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Marriage guidance disguised as investment strategy tips?

Discussion in 'Investing Strategies' started by Haumea, 18th Apr, 2018.

  1. Haumea

    Haumea New Member

    Joined:
    18th Apr, 2018
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    I’d like to share my story, for both my own benefit and hoping any replies will benefit others in similar circumstances.

    Story begin; back in the nineties, there was a married couple, who like many others, decided to invest together. Nothing worth mentioning there, except where the problem lies, is that this couple had totally different investment attitudes. Party A was so conservative, she didn’t buy green bananas. Party B was so gung-ho, he happily stated he was prepared to lose everything, in exchange for a good chance at doubling the money. Fifty percent of net worth was invested in US equities, long direct shares in tech companies. After a pretty good run, when an initial investment of $50k turned into about $2M, party A mentioned that the market looked “toppy”, and that the sum invested would cover basic living expenses for the next 20 years. Party B scoffed and said, keep investing, turn it into $10M. Crucial point – party A looked at options to “insure” the gains, but decided a $54k premium was not worth paying. Cue the dot com tech crash. Anyone who was invested long at that time would remember the sharp dive in share value. After the dust cleared, value extracted and put into residential real estate, was around $600k. Still not a bad result, but the “paper” loss of $1.4M made party A very risk averse.

    Fast forward fifteen years, Party B constantly points out the rise in the share market since then - if only we had stayed invested, we’d be retired. Party A is concerned that next time, there won’t be a recovery. Anyway, once more into the breach, and same strategy re-enacted – this time within a SMSF. Once again, substantial gains made, but the volatility is making party A’s stomach churn.

    There’s 2 issues here – one is that two people with very misaligned goals are investing – a recipe for tension and discord. Second issue is that, despite a twenty year long track record in investing in Australian real estate and international shares, we are not particularly experienced or sophisticated investors. Buy and hold is the main strategy, with occasional balancing of shares due to a IPO. There is no end point, no goal, no aim like, for instance, let’s make 20% and be satisfied.

    Relating to the second issue, there is no-one in our relationship circle who can relate or advise. (I don’t mean accountants or financial advisors – they only tell you what you can’t do.) I think there is a real dearth of strategies available to people with relatively small-ish sums ($500k to $1M) invested. No one to discuss with, no one to bounce ideas off, no-one to share their experiences. In particular, how to preserve any “gains” in a more direct fashion that straight buy and hold – trailing stops and the like. Or is foolish and greedy to want to do so?

    Anyone want to offer (marriage guidance) investment strategy tips?
     
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  2. Hodor

    Hodor Well-Known Member

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    hodor
    Interesting, thanks for sharing.

    If you just look at these two parts of the story then most people would be very happy, x10 in a decade or less is a fantastic return.

    You have far more experience than me. If you are looking at reducing volatility/lock in gains then you might look at asset allocation and re-balancing. Work out what kind of risk/volatility you can both tolerate, then allocate your capital and stick to it. Nothing wrong with buy and hold, its heavy trading and fees you need to look out for.
     
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  3. twisted strategies

    twisted strategies Well-Known Member

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    3rd Nov, 2013
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    Haumea ,

    welcome to InvestChat ,

    a classic case of opposites attract ,

    stupidly simple ( those tax complications will probably ruin it )

    but how about giving Ms conservative , a cash allowance of her own to invest , neither style is perfect 100% of the time ... at least the lady will sleep better knowing you have a safety play

    good luck
     
  4. twisted strategies

    twisted strategies Well-Known Member

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