Joint investments what couples should look at

March 4, 2009
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, NAIROBI, Kenya, Mar 4 – Joint investment decisions among couples are said to be rare ventures among couples; many (investors) are said to be those who will prefer to pull funds with friends to invest together while those who invest independently whether on large or small scale would rather not involve their spouses. According to Peter Kiogora, a financial wealth planner at Info Wealth Advisory Centre, there are varied reasons why some couples do not go into joint investments as much as they share that deep mutual relationship.

The reasons could range from spouse’s backgrounds, education as well as investment objectives such as future considerations. “People (investors) will walk in here for investment advice and many will prefer to have their spouses as their beneficiaries and will even go ahead to keep this a secret for some time,” he adds.

Without being biased many of these investors, admits Kiogora are men mainly of middle and upper incomes who admit that joint investments with their wives has it up and downs. Kiogora notes that investors mainly with monthly incomes opt for standing orders and are quick to explain that if one is to achieve his financial goals joint investments with the spouse is not a viable decision. “The reality is that many fear such investments as one of them is bound to drag the other by not honouring the monthly payments, diverting the cash into other matters and in the end the couple is in arrears and might not meet their end goals,” Kiogora says.

On the other hand, there are couples who will wish to invest together and this according to Kiogora are the investment savvy ones who have set joint financial goals and are focused towards achieving their objectives. Such couples for example might opt to invest in shares, unit trusts as well as buy education or other insurance unit linked products for their children. Secondly such couples’ income is accommodative; this means that while they have a considerable amount of cash to sustain their family as well as some for investment. 

For example such a couple might decide to start off their investment kitty with KSh20,000 each thus meaning they have a combined investment portfolio of KSh40,000. From the KSh40, 000, the couple might decide to buy an insurance product which will require about KSh10,000 for starters and the same amount as the monthly premium. Kiogora explains that this could be a unit-linked education policy product with a maturity period of 15 years to help them in educating their child. 

Though the stock market is quite low at the moment, it is not a crime to put some money into stocks. Kiogora says the couple could also decide to invest in unit trusts thus entrusting their money with a fund manager. “Most couples will tell you that they hope that the returns will support their bigger investment plans as well as educate their children in the future,” Kiogora adds.

Kiogora notes that a couple which chooses to take the joint investment path, which to many the general perception is that its hard to manage must have thought about it and even discussed before going into such a commitment.
 
According to Felix and Damaris Mjumbe, a couple currently undergoing an investment course at the Info Wealth Advisory Centre, though they are sure that disagreements over when to buy and sell a share will not miss, the two are of the idea that it would be wise to consult each other at all times. To them, there are numerous couples running successful businesses together and the secret lies in consultation for any decision to take place.

The couple is both aware that unlike other businesses where decisions can even wait for a few days, selling stocks due to their performance needs instant decision making and therefore Mrs Mjumbe has been entrusted his spouse to make decisions during such times. 
 
Kiogora advises couples who decide to put a joint investment should have an understanding on which areas to invest in the short and long term.  It is important for a couple to decide on what to invest in, how much to set aside as capital and monthly contributions as in the case of investments such as unit trusts or insurance premiums.

He says couples who stick to their set investment rules can grow and learn together. “Investment is not a one off process,” he adds. However, not many prefer such joint ventures and would rather put the spouse as the beneficiary. This is because one of them is bound to be a risk taker while the other is not. This is where most investment squabbles can be based on.

Knowing each other’s risk appetite is important. This helps in reaching at concrete decisions. Kiogora notes that many are the times one of the partners is a risk taker while the other is a slow decision maker. “One might want to sell their shares while they have hit a certain mark while the other has a different opinion and would rather not sell,” he says. 

Secondly, couples should take in mind the risk factor. They should have knowledge and understanding of what it means to invest in stocks regarded as high-risk investments though with good returns in the long term. The couple should therefore set certain objectives when it comes to the performance of stocks.

Other factors to consider include where to seek for investment information from professionals such as financial analysts and fund managers, duration to take up a certain investment, the rate of inflation as well future needs versus current events for instance how large the family will have grown by the time an investment such as unit-link products matures.

Kiogora says such investment practices among couples are healthy giving piece of mind that their children’s future is taken care of. “As a social benefit, investing together brings them closer,” he adds.

Kiogora notes that unit linked products and unit trusts are convenient long-term investments that couples can decide on taking. Couples taking unit-linked insurance products should take up those whose maturity period is between 10 and 15 years bearing in mind factors such as children who will mainly become the beneficiaries. Joining a retirement benefits scheme is another long-term investment that couples should not ignore.

Currently the Retirement Benefits Authority has licensed some 15 individual retirement benefits schemes, which act as an avenue for retirement. They mainly target workers whose employers have not started an occupational scheme. Kiogora says retirement benefits schemes also cater for self-employed or employers who do not want to start an occupational scheme for the employees.

The individual retirement schemes that are run by insurance companies are open to the public and have minimum monthly subscriptions fees ranging from Sh500 to Sh5,000 a month. To encourage more Kenyans to take up the retirement schemes, the government has introduced tax incentives including non-taxable earnings on investment returns.

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