How Do I Persuade My Wife To Invest?

Published in Investing on 4 October 2011

Like many people, she is reluctant to take the plunge.

Although I have been investing in shares for several years, my wife has never bought equities, preferring to keep her money tucked away in a building society savings account.

Better safe than sorry

She knows all too well that she will only receive one or two percent interest a year, but at least her money is safe.

As I have become more involved with the stock market, I have encouraged my wife to take the plunge as well. Particularly during 2009 and 2010, as my shares went up and up in value, I put the case to her to buy equities. Come on in, I told her, the water's lovely!

So earlier this year -- following plenty of persuasion -- she opened a share-dealing account. Her next step was then to put in some money and start trading. Easy!

But to this day, she has left her trading account empty, refusing to invest any of her hard-earned pennies in stocks and shares.

People are deserting shares in droves

Looking at the investing world today, it isn't hard to see why. My wife asks me how I have done this year, and I tell her I have lost money. She asks her sister -- who lives in Seattle and invests in American stocks -- the same question, and she has also made a loss.

In fact, if you were to ask most investors how they have done this year, I suspect they would say they have lost money. Many would have seen as much as 10% or 20% of their portfolios go up in smoke. Why, my wife argues, should you play what seems to be a losing game?

My partner's views are really a microcosm of what much of the general public thinks. People have seen the poor performance of shares and are scared of sustaining losses. Indeed, recently there have been substantial outflows of money from UK equity funds.

Bale outs

According to sales figures from the Investment Management Association, investment for July 2011 was the worst for the past three years.

Net retail sales were just £936 million, compared to £2.4 billion for the same month during 2010, and investors pulled £29 million out of ISAs compared to inflows of £265 million last year.

I don't yet have the figures for August, but with the carnage that took place in the markets during that time, I would expect them to be even worse.

As investors bale out, stock markets have tumbled, not just here in Britain but also in America and Europe. And emerging economies and frontier markets have not been safe havens, and have also taken a battering.

In short, it has been a torrid time to be an investor in equities, and many once more are throwing in the towel.

Margin of safety

And yet, more seasoned market players know these times of pessimism are the times to buy in, not sell out. If shares were consumer products in a shop, I would be going around bagging those bargains.

But course, no one knows what will happen in the future. In these nervy times, when crisis seems to follow crisis, there is the fear that things may get worse before they get better. It's rather like going shopping in the sales. Do you go for the 30% reduction now and risk missing out on next week's buy-one-get-one-free offer? Well, at least you didn't buy at full price.

What we can say now is that shares are looking very cheap. There may be fears of a eurozone meltdown and an economic slump, but company earnings at the moment are holding up remarkably well.

As long you are buying shares in companies with good prospects at low valuations, then you are leaving yourself a wide margin of safety. Even if there are short-term prices falls from here, when the rally does, eventually, come, you should be well positioned.

Let's see who does better

But the question is: how do you persuade people such as my wife to invest? That has always been the difficulty. People have a natural tendency to buy high and sell low, to run away from cut-price shares and chase ever higher overvalued shares. It's as natural to them as water flowing downhill.

That's why we have crashes and bubbles, and why there are so few people are able to beat the market on a regular basis.

Let's see now, maybe I'll try to persuade my wife one more time...

More from Prabhat Sakya:

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goodlifer 04 Oct 2011 , 10:24am

"She knows all too well that she will only receive one or two percent interest a year, but at least her money is safe."

With inflation at about 5% a year - if you believe the government's figures.
You have to be joking.

I have a similar problem with my son.

About three month's ago I managed to persuade him to open a joint account - the money mainly his, the management mainly mine.

We'll just have to reinvest the dividends and see what actually happens.

Tortoise1000 04 Oct 2011 , 11:06am

How do you know she is wrong? You might be glad of her savings when you have lost yours.

Griffard479 04 Oct 2011 , 11:54am

I wouldn't encourage your wife to invest in anything at the moment. It's all very well people yapping on about "buying opportunities", but in some instances if you'd snapped up some perceived bargains last month, these would be down circa 10-15%. I'd focus on putting some money aside, with a view to investing when we finally start to see a period of sustained growth/ less volatility. When this will be....? Who knows

dhorsley 04 Oct 2011 , 12:22pm

and by the time you decide that you've seen a period of sustained growth and decide to buy, you'll be buying towards the top.

goodlifer 04 Oct 2011 , 1:01pm

"If you'd snapped up some perceived bargains last month, these would be down circa 10-15%."

Well, I did, and they are.

Why does it matter? it's only a paper loss unless you sell them.
And who, while sober and in his right mind, would ever want to sell a decent share?

Why not just graciously accept the resultant dividends, to spend or reinvest as the fancy takes you?

