Group investing provides an opportunity for sharing investment risks, joys and pains. Yet investing within a group arrangement is probably one of the most difficult and complex undertakings. This we will now explore, starting with the simplest and most common group: a couple, a man and woman who may be married or just living together.
Just say Mars and Venus instead and you already start to get an idea of the problems that can arise. Given the wide range of personalities, the possibility that any two points on that range may couple and the famous phrase that opposites attract, one can expect a resulting scope of investing behaviour by couples.
Men and women tend to think differently. The common image is of the man earning, saving and investing funds, whilst trying to restrain his extravagant wife from buying everything in sight to keep up with the neighbours.
In more recent times, with more and more women entering the workforce and taking on professions, this image has been changing. Some women are actually the breadwinners in their homes. Women are learning more and more about handling money and improving their image as investors. Nowadays, either the man or the woman may be the smarter investor.
Yet the real issue is not so much who is the smarter investor as who will take the lead, or even further, who will be allowed to take the lead. In a really trying situation, it may even come down to an acid argument about who is smarter.
A friend once described his reaction to his wife’s aggressive and high-risk approach to investing as feeling as though someone had walked him to the slim edge of a deep cavern; he felt on the edge of disaster with each one of her investing manoeuvres. His feelings were real. Her understanding was non-existent. A possible solution to this kind of dilemma may be to talk through these feelings and agree on what is a balanced investment strategy for them.
Then there are situations where one partner is definitely more knowledgeable about investing and more experienced in making certain critical decisions. That partner often just goes ahead and manages all the investments for the couple. The weaker partner tends not to develop investing know-how, but may also silently or aggressively object to this disparity in the investing responsibility.
A likely solution is in the first instance sharing information, with the more knowledgeable partner providing explanations, coaching and investing opportunities to the weaker partner.
The worst situations arise when one partner blames the other for an unfavourable investment outcome. This reflects a misunderstanding of the investment process. Anything can happen when you invest; sometimes the most foolhardy investment on the face of it can turn out to be a super winner and vice versa.
Generally, no matter how weak one partner is, it is best that the investment experience be shared.
This sharing may not necessarily be on an equal basis, but it will provide opportunity for each partner to understand more about their investing personality.
