# Advice Requested: Combining Investments with my fiance



## Ebin (Feb 9, 2013)

Hi,

(Hoping I'm putting this in the right place)

I'm recently engaged and have started the process of combining my finances with my fiance. As part of that, I found out that she's sitting on ~$126K in savings (~$35K in RRSP, ~$25K in TFSA, ~$66K in savings). It's great news as I didn't expect her to have so much saved up, her years of living at home and general frugality have paid off. The bad news is that it's just been sitting in ING savings accounts that currently pay ~1.4%.

Sooo....I need to help her turn this money into more money by investing it a bit more sensibly. She has expressed a strong desire to be able to buy a home (I own a rental property) so she doesn't want to add to the RRSP bucket so the mix needs to stay the same for the most part. Since we're in Vancouver, I'm trying to persuade her to see that buying is not a good use of money but for now I want to focus on doing as she wishes except with higher returns.

Me: I earn nearly triple what she does but have less in investments (~$80K excluding equity in my rental property). Over a third of my income comes to me in USD due to stock vesting twice a year so I'm heavy in US/Intl equities (VTI, VXUS and AAPL). I've only this year become active in managing my investments so am very much a rookie in this area.

My questions:
1) Should I treat our investments as one pool and allocate accordingly? B/c a third of my income comes in USD I'm a bit loathe to convert any of her holdings into USD to avoid exchange fees. My allocations are also off - I'm 80% equity, 20% CDN bonds.
2) How might you suggest allocating her money in each of her accounts and what should I purchase? I'm imagining that she'll be heavy in bonds (XRB/XBB) if I were to treat our money as one pool. Should I convert some of her holdings into USD or use my USD income and build on that?
3) Should any additional RRSP purchases by her be made into a joint account so that I can get the tax credit?

thanks for all of your help in advance,

Eric


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## heyjude (May 16, 2009)

Ebin said:


> My questions:
> 1) *Should I treat our investments as one pool* and allocate accordingly? B/c a third of my income comes in USD I'm a bit loathe to convert any of her holdings into USD to avoid exchange fees. My allocations are also off - I'm 80% equity, 20% CDN bonds.
> 2) How might you suggest allocating her money in each of her accounts and *what should I purchase*? I'm imagining that she'll be heavy in bonds (XRB/XBB) if I were to treat our money as one pool. Should I convert some of her holdings into USD or use my USD income and build on that?
> 3) *Should any additional RRSP purchases by her be made into a joint account so that I can get the tax credit?*
> ...


For you, it's all about I, isn't it? There is no "I" in "team". Tread carefully. Your fiancée (feminine) has done very well building a substantial net worth and avoiding market risk. Rather than making decisions with her money, encourage her to learn more about investing. Women approach investing differently from men. If you bully her into investing in securities that have more market and exchange risk and everything tanks, this will become a source of conflict between you. Frankly, I hope your fiancée insists on a prenup. She needs to protect herself from your greedy ways.


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## humble_pie (Jun 7, 2009)

wow. Is all i can say. Just wow.

wondering if i could send a message to the bride-to-be?

chère mademoiselle, please unaffiance yourself. Instantly if not sooner. Run away as fast as possible, taking all of your savings with you. Don't look back. If he has your bank & investment account records, get all their numbers changed. Change all passwords. Get a new unlisted phone. Shut down existing e-mail, facebook, twitter accounts. You might even have to move out of you parents' home.

the comedy part is that he's not going to be able to see anything wrong even with something like this:



> I've only this year become active in managing my investments so am very much a rookie in this area [but] ... Should any additional RRSP purchases by her be made into a joint account so that I can get the tax credit?


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## Ebin (Feb 9, 2013)

Hi,

Whoa! My intent was not to come across as trying to control her money and I strongly apologize for for doing so. I shall rephrase shortly when I get home but it's definitely not an 'I' but a 'we'.


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## Causalien (Apr 4, 2009)

Eric. Quick answer is no. 
It's her money and you are a newbie in investing.

I can only see disaster from going ahead and controlling *ahem* combining her savings.


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## GoldStone (Mar 6, 2011)

Ebin said:


> 1) Should I treat our investments as one pool and allocate accordingly?


*No.* You are not qualified to manage her money - your question #3 is a clear evidence of that. You are at a stage where you don't know what you don't know. A little knowledge is a dangerous thing.

