here. How can a person succeed in real estate without a good grasp of finances?

She understands the real estate market, not the stock market.

How is she with reading books about the topic?

She just doesn't take an interest like I do. She would rather buy CD's than invest in the stock market.

 

[Scrapr]

I sense a disconnect here. How can a person succeed in real estate without a good grasp of finances?

LOL...you haven't met many Real Estate agents huh? They are all about the sale. 50% of your income on the mortgage to get the sale? Sure...you can handle it. Just think about the value increase! It increased 20%/year the last 18 months. Extrapolate that 10 years. You'll be rich!

The good market has brought in many new folks to real estate sales. Sadly not many are ready for prime time. We sold our house last year. Used a broker that has done it for over 20 years. The buyer side had been in only a couple years. Our guy schooled her hard

The only thing some are good at is ready the escrow statement and the line on the bottom. Broker proceeds

 

[MRG]

I sense a disconnect here. How can a person succeed in real estate without a good grasp of finances?

You're describing my sister.

 

[racy]

Go to the bottom of this page. Find the blue ribbon and click on FIREcalc. It's a calculator to project your financial future. As the calculator says, "Seeing the results will illustrate better than thousands of words".
Good luck!

 

[HI Bill]

Show her a 'reverse amoritization table" assuming 3% annual inflation for 20 years....her $33K would be worth less than half (real purchasing power) due to the eroding effects of inflation. Some folks, however (like my mom), will never get it!

 

[travelover]

....... I just don't know how I'm going to get her to change her way of thinking to put our money to work for us in the market. Any insight would be greatly appreciated!

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.

 

[MDC86]

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.

She would be! However I know very little about that and I don't want to get in over my head.

 

[joylesshusband]

Matthew,

Yours are questions you should have asked prior to marrying her.

 

[Pilot2013]

Show her a 'reverse amoritization table" assuming 3% annual inflation for 20 years....her $33K would be worth less than half (real purchasing power) due to the eroding effects of inflation. Some folks, however (like my mom), will never get it!

+1

 

[mpeirce]

When we were younger, the family used to take nice Sunday drives. I’d have Money Talk (a personal finance radio show) playing on the radio and it sparked quite a few conversations about money. DW learned a lot from those drives. (So did I!)

For some spouses something like this might work better than having the other spouse always trying to teach the other, as this can be interpreted as a lecture.

 

[Car-Guy]

She is scared because she doesn't want to "risk losing money". Shes an great saver but her idea of saving was to stick cash in a safe. She managed to save 33k in cash (Yes cash) before we met by working as a pre school teacher for 5 years. She had zero debt when we met and for a 28 year old she is very mature with not spending like traditional America does.

Sounds like a keeper to me.

I just don't know how I'm going to get her to change her way of thinking to put our money to work for us in the market. Any insight would be greatly appreciated!

Maybe you shouldn't try! If not, maybe a suggestion to dabble just a little in the market with a little money.

She would rather buy CD's than invest in the stock market.

Lot's of very smart (and rich) people do, even on this board. So far sounds good to me!


I know, I'm a big help!

 

[jfn111]

LOL...you haven't met many Real Estate agents huh? They are all about the sale. 50% of your income on the mortgage to get the sale? Sure...you can handle it. Just think about the value increase! It increased 20%/year the last 18 months. Extrapolate that 10 years. You'll be rich!

The good market has brought in many new folks to real estate sales. Sadly not many are ready for prime time. We sold our house last year. Used a broker that has done it for over 20 years. The buyer side had been in only a couple years. Our guy schooled her hard

The only thing some are good at is ready the escrow statement and the line on the bottom. Broker proceeds

Sad but often true. (I won't even try to defend some of my fellow agents).

 

[LOL!]

I just saw a post on another forum:

What to do when DH doesn't understand real estate? How can I get my husband to help me make even more money in real estate. He just doesn't seem interested. He talks about something boring called investing. How do I get my DH on board with my real estate deals?

 

[Aerides]

So.. she is good at saving, doesn't spend frivolously, and wants to save in simple instruments she understands....yet you ended up in a house for twice the price because of what she wanted. That's a bit of a red flag for me, one that will add years to your retirement date. You want to at least avoid losing that type of decision ever again.

I think a good place to start is a nice long chat about where you'd both like to be in 20 years, and then show her how you can get there. She's going to have to trust you with the details for a while if she's really not interested. You're not going to change her dramatically (nor she you).

One other note: Get at least basically on the same page here before you have kids. Things like school/college/bigger cars/bigger houses - creep up very easily, so you'll want to have a roadmap.

 

[Clone]

Perhaps she could also become a Financial Advisor and sell annuities?

(I can already feel some folks laugh, and others prepare the hate mail...)

 

[Philliefan33]

Starting in 2019 you are going to have $7-15K per month to invest? Sounds like you are doing well.

I would recommend that you simply save a portion (maybe a third) and invest the rest. Once you have a nice nest egg of cash saved in a savings account, your wife might feel more comfortable being more aggressive with future money.

It seems to me you have an “in” for making real estate investments. That might be a way for your wife to feel more comfortable.

 

[KenZ71]

To an extent the challenge is no different than many others - one spouse wants to invest one wants to spend. Or differing views say equity vs REIT vs Fixed vs real property.

How about find a financial advisor and let that impartial party be the mediator?

 

[Independent]

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.

 

[retiringby50]

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.

 

[Sue J]

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.

 

[jazz4cash]

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

 

[Scuba]

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!