Tips for Gay Couples Looking To Invest

Investing as a Couple

Joshua Kennon, About.com Guide to Investing for Beginners, answers questions gay men have about investing and saving money.

I asked: Any tips for gay couples looking to invest together?

Joshua said: Although the overall rules are the same, there are several economies of scale that are possible if you are in a situation where you are settled down with the person with whom you expect to spend the rest of your life. In everything from transportation, furniture, food, and utilities, there are opportunities to save money because the percentage of both parties’ income dedicated to paying these bills decreases, resulting in more capital available for investments.

The surest way to build some serious wealth as a couple if you live in a household where both parties work is to live completely off one salary (after deducting retirement contributions to take advantage of any matching, of course) and invest the other salary or paycheck. In an arrangement like this, you’re talking about putting away $20,000 or $30,000 at least each and every year in a middle-class household. If the couple is relatively young and has thirty or forty working years, it would not be unthinkable to have $5 or $10 million or more due to the beautiful power of compounding that we discussed earlier. The key is to avoid wipeout risk and continuing to be disciplined even when it’s not easy.

The underlying principle here is that you must stop selling your time to be successful. When you make money by going to work, you are essentially selling a unit of labor to an employer or client. Depending on your skill base or education history, you can charge more per unit (either hourly, annually, per sessions, or whatever other payment terms are normal in your industry) but you are always going to be limited to the amount of time you are willing to spend working or the rate you can charge per unit. By using the money from one partners’ job to acquire cash generating assets, which can include stocks, bonds, mutual funds, real estate, small businesses, a fast food franchise, a car wash, or almost anything else that generates profits and liquidity that is not directly tied to the number of hours you have to put into it, you can move closer to financial freedom. In my own life, for instance, I own a collection of ecommerce sites as part of my private holding company that generates thousands of dollars as I’m sleeping, going to the movies, eating out at restaurants, or sitting by the fireplace reading a book. As I go about living life, my stocks are paying dividends, my businesses are generating profits, and I’m keeping costs low so I can reinvest all of that money into even more opportunities.

That’s the real secret, and it’s much easier to have if you can share the costs of living with someone you love.

One caveat: Do not hold all of your retirement assets under one person’s name! Many times, a spouse will have to sign off on a retirement account of his or her husband or wife acknowledging that he or she does not have the right to access those funds in the case of divorce or death unless they are specifically named as the beneficiary. Both parties should have their own retirement funds.

More Investing Questions:
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What's the one thing beginning investors should know before they start investing?
What should gays look out for when investing?
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