Run the two portfolios separately. Each portfolio should match your individual risk profiles. Don't pressure your fiancée into taking on more risk than she is comfortable with.

Did you know that women, on average, tend to be better investors than men? Men are more susceptible to overconfidence - one of the most common behavioral mistakes in investing. Overconfidence leads to excessive risk taking... and that spells trouble.

How Men’s Overconfidence Hurts Them as Investors


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## Ebin (Feb 9, 2013)

Hi,

(writing while my other post is in pending)

Let me apologize again for my poor choice of words in my original post. I did not intend to come off in the way that I clearly have. While I am indeed a rookie investor, I did not come here with the intent to offend nor did I want to start by putting my foot in my mouth (which I have clearly done).

Let me try this again by providing a bit more background. My fiancé wants me to figure out what to do with her money. While I have encouraged her to get more educated in investing so that we can jointly plan our long term future out by sharing the resources seen here (and on other personal finance sites and many books), it's not something she has an interest in - she wants me to deal with it. She's going to set a goal and set a risk level and wants me to deal with it. 

While we're only combining our finances now, we've been doing a bit of the "what's mine is yours, what's yours is mine" thing for a couple years now but now that we're combining we're getting a lot more transparency into each others finances (she now knows what my rental mortgage is, I know how big her pile of savings is). She'll help me save better, I'll help understand where her money is going and, hopefully, this will help us be more successful long-term.

I have one new questions from the responses I've seen (and sorry if it's dumb question):

1) Why not have a single risk profile? I figure with over $200K at this point we can diversify between the two of us in a way that reduces risk. Could/should we put our both our names on all of our accounts?

thanks again and apologies again.


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## MRT (Apr 8, 2013)

I agree with the advice of keeping your investment portfolios separate, especially if you are new to the game.

I would suggest seeking out a financial planner or coach TOGETHER (ideally one who charges a flat fee or hourly fee, to avoid conflict of interest with commissioned products).

They can advise you TOGETHER of your options to structure your respective portfolios (given your respective risk tolerances, which may be entirely different) against the backdrop of now being engaged. It is indeed sensible to leverage dual income, lower individual expenses, and tax benefits, but I would take baby steps beyond that...


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## Homerhomer (Oct 18, 2010)

OP, welcome to the forum.

Unfortunately as you can see sometimes asking questions here does evoke strange reactions (if you can ignore it you can learn here quite a bit), and you have managed to ruffle the feathers of the resident judgmental feminist ;-)

You can't have joint RRSP account, however a spousal contribution can be made so the higher earner may benefit from a higher tax deduction while the contributions are made to the lower earner rrsp account.

Since your partner accomplished such significant savings I would suggest letting her make the decisions on how those funds should be invested, discussing and expressing your ideas is fine, but let the final word be hers.

Good luck.


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## underemployedactor (Oct 22, 2011)

Ebin, I heard some shocking news down at the Masonic Hall. It appears that Prime Minister Sir Robert Borden is thinking of extending the vote to women! Gad!


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## Guban (Jul 5, 2011)

Wow. People are reading a lot more into the OP than I did!

In our family, we treat the investments as one big basket, and allocate accordingly. It allows a big picture perspective as to what is going on, and simplifies the holdings and reduces duplication. But this requires communication and agreement with both spouses. If you disagree with risk tolerance, then you may want to err on the conservative side, or have separate accounts.

If both of you agree, I think that this is the best approach. It's good that you are planning ahead, but perhaps implementation should wait until the two of you are actually married.


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## Toronto.gal (Jan 8, 2010)

Guban said:


> In our *family*, we treat the investments as one big basket


But the couple is newly engaged, yet the OP did not even know about his fiancée's life savings, what does that say? I think it's an important point to consider.

OP said: '*I* want to focus on doing as she wishes *except* with higher returns'. There is no 'I' and there is no 'except' as it's her money for the time being. Also, does the combination of finances also include his assets, or just the transfer of her $$$?

How about focusing on encouraging the fiancée to join the forum herself/learn/manage her own portfolio perhaps? Given that you yourself are asking basic advice with respect to allocation and what purchases to make, you can both learn together rather than take over completely.

+ Every word GoldStone said!


