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MANILA, Philippines – Love and money are fundamentally the same, in my opinion: most people talk about them all the time, most people drink seemingly endless amounts of alcohol and eat monstrous servings of ice cream just to forget them, and most people have either love problems or money problems on their minds.
(If you don’t have either, you’re lucky.)
Let’s face the music: most people place a particularly high importance on both aspects simply because they’re universal. Love and money are languages that everyone knows to communicate.
One day, you and your lover might be having a great time until a third party steps in to destroy your relationship.
The next thing you know, you’re drowning your sorrows in liquor and asking yourself if maybe you should set your status from “Available” to “Single” during the wee hours of the morning so no one would notice.
In the same vein, you and your investments might have a wonderful companionship – you feel stable and secure in dealing with them.
Suddenly, something unexpected happens and this affects your portfolio adversely.
You then also drown your sorrows in liquor and ask yourself if maybe you should continue investing or stop now.
If you don’t believe that romantic love and money have a common ground, why don’t you read about these similarities between your lover and your investments to change your mind, then?
In pursuing your prospective partner and in starting your investment account, you should know the following concepts:
1. You start with knowing what you have and what you don’t have.
Your lover: Identify your strengths and your weaknesses first before even considering to go out with someone.
You have to show your strengths and play down your weaknesses – you do this by adjusting yourself to fit the conventional idea of an attractive person.
Looks matter, so take care of your body more. Here, you decrease your intake of food and increase your metabolism.
Your investment: Set up a budget to know your income and your outcomes.
Of course, for you to allocate enough money to your investment account, you need to work on your budget and adjust as needed. You either increase your income or decrease your expenses to start investing – choose one or both.
Remember the magic formula in personal finance?
Income – (Savings + Investments +Tithes) = Expenses
2. You need to identify your ideal partner/investment to spend your life with.
Your lover: Identify the characteristics that you want in a potential lifetime partner.
You love to play Candy Crush, she loves to play Candy Crush. You’re good with children, she still acts like a child.
You love to laugh, he looks like Diego from Bubble Gang – it’s a perfect combination!
Your investment: Your investment vehicle should be personalized according to your objective, investment horizon, and risk profile. It’s supposed to be uniquely suited to you:
Objective: What is your investment for? Why do you invest?
Horizon: How long can you last without touching your investment? How many years?
Risk Profile: Can you manage to take high risks with your money? Do you have a plan in case the market plummets?
This means a 26-year old with a child and a 30-year old with no dependents may differ in this area.
3. Both of them should play a part in increasing the value of the relationship.
Your lover: He should be there to unconditionally shower you with gifts, constantly adore your quirks, kiss the floor you walk on, and give you fastfood meals every time you crave for them.
Yes, okay, no, I’m kidding. A supportive, understanding, and trustworthy lover should fit the bill just fine.
Your investment: Invest in vehicles that can give you a greater return compared to the current inflation rate.
As of June, 2013, the inflation rate is 2.80%. If you invest in accounts giving you less than 2.80% return, you’re basically telling inflation to eat up the value of your money.
Your lover’s impression of you affects your self-worth.
Your investment’s interest rate affects your net worth.
4. Consistency is always better than timing.
Your lover: You simply can’t time when to court or when to pursue your partner.
I mean, you can’t waste most of your life speculating when to make your move, right?
Instead of asking your neighbor’s long-lost cousin for tips on when to give flowers based on what she texted you last night, you go and start courting.
You do this consistently, regularly, and without fail, up to the point that she starts to fall in love with you (or starts to finally give you a chance).
Which would you prefer, a consistent suitor who gives you romantic roses every week, or a one-time suitor who gives you only one bouquet during the courtship?
Your investment: You can start investing now and start making your money work for you, or you can stay put and analyze every little thing that can influence the stock market right now.
Obviously, the former is better. If you invest now and do so consistently (even though you start with only P1,000 every month), compound interest gets to be your best friend.
You don’t analyze every little movement in the stock market and you don’t follow every stock market guru’s advice.
Ben Graham, a prominent financial analyst and value investor, puts it aptly: “The individual investor should act consistently as an investor and not as a speculator.”
A consistent investor who invests small amounts per month is better than an investor who invests a large amount once.
You need to put in consistent efforts to make your relationship and your money grow.
5. Understanding is the key.
Your lover: Naturally, you wouldn’t be with someone you don’t understand very well.
Sure, you can have “good times” with just about anyone – you can post kissy pictures on each other’s Facebook, wear cheesy couple clothes all you want, and spend the night together regularly.
But at the end of the day, if you don’t understand your partner, and if your partner doesn’t understand you, it’s time to let each other go.
Your investment: You should only invest in businesses and investment vehicles that you really understand.
When investing in stocks, always ask yourself, if you had enough money, would you buy the company itself?
Your long-term lover is your lifetime partner.
Your long-term investments can only grow substantially if you make investing a life-long habit.
Before you look for a lover, start investing first, though.
At least your investments won’t throw a brick through your bedroom window because you cheated on them, right? – Rappler.com
Lianne Martha M. Laroya believes in better days. She founded The Wise Living to educate fellow 20-somethings on self-development and money management without boring them to girly tears. Hey, she’s going to publish her book this year too! Connect with her on Twitter @MsLianneLaroya!
Young couple in bed with piggy bank and calculator photo from Shutterstock