Our regular columnist , Mom2KG, checks in with her monthly column. As per your request, I have (finally) given Mom2KG a well-deserved category of her own. As usual, comments are highly encouraged from readers.
Thanks so, so much to everyone who posted with their thoughts on my July post. As always, there were lots of good suggestions, but the encouragement really helped me.
We have gone to see a new financial advisor, recommended by our tax guy. He was certainly nice, but he didn’t wow us with anything exciting. And he’s leery of real estate investing (as was a poster from July), something we’re interested in, so he may not be the guy for us. (Caveat – yeah, I know I’ve mentioned this ad nauseam and never seem to get anything done about it. It’s been a busy summer, okay?) But he’s going to draft a plan for our review. He sang the same old song of long-term conservative investing being the best bet. Ho hum. (Not to mention, my husband has had his RRSPs in super-low-risk mutual funds for fifteen years, and his portfolio is worth only slightly more now than at inception. We only have so many 15-year increments in our investing careers, and can’t afford another one like that. How long is long-term?) Are we expecting too much? Should all investments be self-directed? We are actually moving that way, and will soon consider ditching all mutual funds.
Very interesting comments on what people out there count as savings. I am all for counting RRSPs, RESPs (there was some dissent on that) and the extra mortgage payments as savings – it’s all part of net worth, right? Seems straightforward to me. Tell me how to convince my husband. He refuses to count anything other than cold hard cash sitting safely in a high-interest bank account as savings. I went online and did a comprehensive net worth statement, and showed it to him – he made a pfffft sound which I interpreted as “I am entirely dismissing your attempt to argue a financial point other than my own. Your so-called net worth statement is nothing to me, woman.â€
I suppose this is why TMW asked me to blog on this as a family matter – how do two people, both well read and reasonably informed, working towards the same goals, sort out issues like this? This is, I will say, exceptionally frustrating. I was, as I noted last month, disappointed not to have met our savings goals (as in cold hard cash), but as many readers pointed out, we’re doing quite well with other forms of money management and allocation. My husband cannot seem to accept this, grieving anew each month. (I am, of course, utterly blameless in our financial sins- statement made with tongue firmly planted in cheek.)
TWM asked what our goals are. My husband has an idea about retiring at 55 and sitting on a beach. Won’t that be great…for six weeks? I think of all the things we’ve planned and fought over, that vision is actually the least realistic, but I frankly haven’t put much thought into it. I’m the first to admit, the point is probably having that option, though acting on it is another matter. Goals – life-long and short-term – were mentioned in the July comments, and I will try to set down my own as a financial exercise.
We’re both career-driven, both sets of parents are still working, happily, into their sixties (though they are financially set). You can see – this is a long road to financial happiness, and it’s not the money (or lack of it) standing in our way. There’s a fundamental divide in that it’s not even clear what we’re working towards, in terms of family plans (of course we have some concrete goals).
And there’s perhaps an even greater divide between my husband and I when it comes to attitudes towards money. He thinks I’m the prodigal wife; I think I’m reasonable. I think he’s needlessly frugal; he thinks we’re on the brink of bankruptcy. Is every couple like this? How do we reconcile these two solitudes?
August 28th, 2008 at 9:06 am
I’d say it doesn’t matter what you call “savings”. To retire, you don’t need sufficient “savings” so much as sufficient passive income to afford your retirement lifestyle. Why not focus on that and try taking the word “savings” out of your vocabulary for a while.
August 28th, 2008 at 10:44 am
You should clarify with your husband what his working definition of savings and net worth are. Typically, I consider net worth to be, well, how much assets you have after you subtract your liabilities (debts). Your net worth is the pool of “stuff” that you build up while you’re working, and then sell off to live on in retirement.
Savings is a little more fluid — sometimes it can mean additions to your net worth in any form… but your husband seems to be defining it as rainy day savings or an emergency fund, which might be why he’s only counting cash/liquid assets. Ask your husband what he means by savings. Surely he can’t mean that all your savings for retirement should be in a high-interest savings account. Is your husband coming here and reading your entries and the comments?
“And he’s leery of real estate investing (as was a poster from July), something we’re interested in, so he may not be the guy for us. [...] He sang the same old song of long-term conservative investing being the best bet. Ho hum. (Not to mention, my husband has had his RRSPs in super-low-risk mutual funds for fifteen years [...] Are we expecting too much? Should all investments be self-directed? We are actually moving that way, and will soon consider ditching all mutual funds.”
I’m not a very positive person when it comes to real estate in general, but that aside I would caution you against real estate investing anyway (unless you mean REITs) since you’re, well, naive investors, and busy to boot. Landlording can be hard work at times, and usually you’re not diversified with it. When it goes well, everything’s fine, but if you screw it up you can lose big.
So what’s super-low-risk? Bond/money market funds (with high fees for the old advisor)? Principal protected notes? Did you have a diversified equity component? I’m a self-directed guy myself, and think you should probably go that way, but consider hiring a fee-only advisor to help guide you through it all. Also, I just want to make sure that you’re not going to overshoot getting away from your advisor funds to getting away from any kind of fund and going to active investing — you should probably read about passive/ETF investing.
Oh, and if you are going to go for a stock-heavy portfolio, make sure you can handle the risk — if you were managing your own money and saw the gyrations of the stock market over the last year, would that have given you a stroke or would you weather it ok?
Has your financial planner gone over your retirement plans with you? Knowing how much you will need and seeing your progress towards that should help a lot with figuring out where you are on the reasonable/bankruptcy scale.
August 29th, 2008 at 12:51 am
It’s very common for couples to be very different with regards to opinions on money. When we first meet our future spouse, all the differences seem to be points to admire about the person. I’m thrifty, my wife is free-spending. I loved when she would buy me nice gifts… she loved that I could control spending and saved and invested wisely. Now she gets annoyed at my cheapness and I think she buys too much junk.
I wonder if there’s a way to get your husband to see your point of view. I think your net worth calculation is right on. However, his point is valid too, in that he feels more security from super-liquid assets. It’s a tough difference in opinion. One’s assets are an important measure of financial health. I can sympathize with your plight, but I have no real solution.
August 30th, 2008 at 7:00 am
[...] A personal finance tale [...]
September 9th, 2008 at 6:31 am
[...] was an interesting guest post on Thicken My Wallet that got me thinking about what is really considered savings. The author was going through a [...]
September 15th, 2008 at 1:44 am
I thought of you when I read this post: http://moneyning.com/investing/buy-an-investment-property-or-dividend-yielding-stocks/ - maybe it will help in deciding whether the purchase investment property or dividend stocks.