FREE NEWSLETTER

He Says She Says

Sonja Haggert

MY HUSBAND AND I have been selecting investments together for years—and we’re still married. How have we gotten along for decades without killing each other?

Our investment discussions revolve mostly around individual stocks and bonds. They constitute the bulk of our investments and take up the bulk of our time. We own everything from small amounts of risky stocks like Immutep (symbol: IMMP) to blue chips like Johnson & Johnson (JNJ) and 3M (MMM). Riskier stocks involve a lot of back and forth, while our discussions about blue chips are quick and easy. After all, what’s not to love about a dividend aristocrat—those stocks that increase their dividend every year?

We get recommendations on funds from our financial advisor. Those are also easy discussions because the parameters we set up are clear. For instance, our advisor recently suggested a closed-end fund that looked good to us because the fees were low, it invested in municipal bonds—something we’re lacking—and the credit quality and distributions looked enticing. Problem is, the fund’s shares were selling at a premium to the fund’s net asset value, which is its portfolio value on a per-share basis. We agreed to continue watching the fund and buy when it was at a discount.

Sometimes, our decisions take an especially long time. Consider bitcoin. We’d been talking about adding cryptocurrency to our portfolio since 2017. During a seminar in 2018, we were introduced to the workings of cryptocurrencies by someone we respected. But we didn’t do anything. In 2019, we were reading about hyperinflation in Venezuela and hearing firsthand reports that bitcoin was being used to purchase goods and services. The buzz seemed here to stay. In January 2020, we finally decided to buy.

Our Weekly Newsletter

Let’s face it, when we make investment decisions, the stakes are high: Success or failure can determine our next vacation, whether we can afford college costs and how much we spend in retirement. How have my husband and I avoided coming to frequent verbal blows? I gave it some thought and huddled with my better half (don’t tell him I called him that). We agreed that these are the five strategies that have worked for us.

  1. Settle on an investment approach. What are your criteria for buying a stock, bond, piece of real estate or cryptocurrency? Are you purchasing it as a short-term or long-term investment? What’s its role in your asset allocation? Be prepared to have a wonderful idea quashed because your partner reminds you it doesn’t fit with your investment strategy.
  2. Have an exit plan. It’s important to have markers in place that’ll prompt you to pull the plug—without emotion. That marker could be a drop below some agreed-upon price, a dividend cut or a spinoff of part of the company. Alternatively, maybe you’ve been fortunate, doubled your money and agree that that’s the signal to get out.
  3. Earmark money for speculative investments—those new technologies, medical breakthroughs or other risky bets that one or both of you can’t resist. My husband worked in the pharmaceutical field and he’s always looking for the next great medical discovery. He’s had winners as well as losers. We celebrate the winners. What about the losers? Because these speculative investments aren’t a big part of our portfolio, the losses are never large enough to start an argument.
  4. Have a referee. No, not a neighbor or friend, unless he or she is knowledgeable. Instead, your referee might be your financial advisor, a website that you read consistently or an investment newsletter you follow. If these sources indicate that an investment is a buy or sell, that can be the deciding vote.
  5. Be prepared to discuss and, yes, argue—but try to keep the arguments fact-based. We read numerous publications. We base our discussions around a simple checklist that guides our decisions. That, along with our overall strategy and a few newsletters we trust, have guided us over the years and helped us to get the results that we want. Have we always followed all the above points? Have we never had an argument about an investment product? No, we’re human. But the discussions are always thought-provoking—and they often lead to comments like, “I didn’t think of that.”

Sonja Haggert is the author of Invest, Reinvest, Rest. You can learn more at SonjaHaggert.com. Follow her on Twitter @SonjaHaggert and check out her earlier articles.

Do you enjoy HumbleDollar? Please support our work with a donation. Want to receive daily email alerts about new articles? Click here. How about getting our weekly newsletter? Sign up now.

Browse Articles

Subscribe
Notify of
14 Comments
Inline Feedbacks
View all comments
Richard Gore
Richard Gore
2 months ago

To clarify:

Per my schwab account the 3 year return is expressed as an annual %. Thus it is 20.38% per year. Also per schwab the SP500 return for this period is 17.77%.

Since 1/1/2000 when I started keeping track, my portfolio is 4 > it would have have been had I invested in SP500 with much less volatility.

