Marriage is more than just love, couplehood and kids/parenthood. It brings along new financial responsibilities too. The planning for the joined future of course ideally should start with / include open conversations on your values and finances. Beyond a sensible family budget and spending understanding, couples need to grow their nest egg too.
So what are the key things to take note of if you decide to invest together as a couple? How should one manages when disagreements arise?
In the recent months, we have noticed an increasing number of couples who attend our angel investment workshop together. And many asked at the workshops how investment decisions should be made “at home”. Our team decided to have a chat with our very own Chief Angel and Partner of AngelCentral, Shao-Ning, to find out more on her experience of investing alongside her husband, Der Shing, for the past few years.
Read on as she shares some tips on investing together as a couple.
1) What are the key things couples should be aware of before having a shared investing portfolio?
Shao-Ning: Money is one of the top reasons, if not the #1 reason, for divorces in major economies in the world. So it’s a very sensitive topic. It’s crucial that, should couples decide to invest together, they need to have a very clear idea of what their money values are and what their financial goals are. How much to invest, what to invest, who decides on what to invest, who contributes to the fund quantum, investment approach and strategies, frequency of reviews, channels to invest with, etc. are all questions that need to be answered first and they can’t be answered overnight. The framework and basic understanding need to be worked out (could take a few sessions) and I would recommend both parties be as honest and direct as possible in these meetings. All these need to be agreed on before even starting to look for deals to invest in.
For Der Shing and myself, we have a joint account and joint decision making on all major financial decisions. As we were in business together before we got married and we both contributed equally to both family and business, it was natural for us to “evolve” to a common pool for our finances. I was quite uncomfortable with that initially, as I didn’t like that he knew what I was spending on. But after a while, I like the joint responsibilities and accountability the joint scheme gives us both. So in a sense, there is no secret between us, since we both know where every cent goes.
2) Do both of you combine all your investment pools or separate them into two pools – personal and couple investments?
Shao-Ning: All major financial decisions are made together and executed in joint name facilities. There are exceptions on some executions, like for some angel investments, the investor could be in personal names, but these are just more of an “account manager” concept that we have. The fund source is still the common pool.
3) What are the investment products that both of you invest in? Of which, which are of lesser risk?
Shao-Ning: Bulk of our investments are in standard products – listed stocks and bonds. Der Shing enjoys the research of companies and reading of financial statements. He used to watch 50-60 stocks and bonds on our family portfolio. Very taxing on his bandwidth. So in the past 1 year, we switched the approach to include a lot more global index ETFs and bond funds.
We also used to have a few rental properties but they are really troublesome to manage. So, when we received a good offer, we sold them all off. Asian investors believe in property, as generally property should beat inflation and capital appreciate. However we found it too illiquid and also really cumbersome to manage tenants.
The most fun and time consuming part of our portfolio is in startups either as angel investors or as VC investors. Both of us have a lot to give in this space and so we spend most time on it. We have even created an Angel club called AngelCentral to train and help fellow angels invest in quality startups. It is also our best returning asset class on paper right now.
4) What does each of you look out for in an investment and how does it conflict/complement the other?
Shao-Ning: Always the same thing – Risk Reward to generate the right level of returns. Something different for us is because we were business partners first, so, we treat our portfolio as a project that we are managing together.
First, we set the timeline and goal. What’s our investment timeline and what do we want to achieve at the end of the period. Then we look at the general risk-reward ratio of the different asset classes, our cashflow needs etc, and design our own overall portfolio to fit our timeline and to give us the kind of returns we want. With this overarching framework, we “fill in the blanks” – research and decide what to invest in within each asset category to form our portfolio.
And this is actually the first step of what we share in our angel investing masterclass. It’s after we did up our allocation, we knew how much we could allocate to Private Equity investments, and then we designed our strategies for the (VC/Angel) and frequency of our investments per year.
5) If conflicting views occur, how do both of you resolve it?
Shao-Ning: At the end of day, we are not the same person and we could draw different conclusions on the same company or same product, based on the same set of information presented. It takes both openness and willingness to share our thoughts and talk it out. And also, basic respect to each other’s view points and do not take things personally. I tend to need more time to decide as I like to let information “sink” into me and see how I feel about it. So, Der Shing has to adjust to my timeline a bit. And I also have to learn to listen out to his views, as he is a bench-marker and extremely competitive. Sometimes he beats himself up for the slightest trading errors. So I have to remind him it’s ok! Everything is a learning opportunity. And yes, most importantly, do not point fingers and accept and internalise all decisions as joint decisions.
6) What would the profits of the couple investments be used for?
Shao-Ning: They are mostly just ploughed back to the portfolio to grow. We do set aside budget for living expenses, for charity and kids education.
AngelCentral is the most active and fastest-growing community of angel investors in Southeast Asia. We organize regular pitch sessions, angel education workshops, and provide syndication services. Since Inception, AngelCentral has trained >300 angels and raised >S$12m for the startups that they featured.
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