Attempting to persuade your partner to participate in the stock market may appear to be a “impossible quest.” They believe that there’s no reason why we risk our entire life savings on a gamble, as they may view investing to be?
Money is a substantial reason for disagreement in 31% of relationships. When you add stock investment to the already existing strain in your relationship, it might tilt it to an inflection point if not managed appropriately.
You might start by making them comprehend the fundamental aim of investing, which is to accomplish their future financial objectives. Investing in stocks is not the only choice; there are others such as mutual funds, ETFs, gold, real estate, and so on, all of which may aid in the accumulation of capital over time.
But, make sure they understand that one can only reap the rewards if they have done their study and evaluated adequately. If they don’t want to do it themselves, there are financial experts that can assist them.
I’ve jotted down some tips below that you might use to persuade your partner not just to marry you, but also to marry your idea of investing.
1. Clear the myths about equity investing:
There are many stock investing myths, especially in India where people tend to have conservative mind-sets. You must first dispel these myths. Some common misconceptions regarding stock trading include those that it is gambling, suitable only for expert traders or investors, and restricted to the really wealthy.
Contradicting such beliefs seems like the height of foolishness to individuals since they are so embedded in their thoughts. Your partner may undoubtedly believe in some of these misconceptions. You may start by addressing those with clear, factual evidence.
Show to your partner historical stock market performance charts. Make use of online information sources to show your spouse podcasts or interviews of prominent investors who have had success in the stock market in the past, such as Warren Buffet, Charlie Munger, Rakesh Jhunjhunwala, etc.
The objective is to convince your partner that stock investment is neither gambling nor high-level mathematics. In investing, the person with the higher IQ does not always triumph over the one with the lower IQ.
2. Flexibility:
While speaking of flexibility, let your spouse or partner know that there are numerous financial instruments available for investing. These include bonds, gold, stocks, and mutual funds. It offers a wide variety of possibilities for people to invest their money. You will therefore have the freedom to decide where you would like to invest.
Also, if your spouse hasn’t heard of this, explain to them the benefits of doing so, including the ability to diversify their investment portfolios. Either different financial instruments or stocks from various industries can be used for diversification. In turn, this action lowers the risks connected with investing.
3. Recommend literature:
Investment-related books and e-books are widely available. Ask your partner to read a few titles you buy. They will be able to comprehend how investing functions and learn about all the advantages by reading more about this subject. Also, you may suggest blogs and podcasts from reliable sources.
4. Invest smaller and stay calmer:
Don’t be rash and risk your entire life’s wealth. Any relationship will find it difficult to watch their funds decrease by half in a matter of days or weeks owing to a stock market downturn. While the stock market can be brutal in the short term, it rewards long-term investors.
You must proceed cautiously. Start off by making tiny investments that nobody will miss.
Make sure your spouse is aware that investments do not always need to be substantial. You might encourage them that they can start investing in the stock market or in gold or in fixed income instruments by putting in tiny sums. There is SIP (Systematic Investment Plan) mode of investing, which is the most recommended path of investment, that too for salaried individuals or for recurring income earning people.
Your spouse will be more inclined to trust you with larger sums of money if you do admirably with the smaller quantities. Your partner will begin to see the prospects of the stock market.
Advise them to revisit back at a later date and see how that tiny sum invested has increased with time. Yet, one thing you should instill in them is the need of properly researching an investment’s effectiveness before investing in it.
5. Make your finances in order:
Living paycheck to paycheck makes investing in the stock market difficult. You should try to live within your means. You must manage your debt and establish an emergency reserve. If not, stock market investing adds another potential source of tension to your relationship with your partner.
Not all debt is bad for you, but consumer debt, such as personal loan or credit card debt, works against you. These debts have hefty interest rates, thus they must be paid off as soon as possible.
Your peace of mind is enhanced by having a modest emergency fund. The anxiety of dealing with a financial emergency on a tight budget is not something you desire. However, it’s not necessary to have a sizable emergency fund. Strive to keep an emergency fund with enough money to cover your costs for at least six months.
6. Magic of compounding:
It’s now time to use your money’s most effective investment tool—the power of compounding. First off, sit your spouse or partner down and explain the concept of compounding if they are not aware of its power. It describes the interest that you receive on both your initial investment and the interest that has accrued over time. Your money multiplies exponentially since interest is reinvested at the same pace. Compounding styles, such as continuous and periodic, have an impact on how frequently interest is added to the principal.
Make sure your spouse understands how important it is to start investing early in order to benefit from compounding and expand their money multi-fold. The longer people keep their money invested without touching it, the more it increases with the power of compounding.
To make it simpler for you to persuade your partner, explain them using a simple illustration. The future investment value of Rs. 50,000 at a 10% compounding rate will be approximately Rs. 1.30 lakh in ten years. The same sum will grow to 5.41 lakh rupees in 25 years if left unaltered. This is the magic of compounding, which is magnified if your money is invested in the stock market since it will multiply more quickly if left unattended.
But again, you need to inform them to be various of the sort of investment they undertake, based on their risk tolerance, as investing in equities entails some risk.
7. Investing process is more important than outcome:
In life, there are things that are directly in your influence and things that are out of your control. Stock investing incorporates both controllable and uncontrollable factors, but your efforts should be focused primarily on the first. You may make decisions on how much you invest, but you are not assured a great return.
Future results are not guaranteed by past performance. While the stock market has historically performed well, there is no guarantee that this will continue indefinitely. But that applies to all assets, not simply the stock market. Even the bond market or gold will see declines.
Hence, while a good procedure never guarantees success, it is always preferable than the negative one.
Instead of fretting over what’s to come in the future, focus on the process. Place an emphasis on long-term stock market investing. Your prospects of accomplishment will be better than if you don’t invest in the stock market at all.
Conclusion:
Now that you have your points prepared to persuade your partner, speak with them and assist them in beginning their investment journey right away. However, we must consider the fact that people, as is natural, require some time to act and invest their hard-earned savings in investments such as equity, mutual funds, or gold. It’s entirely plausible that your partner is hesitant to accompany you on this investment adventure. Instead of proceeding without their backing, be patient and strategic in how you bring them on board. Provide them some time and attempt to persuade them, not via coercion, but through thought-provoking talks and demonstrations regarding investment.
As the value of your investment portfolio grows, highlight it to your partner. Additionally, don’t miss to appreciate the triumphs when they come on your way. For example, when you receive some dividend payments out of your investments, go out for a dinner with your family, instead of continually reinvesting them back. It supports the notion that stock investment is effective and advantageous to your relationship as well.
