Tuesday, April 21, 2015

Your Marriage or Your Investment?

This post was inspired by a chat with a friend recently. I was told that there were some young people who are investing the money which was meant for their marriage or wedding in the next few years time. With investment products easily available now, young people can just start their investments from as low as $100 per month.

An example is the POSB invest saver which invests into the STI ETF. Yes, the STI ETF is a good investment tool but the problem with the investments some young people are doing is they plan to invest a sum of money every month and take it out for their wedding in the next 2 years or so. Is this a wise move?

Is it wise to invest the money you need for your marriage?

The answer to the above question is probably a NO. There are a few reasons why we should not invest the money we need for our marriage. I'll elaborate on the reasons below.

1. Investment returns are never guaranteed

I'll focus on the investments of non guaranteed assets such as stocks, index ETF and even bonds. We can never be sure if we will make a profit or loss in investments. Moreover, if our investment time frame is only 1-2 years, its even worse.

When we invest the money we need for our marriage in the next few years, we may have to sell at a loss when the portfolio isn't doing well. Some of us may be thinking what if I make a profit? Then I can have more money for my wedding. We should immediately identify that this is a very dangerous thought to begin with.

2. Investment should be for the long term

1-2 years time frame for investment is definitely too short. 3-4 years is also short. We should probably look at more than 5-10 years time frame for any investments that we make. In fact, we should invest all the way to retirement. It is part of our retirement portfolio.

I know young people want to start investing as early as possible once we know the magic of compounding. Yes, the earlier we start, the greater the compounding effect but always remember that financial planning is not just about investments. It is planning our finances as a whole.

Getting Married and still achieve financial freedom

All of us want to achieve financial freedom and get out of the rat race. We want to grow our money through investments. But now, with marriage in mind, there seems to be a road block. How do we plan our finances such that we can get married and still achieve financial freedom?

In the next few paragraphs, I would share with you my personal plans for the past few years which is still ongoing. But first, there are two likely scenarios for most of us. One likely scenario is we are single and no plans for marriage. The second likely scenario is we are attached and planning for marriage in the next few years. Let's see what we can do for the two different scenarios.

Single and no plans for marriage yet

Being single now means you certainly have more time to plan your finances. Since you don't need a large sum of savings for marriage as of now, you can invest some savings which you have and grow it for the long term. This is the time to work hard, increase your income and save up aggressively.

Being single now doesn't mean you won't get married in the future. What happens when you get attached somewhere in the future? The key idea is this. Most of us will date and plan for marriage in about 3-4 years time when we get attached. Since your previous savings are already invested, you shouldn't rely on that for your marriage any more.

From the time you get attached, start saving up a portion for your marriage and never ever invest that portion into any non guaranteed investments. It is good to put that money in some guaranteed higher interest accounts which will allow you to take it out by the time you need it for your wedding.

I wrote an article on How much money is needed to get married and start a family in Singapore?. You can use it as a guide for your marriage cost or get some information from your friends or family members who have already been through that stage. You'll know roughly how much you need to save every year to get married in 3-4 years time. If you plan $60,000 for your marriage, just save $20,000 a year and you'll be on track to get married in 3 years time.

Attached and plans to get married

If you already have a partner, planning for marriage is inevitable if you feel he or she is the right one for you. If you've yet to save up for a wedding, start now and plan it out with your partner. Know the amount you need and set the targeted time frame to save up that amount.

Rushing into marriage without any planning is not advisable. You'll end up with a lot of financial problems later on. If you're really serious about this relationship, there is no point rushing into marriage without any planning. Of course, some unforeseen circumstances may happen and you may need to rush into it but I shall not go into that here.

Some couples take the short-cut and think they don't need to plan ahead because there are zero interest credit instalment plans available for their wedding in Singapore. But, always remember that you need to pay back the amount you borrowed later on in your married life and don't forget you probably need to pay for other things too such as housing loans, your own bills and all that. It is always easier to save up before marriage when you don't have much commitments yet.

My plans for marriage and financial freedom

Long time readers of my blog will probably know that I'm at the single and no plans for marriage stage now. This gives me a lot of space to plan my finances. My personal plan is to achieve a $100K investment capital base and start saving for marriage when I find a partner. I probably can save up for marriage in less than 3 years and still have $100K to invest by that time.

Do note that the savings amount for marriage and the $100K are two separate accounts. After catering to my marriage needs, I still have money which I can invest and grow for the long term. Never put your marriage needs and investment into one account. It becomes confusing in the end.

On the issue of financial freedom, passive income have to be created. I've written about passive income in quite a few of my previous articles. You can read all my articles on passive income from the link here. A fellow blogger, ASSI AK has also recently written a good post on How to get $50K in passive income by investing in stocks? If we can get $50K in passive income a year, we could quite possibly achieve financial freedom and choose not to work by then.

Ultimately, all of us have different lifestyle and needs. Plan accordingly to your lifestyle and you'll know whether its achievable. If you want a $100K wedding vs a $50K wedding, the planning will be completely different.

Your marriage or your investment? I hope you know the answer now.

Enjoyed my articles? 
You can Subscribe to SG Young Investment by Email 
or follow me on my Facebook page and get notified about new posts.

Related Posts:
1. Why extreme savings is more powerful than investing
2. How much money does a couple need to earn in order to afford a $300,000 HDB flat?


  1. Hi SGYI

    Good timely post.

    With money seemingly so easy to earn in the market these days, one might just be tempted to play around the wedding and emergency money into the market.

    1. Hi B,

      I was worried when I heard that there are actually people who invest the money they need for their wedding. I hope this is a reminder for them.

  2. Reminds me of what I wrote recently. Tsk tsk :/


    1. Hi EH,

      Hmm, how did my post on marriage link to your post on savings?

  3. If you replace the word marriage with other impt milestones like child, education, house etc, it's almost about the same...that Singaporeans are not that prudent with their financials.

    1. That is true. In actual fact, people all around the world will prefer to enjoy first and think later.

  4. If you find the right woman, then it is worth much more than all the money your investments can make in a lifetime.

    1. Yes you're right. Why not we have both? I believe its possible.