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## andrewf (Mar 1, 2010)

I want to say two things:

1) yikes at the reaction OP received
2) the reaction seems pretty well-deserved. Maybe the OP was not articulating well what his actual outlook is. I would agree that both parties should learn a bit more about investing before making any rash decisions about their investment future. OP mentioned that he owns hot stocks (AAPL). That, combined with a low level of understanding of investing is dangerous. I would not recommend putting your fiancee's nest egg in harms way, especially in a way that is not consistent with her financial goals.


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## MoneyGal (Apr 24, 2009)

It does kind of read as the OP is dismissive of his fiancee's risk profile and preferences. 

OP, you are talking about an asset class change - there is no "continue to do what she's doing [invested in cash/near-cash] but with higher returns."


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## kcowan (Jul 1, 2010)

Let me apologize to OP for the reaction here. Although it appeared deserved, you have apologized for your straight-forward ways.

Now there are several issues that you need to deal with:
- Property - she wants to buy a house. That will soak up most of your equity for now.
- Rental - you own an investment property. How is that going? If it is good then maybe you should leverage that. If it is not good, then you should look at putting that in the mix and get out of it.
- Individual stocks. You seem to enjoy stock picking. Keep that on your side.
- Remainder - I would put the balance in a variety of ETFs to represent the various sectors.
- USD - With Norbert's Gambit, you can keep just the amount of money that you need in USD. My guess is your dabbling in US stocks will give you enough exposure.

Don't worry about balancing risk. Give her the low risk stuff. That is what she likes. If your side makes out better, then just explain that the higher risk has been paying off but that may not stay that way.

The main thing is to communicate. 
Keith


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## MoneyGal (Apr 24, 2009)

OK! I didn't see the other responses from the OP.

To respond specifically to, "why not just one big portfolio?" This works (it is how I manage the household portfolio in my household) if you have the same risk profile. It sounds as though *at least right now* you have quite different risk profiles, plus you say you are "new" at investing. These are reasons to have separate portfolios - at least for now.


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## heyjude (May 16, 2009)

Homerhomer said:


> you have managed to ruffle the feathers of the resident judgmental feminist ;-)


I am not sure whether you are referring to me. Be aware that several other posters agree with my POV.


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## My Own Advisor (Sep 24, 2012)

Questions:
1) Should I treat our investments as one pool and allocate accordingly? B/c a third of my income comes in USD I'm a bit loathe to convert any of her holdings into USD to avoid exchange fees. My allocations are also off - I'm 80% equity, 20% CDN bonds.

You could, but that is not how we run our finances rightly or wrongly. We treat my wife's accounts as one portfolio and my accounts as another portfolio. We manage risk in each by using various bonds and based on her and my own investing risk tolerance.

2) How might you suggest allocating her money in each of her accounts and what should I purchase? I'm imagining that she'll be heavy in bonds (XRB/XBB) if I were to treat our money as one pool. Should I convert some of her holdings into USD or use my USD income and build on that?

If you are to treat all accounts as one portfolio, might be smart to have some bonds in each just in case. I wouldn't convert anything your wife is not comfortable with; just a personal bias perhaps.

3) Should any additional RRSP purchases by her be made into a joint account so that I can get the tax credit?

That depends on your income. If one salary is significantly higher than the other, you could open a spousal RRSP.


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## wendi1 (Oct 2, 2013)

My husband and I think of our mutual investments as one pot. Oddly, though, we have separate chequing accounts and credit cards, as well as a joint credit card that handles household expenses (I think each spouse should have and maintain a separate credit rating).

We divide our funds roughly into two groups: emergency funds and retirement funds. But we are older and have already paid off our house - you might want to add a third category for a down payment, and a fourth for maternity/paternity leave. Once you have decided the term of these goals, you will be in a better position to decide what should be in these accounts.

The one of us that makes the most money in a given year might make a spousal RSP contribution and take the deductions for charity and medical expenses, we each fill our TFSAs by ourselves, and we each make our own RRSP contributions. The purpose of this is to minimize taxes.

I do have a complicated spreadsheet that makes sure we are balanced across all our accounts. But talking and gaining buy-in for the plan with your spouse is key. You don't want to take risks with money you have both worked hard for, and you don't want to be blamed if things go wrong.


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## Causalien (Apr 4, 2009)

I am a man. So understand that this point of view is not just coming from one side of society.