Griffard479 04 Oct 2011 , 1:21pm

dhorsley - I guess it's about market timing, and I'm happy to use my own judgement on when to buy - hopefully it won't be at the top of a cycle ;-)
goodlifer - valid points, but not relevant to me - I don't invest enough to gain any real benefit from dividends.

LetsGoa 04 Oct 2011 , 1:28pm

Tortoise1000 too right, only an Idiot would put money in the stock market now, wait till it gets bellow 4000.

SmudgeButt 04 Oct 2011 , 2:03pm

I'm with Tortoise on this. And I'm fairly certain Tortoise is an investor & I like to invest too(especially in a market like this).

But isn't one of the basic rules diverstiy? So what's the problem with you doing the shares side of things and she doing the cash in the bank side. I've been told that if I go for the default option with my company pension scheme that they would be doing a mix like that too.

Or maybe she's getting up to all sorts and isn't bothering to tell you cuz she doesn't want you looking over her shoulder? (I hate it when my OH does that and starts to say - "no click on the icon, no THAT icon!")

rober00 04 Oct 2011 , 5:26pm

My problem is keeping enough cash avaiable to buy those items "still" on my watchlist, during what I expect to be a continuing downturn.

LastChip 04 Oct 2011 , 6:00pm

The bottom line is, the markets been a disaster now for over a decade.

We keep being told invest long term and that used to be viewed as 5 years or more. When 5 years didn't work, it became 10. Now 10 hasn't worked, where do we go now, 15, or 20, or 50?

It's time to question whether investing in it's present form, is actually viable at all.

It seems to me, the main boards of companies do very nicely thank you - at the expense of the owners. Time to review the situation and until the institutions (also on the same gravy train) do something about it, it's unlikely it will change for small shareholders.

The massive financial imbalance is not only through government incompetence with the countries finances, but within companies as well. Multi-million pound packages are not necessary or sustainable. Something has to give; and it will. Just make sure you're very clear when this whole scenario collapses like a deck of cards.

Frankly (and I never thought I would say this), I'm really tempted to get out on the next upswing, because I think we are going to see a big financial bang, like no other we've ever seen before.

Europe has been a huge financial experiment with our lives and the only thing that is positive about it, is it's avoided serious conflict that we seemed to get periodically. The Eurocrats are clinging on to power with everything they've got, refusing to admit defeat. But defeat they will suffer. It's just a question of when.

Isquirrel2 04 Oct 2011 , 8:56pm

Every week I put a bit more in to my FTSE 100 Tracker.
Every week the market seems to go down.

Yes I buy more for my money but why don't I wait for the markets to drop more?
How low could it go, 4000, 3000 lower?

You have to be brave or some may say stupid to keep investing?

Will it the FSTE ever get back to 6000?????!!!!!!!

BLB53 04 Oct 2011 , 9:47pm

The stockmarket is not for everyone. Some people have the temperament for investing and others feel happier with cash in a safe place.
There is no right and wrong. People are different and better to just to accept and celebrate these differences rather than attemting to try to change them.

goodlifer 04 Oct 2011 , 11:09pm

Hi Griffard479,

Pardon me if I'm talking out of turn, but I think you should think very seriously about getting out of the market before you get hooked.

Why do I say this?

Because if you can't, for any reason, be serious about dividends, you're not, in my book, an investor, but a speculator.
And that means you're almost certain to lose money in the end, unless of course you're either incredibly lucky or, as Great-Uncle Ben puts it, "gifted with some uncommon and incommunicable talent."

And Hi LetsGoa,
"Only an Idiot would put money in the stock market now, wait till it gets bellow 4000"

My problem is, when I come with some obviously sensible strategy like yours the market never seems to do what I expect..
So if I see anything I think's worth buying, and the lolly's available, I just get stuck in and buy, before the moth's get at it.
Simple soul, me.

Anyway, if/when footsie deepsixes below 4000 I'll still be investing my divvies every month.

F958B 04 Oct 2011 , 11:58pm

At present, there are some great companies at great prices.
Wise old investors such as Buffett didn't get where they are today without knowing a thing or two.
Buffett recently topped-up his holding in Tesco.
Does anyone fancy betting against Buffet?


Most private individuals are actually speculators (gamblers) and not investors. They buy in the hope of quickly selling to a greater fool at a higher price. Many buy what looks beaten-down or downright cheap, only to find that they got exactly what they paid for: cheap rubbish which doesn't do what it was supposed to.

The best way to judge a company (which was bought at a sensible price) is by its operational performance and its ability to keep churning out the rising dividends to its shareholders. In the long term, the gradually increasing dividend payout of a quality company will tend to pull the shares up with it, generating a capital gain.

Remember Buffett's purchase of Coke in the 1980's?
He has seen dividends grow sufficiently that he will soon receive an annual payment approximating his entire original purchase price .......... and the shares are now trading at multiples of their original purchase price.

