One of the happiest occasions you can experience is the feeling of tying the knot.
All the preparation and fanfare associated with the big day make the wedding an event to be cherished and remembered for the rest of our lives.
However, once the big day is over, it may be time to get down to the practical aspects of living together as a newly-wed couple.
It’s also an opportune time to consider investing for the future as there will be major commitments such as a new house or baby.
Capital gains from a healthy investment portfolio plus an additional source of passive income from dividends can go a long way to helping out a newly-married couple’s financial needs.
Hence, it’s important to plan your personal finances carefully as a couple.
With money left over from the wedding and savings from years of working, it’s time to deploy some into suitable investments to grow your wealth.
Here are three steps on how to kick-start your investment journey.
Pooling your resources
Don’t underestimate the power of a dual-income couple.
With both spouses working and saving, the family should be able to save up a sizable amount in just one year.
Assuming you have taken care of all your major expenses such as the housing loan instalments and insurance premiums, it’s time to take stock of the cash you have left.
As a couple, pooling your resources also means you have a larger fund with which to tap for investments.
After setting aside six to 12 months of expenses as an emergency fund, you are left with a pool of money that you can slowly deploy into investments.
As an example, imagine a husband and wife each has S$100,000 in their bank account, for a total of S$200,000.
After setting aside money for daily expenses, the emergency fund and other major expenses as stated above, the husband has S$40,000 left while the wife has S$50,000.
This combined S$90,000 can thus be used for investments.
Also, remember to use only money that you will not need for the next five years.
Discussing investment plans and goals
Once a specific sum has been reserved for investments, the next step is to discuss your investment plans and goals.
Every individual is different, and, likely, most couples do not talk about their financial goals in detail before getting married.
It’s important to be aligned when it comes to pursuing your wealth-building journey together.
For instance, if the husband seeks quick gains but the wife prefers steady, long-term capital appreciation, then disputes may occur as each spouse’s investment style is different.
Seek out differences in opinions and try to resolve these amicably.
Money is, after all, a very sensitive issue that can stir up many emotions.
Once both of you have shared goals and objectives, you can then proceed to invest and grow your wealth together.
These goals and plans may change along the way as different life events occur, such as the birth of a baby, so it’s good to periodically revisit them and make adjustments if need be.
Seeking both growth and income
The final step is more of a suggestion.
Married couples tend to be young with less available funds to start with.
As they have time on their side, a potential path would be to go for a mixture of growth and income.
Growth investing can help you to compound your wealth over years or even decades.
Dividends, on the other hand, act as an additional layer of income that helps to supplement what you earn from your day jobs.
Don’t be worried if you and your spouse may not have a large sum of money to start with.
There’s always the option of dollar-cost averaging to slowly but steadily build your investment portfolio up to a decent size.
Get Smart: Start with strong names
You’re now ready and equipped to start your investment journey.
It’s a good idea to start with familiar, blue-chip names to reduce your investment risks.
Well-known companies such as OCBC Ltd (SGX: O39) and Singapore Exchange Limited (SGX: S68) offer a great mix of both growth and dividends.
If you’re gunning more for income stocks, you can consider REITs with strong sponsors such as Mapletree Commercial Trust (SGX: N2IU) and Frasers Centrepoint Trust (SGX: J69U).
Or if you’re seeking more growth, there’s always the option of investing in several high-growth US stocks.
Take it slow and steady and you will eventually enjoy the fruits of your efforts.
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited.