To avoid the potential of any negative emotions that arises from you losing her money due to your relative inexperience in investing. I suggest managing the two portfolio separately.

You have more income than her, so you can afford higher risk investments. She has less income, so a hit in her portfolio will have bigger emotional impact in her life. She's going to see a 20k hit as one years worth of work while it is probably only 3 months for you. Manage the portfolios separately for 3 years, prove that you can do it then start a joint investment account. Then you can both have a sit down where you write down a number you'd like to put into the joint account to invest without telling each other first. This is the fairest way I think is possible to avoid any confrontation. 

Do this because, money is the #1 reason why couples fight and just because she loves you, it doesn't mean the topic of losing all her life savings won't come up in future conversations in a fight as a rebuttal.


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## marina628 (Dec 14, 2010)

Maybe leave everything as it is but moving forward both of you open similar investment accounts and start learning together. Maybe if you guys do well on your joint efforts she will decide to invest some of her cash in the markets.


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## donald (Apr 18, 2011)

as you can see a lot of estrogen in this forum!if you reversed your initial post and gender and signed off as Erica you would still be under attack.
"dump the loser" 
Fun being a young male isn't it!


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## MoneyGal (Apr 24, 2009)

Ahhhh! Please don't lump all women together into one estrogen-carrying boat.


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## donald (Apr 18, 2011)

The op is coming from a point of wanting to take care of himself and the women he loves.
Somehow that is abusive.thats my interpretation.
In today's world I got the great challenge of trying to re-write the script how I was raised(my mother failed me)lol
Bet if the post was reversed it would be a lot of "you go girl"and a lot of that puke in my mouth comments.


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## heyjude (May 16, 2009)

There is a lot of testosterone on this thread too.


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## Ebin (Feb 9, 2013)

Thanks all, appreciate all the advice (and your forgiveness for those I offended).

Re: Risk profile - as noted I have a more aggressive risk profile right now than she's likely to want but I'm pretty open to lowering mine to a more balanced approach. Part of the aggressiveness is to attempt some catch-up and if we pool our funds I think we can find some good middle ground which still protects our retirement while leaving the door open to buying a home in the near future. My investment in AAPL is pretty minimal (10 shares) and mostly a reflection of my love for the company, the rest of my profile is VCE, VTI, VXUS, VAB and XCB and I don't want to mess with any other individual stock picks (I don't have sufficient desire to manage my investments that closely). I've seen too many family members burned by day trading and speculation for that kind of stuff - my goal is to put in steady contributions and get a 5-6% annual return till I'm 60, everything else is gravy. I think 5-6% is doable but tell me if I'm wrong.

Creating a bond heavy profile for her seems to make sense to reflect her desires but also to balance out our overall profile. It sounds like I should still carry some bonds on my side - part of my challenge is that most of my investment funds are in USD, my CDN income largely pays for our expenses and cash on hand savings (I don't mind converting into CDN though). I think I should be looking for an US/INTL bond ETF to purchase into to even out the risks in my USD portfolio. Is that sensible? What are suitable candidates for that?

Real estate wise - the rental property is working very well, it has enough equity and free cash flow that I'm planning to buy another property soon. Alternatively, it could help fund the house she wants to buys. Combining our finances is partly intended so that we can make those decisions together by seeing the big picture better. I'm pretty unconvinced that buying a home in Vancouver makes financial sense - I'd rather buy rentals in outlying towns that generate revenue. This is probably the area where the two of us have the most disagreements and where the fighting will take place.

thanks again for the advice.


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## Synergy (Mar 18, 2013)

Ebin said:


> my goal is to put in steady contributions and get a 5-6% annual return till I'm 60, everything else is gravy. I think 5-6% is doable but tell me if I'm wrong.


5-6% sounds reasonable to me. Don't forget that bonds aren't devoid of risk, especially in a rising rate environment. Personally I'm not a big fan of bond funds right now. With regards to purchasing a house, I'm sure you guys will find some common ground - after all it's about compromise and teamwork, right. Sounds like you're doing pretty good so far. All the best.


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## Guban (Jul 5, 2011)

wendi1 said:


> The one of us that makes the most money in a given year might make a spousal RSP contribution and take the deductions for charity and medical expenses, we each fill our TFSAs by ourselves, and we each make our own RRSP contributions. The purpose of this is to minimize taxes.
> .