The trick:
Quality at a sensible price, dividends and the passing of time.


Here's what I'm holding, without fear of the future:

Tesco, GlaxoSmithKline, AstraZeneca, Scottish&Southern Energy, Morrison Supermarkets, Imperial Tobacco, National Grid, Vodafone, Sainsbury.

Holdings vary between 7.9% to 10.5% of portfolio.

Weighted average forward dividend yield: 5.4% (covered about 1.8x).

Financial strength of most of them is very good.
Earnings stability has also been very good (even during 2007-9).

There are plenty of other good companies out there, including BAT, Unilever, Diageo, Reckitt, Centrica and more.

goodlifer 05 Oct 2011 , 12:16am

Many thanks, Fox 958B,
I seem to think very much like you do, so let's hope we're both right!

Same as you, apart from Morrison and Imperial Tobacco.

I've also got ULVR, DGE, RB, CNA, BARC, PSN, STAN, IPR, MKS and UU.

F958B 05 Oct 2011 , 12:19am

.....and consider this:

When speaking of my holdings above, I mentioned:

1. How much I should receive in dividends.
2. How well covered the dividends are.
3. Financial strength.
4. Earnings resilience.

Nowhere did I mention how much I was looking to sell them for, to a greater fool.

Selling would only occur if:

1. The price reached an unjustifiably high level (e.g. P/E far above the market average, subject to being able to find a suitable replacement holding at a more reasonable valuation).

2. Company heads in a direction of business which I do not like.

3. Company 's financial position appears to be noticeably deteriorating.

4. Company unable (or may soon be unable) to pay a good dividend.


As it happens, situation #1 triggered the sale of my water holdings several months ago; switching to Morrisons Supermarkets shortly after Christmas.

goodlifer 05 Oct 2011 , 12:21am

Forgot to mention BP, RDSB and BT

Griffard479 05 Oct 2011 , 9:32am

Goodlifer - re: "think very seriously about getting out of the market before you get hooked"!?! I'm sorry but I don't consider myself a speculator at all. I'm not sure how you can pass such judgement without knowing anything about my holdings, but thank you for those words of wisdom.

goodlifer 05 Oct 2011 , 10:19am

Hi again Griffard479

Apologies, I didn't mean to pass judgement.
You're quite right, I know nothing about your holdings.
It was your apparent indifference to dividends that made me wonder.

piecan 05 Oct 2011 , 1:30pm

Think of yourself as an IFA advising your wife:-
"I think you should invest some money in these nice shares, dear."
"Why?" "You'll receive about 5% pa in dividends." "That sounds nice. Will my money be safe?" "Well, they're very big companies." "But are they safe?" "The price will go up and down." How much?" "Nobody knows, dear. It could be a bit or a lot. It's sort of like a rollercoaster." "So I could watch my money go down by any amount and not know If I will ever get it back, but I would be sure of 5% dividends in return?" "Well not exactly dear, the dividends aren't guaranteed either!" "Have you been drinking?" End of conversation.
What a decent IFA would say is "you should spread your money between a balanced portfolio of different assets, with a large weighting in cash, and don't let that idiot of a husband anywhere near it it!"

goodlifer 05 Oct 2011 , 5:13pm

Hi again Griffard479

Unfortunately we don't all always mean precisely the same things by the words we use, and I'd be very interested to know just what you mean by the words "speculator" and "investor."

FWIW my "investor" buys shares he hopes to hold for ever with the intention of spending or reinvesting their dividends.
Whereas my "speculator" buys shares in the hope that they will go up, so that he can sell them on at a profit.

Is that too simplistic?

F958B 05 Oct 2011 , 6:05pm


I have a similar definition for investor and speculator.

One wants to be a long-term owner of a good quality business and enjoy in its success and dividend payments.

The other buys with the intention of selling the asset on to someone else at a higher price, not really caring about the quality of the underlying business.


I am an investor and I only buy with the intention of holding "forever".

However, I am not averse to being a speculator if the market happens to offer me an attractive (high) price for one of my shares, while at the same time offering me an attractive (low) price on something to replace it.
Several months ago, I made such a switch; I replaced some medium-sized holdings in water companies with one large holding in Morrison Supermarkets.

goodlifer 06 Oct 2011 , 12:00am

Thanks, F958B

I don't really agree that selling anything to Mr Moody Market if he offers you a really stupid price turns you into a speculator.
Otherwise I'm with you all the way.

So let's wish ourselves luck!

jelg 06 Oct 2011 , 12:56pm

I hold Unilever and Reckitt Benkniser ordinary shares and treat them like a bond.
Absolutely safe as houses (more so) and have a reasonable average yield of 3.5% plus.
Therefore I go very weighty compared to the rest of my portfolio. Ie each holding is worth more than 150K.
Can't go wrong during these troubled times.

goodlifer 06 Oct 2011 , 2:48pm


Dear Mr Decent IFA,
Many thanks for your advice.