I’m not saying this approach is for everyone or even most people, but the notion that is impossible to beat the market is false or that indexing is the only way to go is wrong.

Oddly, I have never owned a high flying stock, just what I call steady eddies. However, I also have avoided the very overvalued sections of the market.

One other reason that I don’t index is that I want my investments just like my consumer goods to be consistent with my values. Hence, no tobacco, alcohol, fossil fuels, or gun stocks in my portfolio. I don’t want to profit from those activities. Money is not the only goal in life.

Jonathan has created a great website here, but I don’t think all of the users are very kind. It isn’t necessary to attack everyone that does something different than you. Anyway, I’m done with you’ll.

Olin
Olin
2 months ago

I’d like to be positive about this article, but there are just too many red flags and contradictions.

parkslope
parkslope
2 months ago

Sonja, Several other commenters have asked if you compare your returns to benchmarks. Your lack of a response suggests that you don’t and raises questions about the value of your advice.

Sonja Haggert
Sonja Haggert
1 month ago
Reply to  parkslope

We do compare out returns to benchmarks and are doing fine.

Last edited 1 month ago by Sonja Haggert
Ginger Williams
Ginger Williams
2 months ago

It sounds as though selecting individual stocks for your portfolio is a shared interest, something you do for enjoyment as well as financial reasons. Have you assessed how your portfolio is performing compared to benchmarks like S&P, Russell 4000, or others?

I used to have a small percentage of my portfolio invested in individual stocks, because I enjoyed picking them. I compared my results to several indexes periodically. After a while, I decided that I was paying too much for the enjoyment I was getting.

Richard Gore
Richard Gore
2 months ago

Thanks for sharing your approach! It is refreshing to see some diversity of thought on this site.

Purple Rain
Purple Rain
2 months ago
Reply to  Richard Gore

Funny how some folks are obsessed with “beating an index” while others like myself are focused on getting an assured and growing income through dividends. That means I avoid the sequence of returns risks altogether as I don’t have to sell when the market crashes. It also means I can be 100% invested in dividend growth stocks that give me a 10% pay raise each year and have zero bonds if I choose to.

My portfolio is doing great and so is my growing income stream. I also don’t feel the need to constantly berate the indexers who get 1.3% a year in income.

Brent Wilson
Brent Wilson
2 months ago

Frankly this is a very strange article to see on HD. All of this back and forth with your spouse could be avoided by simply investing in low-cost index funds. The odds of beating the indexes over the long-term with your stock picking are very slim, and the odds of beating them over the long-term by a significant margin – essentially zero. Save yourself the headache. I believe there are enough things to worry about in retirement and stock picking shouldn’t be one of them.

Sonja Haggert
Sonja Haggert
1 month ago
Reply to  Brent Wilson

We learn a lot from the back and forth and keep our fees to a minimum. We found a newsletter service that has produced excellent returns. Retirement is that much more enjoyable because we always have something to talk about.

Ormode
Ormode
2 months ago

You need a lot of knowledge to invest in individual stocks I have seen quite a few people who try to invest without understanding the basics of corporate finance. You have to know how to analyze earnings statements, cash flow statements, and balance sheets, and understand the relationships between them. It’s different in each industry, too – the financials of a drug company will be completely different from those of a utility.

R Quinn
R Quinn
2 months ago

Sounds like both fun (at times) and a lot of effort. Guess I need to ask the bottom line question. How much different would your net worth be if you had put all your investments in several index funds and spent your extra time gazing at the horizon? And, do you recommend your approach for the very average person trying to accumulate retirement funds?

Sonja Haggert
Sonja Haggert
1 month ago
Reply to  R Quinn

In retirement we had always planned to spend our time learning and that’s what we’re doing with our investments. We do spend time looking at the horizon but don’t want to do that all day.

Richard Gore
Richard Gore
2 months ago
Reply to  R Quinn

Here are the recent annual % returns for my individual stock portfolio:

YTD = 20.46%
1 year = 47.73%
3 year = 20.62%

I don’t like gazing at the horizon so I think I will continue with my approach.

R Quinn
R Quinn
2 months ago
Reply to  Richard Gore

S&P 500 3 Year Return is at 58.09%, compared to 55.40% last month and 27.93% last year. This is higher than the long term average of 20.91%. I’m going fishing. But I under the thrill of picking stocks.

Free Newsletter

SHARE