You would lower the family tax bill by having the lower income spouse take the medical expenses, assuming that both are paying income taxes.


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## mind_business (Sep 24, 2011)

My wife and I combined our savings right from the start of our marriage, but it was natural since neither of us had any savings to start with LOL. 

Considering you both have significant savings, I think I would approach the situation in awe of how much she has saved on a much lower income than you. I would let her know that I'm impressed, and ask if she has any savings tips for you. She may be asking for your help out of politeness, but in reality you need to be up front with her and admit you both have lots to learn. You both can do some research for a few months, then come together with a sharing of knowledge.

Have you considered keeping your initial savings separate for a few years? This way you both have time to phase in your ideas about investing, and can decide later if they align. If they don't align, keep them separate ... no big deal.

As a guy, especially being more traditionally minded, I think I can see why you want to 'help' her make wise choices ... however, I think she's doing pretty darn good already. More than half the battle when building a nest egg, is the savings part ... the compounding interest is a bonus.


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## Ebin (Feb 9, 2013)

mind_business said:


> My wife and I combined our savings right from the start of our marriage, but it was natural since neither of us had any savings to start with LOL.
> 
> Considering you both have significant savings, I think I would approach the situation in awe of how much she has saved on a much lower income than you. I would let her know that I'm impressed, and ask if she has any savings tips for you. She may be asking for your help out of politeness, but in reality you need to be up front with her and admit you both have lots to learn. You both can do some research for a few months, then come together with a sharing of knowledge.
> 
> ...


Like you, I'm impressed with how she managed to save so much. I figured she would have a third or half of that considering her income. No doubt living rent free at home has helped her greatly but even then it's pretty darn impressive. 

As for keeping the funds separate - it'll probably be a gradual process as the size of her savings is such that we should move slowly, I think it'd be a bad idea to just dump it all into a few ETFs at once. For all I know it'll take a couple years to successfully merge our accounts.

cheers,


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## kcowan (Jul 1, 2010)

Guban said:


> You would lower the family tax bill by having the lower income spouse take the medical expenses, assuming that both are paying income taxes.


I let Ufile look after that. It will deduct all the expenses from the lower income spouse (assuming that spouse actually files).


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## argyle (Nov 12, 2013)

Aside from the investment side, there is also the expenditures side which can help you as well. When I got engaged, we immediately began most of our spending out of my income. I "borrowed" money from my fiancee via a loan to fund our wedding then paid her back. The idea is that the higher earner does the spending so that the lower earner's funds can be fully invested and taxed at that lower marginal rate. If the two of you are willing to spend in an efficient joint manner then I think it's appropriate to invest in a joint manner.


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## Synergy (Mar 18, 2013)

argyle said:


> The idea is that the higher earner does the spending so that the lower earner's funds can be fully invested and taxed at that lower marginal rate.r.


That's a great point.


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## Ebin (Feb 9, 2013)

argyle said:


> Aside from the investment side, there is also the expenditures side which can help you as well. When I got engaged, we immediately began most of our spending out of my income. I "borrowed" money from my fiancee via a loan to fund our wedding then paid her back. The idea is that the higher earner does the spending so that the lower earner's funds can be fully invested and taxed at that lower marginal rate. If the two of you are willing to spend in an efficient joint manner then I think it's appropriate to invest in a joint manner.


Thanks Argyle, that's sounds like a pretty good idea. We're already in a spot where I pay for most things anyways so moving it all onto me wouldn't be hard. 

Would it be correct to say that this applies only to non-RRSP/TFSA investments though? I figure that for an RRSP that I'd want to max myself out first as the tax deduction is larger and my expected retirement income will likely be substantially lower than it is now. 

thanks,


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## My Own Advisor (Sep 24, 2012)

If you're making more money Ebin, yes, I would focus on your RRSP more than hers, depending upon your income. RRSPs work well when your income (today) is much higher than expected to be in retirement when you withdraw the funds. This you know I suspect.


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## Spudd (Oct 11, 2011)

You can also do a spousal RRSP to try and even out your two incomes in retirement. This gives the higher earner the tax deduction, while putting the money in the lower earner's name so upon withdrawal you can pay less tax as a household.


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