Hubby says that if I spread my money over a balanced portfolio of decent assets I will, after all, have to invest some of my money in these shares I'm so scared stiff of.
Is he right?
I'm confused.

Hubby's also worried about my keeping a large weighting in cash.
He says something called inflation will reduce its value.
I'm just fifty and, according to Hubby, by the time I'm sixty five my cash will buy less than half as much it buys today.

Hubby also says you seem to be muddling up the risk of an individual share with that of a sensibly diversified portfolio - what ever that may mean.

He says that, apart perhaps from property,he can't think of a safer place to put my money than in what he calls "a portfolio of about 25-30 blue chips, bought at sensible prices."
Can you?

taken2often 06 Oct 2011 , 3:02pm

I have been following this share buying thread with interest and have sympathy for both sides or should I say three sides.
Speculator,Investor and Saver. The saver is at risk due to inflation and the possibility that under pressure the Government bank guarantee could be swept away and your pound could be devalued.

The Specutator its all in the timing and if there is no dividend it could take a long time to recover, so they tend to cut their losses and try again. Some times it works.

The investor is buying for the long term which usually means good steady dividends. They also reduce costs and stamp duty. They companies tend to have managements that care about there shareholders and are less likely to go into overpriced speculative ventures

I have properties rented out which sometimes make a profit
these have rental voids, trashed apartments and rental default which can take months to get vacant possession.
Council are now colluding with tenants who commit fraud. Payment is made to the tenant and they do not pass it onto the landlord. no action taken against them. We can afford the loss.

I have various share portfolio's. The oldest show the worst losses because they were purchased when the market was much higher, but when i look at the difference between the starting cost, the value today I have made a profit due to dividends re invested. The paper loss could over the years recover.

My ISA is the same, but due to the income, I can now draw 10k a year tax free, which will increase every year, as I transfer the allowance from my ordinary portfolio into the ISA.

I have three SIPPS and although I am passed the age Iof retirement have not drawn on them, all are producing high income.

I dont care about the ups and downs of the markets. I care about the income, and this is spread over 50/60 items and rising. This ranges from PIBS (gross) Preference shares Ordinary shares but mostley Investment Trusts.

If I die the SIPPs if I have not started them will be paid out tax free. If I have started any I will be in Drawdown and the fund goes to the nominated person as a pension or taxed at 55%.

With regard to the other Portfolios the Revenue will win or lose according to the market level at that time. The only advice I have left is that the PIBs should not be sold but transferred into one of the inheritors account.

Thats it hope, some of this may be of interest and helpful as to why shares.

snoekie 06 Oct 2011 , 5:21pm

Prabhat, being the old cynic that I am, the reason she is not investing is so that she has money to spend (she cannot if invested in shares) and when she runs out of spending money she will tackle you to give her more, on pain of loss of privileges.

As you are invested and earning money from those investments, she will demand that you spend that income on her and the kids, and then when there is less income in the future, when her mates are on spending sprees, you will get it in the neck and there will be undoubtedly a demand you cash in some investments so she can keep pace with the Singhs/Patels/Joneses et al!

The fact that she has spent the money will cut no ice whatsoever.

goodlifer 07 Oct 2011 , 12:07am

Hi jelg,

"I hold Unilever and Reckitt Benkniser ordinary shares" - so do I --. *and treat them like a bond.".

How do you treat bonds?

piecan 07 Oct 2011 , 12:47pm

Mrs. goodlifer

You've overlooked my final sentence - "and don't let that idiot of a husband anywhere near it." It speaks volumes that he thinks I was referring to him! A couple of weeks ago, when I first came across him, he was begging for advice; now he's become qualified as an IFA. Amazing how a HYP can do this to the uninitiated. Just slap your money on all the usual suspects in the FTSE, but make sure they're in different sectors and kid yourself you've constructed a "diversified" portfolio. He's also developed the ability to see what's going to happen over the next 15 years. Please ask him how he does that. I'd love to know!

goodlifer 07 Oct 2011 , 7:35pm


Dear Decent IFA,
I'm afraid I'm more confused than ever, but thanks anyway for trying,
Kind regards, best wishes,
Maureen Goodlifer (Mrs)

PS.Hubby says his estimate for the value of my cash in fifteen years time is based on an average inflation rate of 5%.
He thinks it might not be as bad as that, but is more likely to be worse.
He says inflation's averaged more than 4% over the last sixty years, more than 5% over the last thirty.
He said something I couldn't understand about something called QE.

piecan 08 Oct 2011 , 11:07am


Read this to Hubby - "Our main business is not to see what lies dimly at a distance but to do what lies clearly at hand." (Thomas Carlyle)

Goodbye, goodlifer

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