Pair up on your finances this Valentine’s Day

Many couples prefer to keep their finances separate, since money issues can be sensitive and one of the biggest sources of tension in an otherwise happy relationship. Yet working together on managing them could be a rewarding step in getting the most out of your investments in order to live the life you both dream of. After all, if you share a life with someone it doesn’t make sense for you not to be taking into account your partner’s goals when it comes to finances.

Share your dreams and savings
So, why not show your loved one your commitment this Valentine’s Day by including a financial check-in with them? Besides simply sharing information, this could also mean pairing up to invest towards big-ticket purchases like a car, an apartment (plus furnishings and appliances!), or even saving towards starting a family of your own. Here are some pointers to get started.

It’s probably best to start by agreeing on an amount each of you could commit towards investing every month. Once you know how much this joint amount is, it will be much easier to determine how to invest it in order to achieve your joint goals. Listen to your partner about their priorities, their investment goals, how they feel about risk, and what their thinking is when it comes to timing.  A qualified financial adviser can also be a tremendous help in combining your resources in the most effective ways possible and finding investment solutions that satisfy you both. With their experience they will probably be able to help resolve any conflicts and know the right questions to ask each of you in your search for common ground.   

Take advantage of financial advice
If you started investing before you met your loved one and you’ve built up a relationship with a financial adviser grounded in trust, there’s no reason why you can’t keep your adviser once you’ve started investing together - both of you could have different advisers. The more information you gather from different advisers, the better. If this happens, just make sure you communicate well and ensure you attend each other’s meetings with your advisers to keep up to date with your financial situation. Try to schedule at least one annual meeting for both of you with each adviser to make sure that your collective goals are aligned and being met… even if you’re taking different investment routes to get there. Just be sure to avoid duplicating adviser fees. 

Remember, all decisions related to your combined investments should be discussed. Fighting over money can escalate very quickly - so clear and regular communication is essential.

Tools for planning together
Once you agree on how much each of you will be investing every month, if you’re not using a financial adviser then you’ll need to decide on your collective investment goal and the time horizon for achieving it. Our Goal Calculator is a great way to help you determine how much your investments need to earn over a specific timeframe, or what might need to change to help you reach your goal – ie, you may need to increase your savings, lengthen your timeframe or choose different investment solutions. It’s up to you.  You can also  try our Fund Selector Tool, which we designed to help investors find a suitable M&G fund based on their risk appetite and investment time horizon.

A middle-of-the-road option
A great ‘middle of the road’ option could be the M&G Balanced Fund, which is designed to deliver returns well above inflation for a moderate amount of risk by holding a well-diversified selection of equities, bonds and cash, from both local and offshore markets. The minimum recommended investment time frame is five years, in order to smooth out the variability of equity returns over time. It can also work well for retirement savings because  it complies with Regulation 28 of the Pension Funds Act. This means there are limits on the Fund’s exposure to the different asset classes, which helps to safeguard your capital from being invested in excessively risky assets.  And, because it provides a balance of assets, it might be easier to agree on, even if you and your partner have different tolerances for risk. The M&G Balanced Fund has enjoyed significant outperformance, returning 13.2% p.a. (after fees) since its inception over 20 years ago and beating its benchmark’s 11.5% p.a. return. This demonstrates the consistency and success of M&G Investments’ approach over the long term.

So this Valentine’s Day, pair up with your loved one and plan the best way forward for your financial future together.

For more information and to invest with M&G Investments, please feel free to contact our Client Services Team on 0860 105 775 or email us at info@mandg.co.za.