• Dangerous games

    Employers' body Neasa is playing a potentially dangerous game, says Terry Bell.

  • Rational thinking

    All players should first consider the net result of their actions, says Leopold Scholtz.

  • Telkom's property poser

    BEE may be hindering Telkom's plans to offload redundant real estate, says Gugu Lourie.

Data provided by iNet BFA
Loading...
See More

Investing when married out of community

Jun 13 2013 12:21

(Shutterstock) (Shutterstock)

Related Articles

What to do with my inheritance?

How to sell Satrix investments

How a stock index is calculated

Debt and marriage

Marriage and money woes

Debt cripples relationships

 
A Fin24 user wants to know the investment implications of getting married out of community of property, with accrual and exemptions. He writes:

My fiancée and I are considering investment options for when we get married (out of community of property, with accrual, with exemptions).

We'll both have separate investments (equity, retirement annuities, etc), but we'd like to have a joint vehicle so that we can invest in opportunities together.

In terms of contribution towards this joint investment account, should we both give a fixed, equal amount each month, say R5 000 each, or should we instead each contribute a fixed percentage of our disposable income, say 20% of our after-expenses cash?
 
The thinking behind a fixed equal amount is an equal monetary contribution, so that each partner is equally invested.

The thinking behind a proportional, percentage-based approach is that while the higher earning partner contributes more, his or her relative contribution is the same as the other partner's.
 
We're at an impasse as to which approach we should be going for, and while both have positive and negatives, we'd appreciate some external input.

Johan Gouws, head of Absa
multi-management responds:

Decisions related to household finances are always very personal and one has to consider both the relationship and economic principles in making your decision.

However, if you purely have to decide about a fixed regular contribution towards your retirement savings versus a percentage of your salary, then the preferred way of saving is actually quite clear.

The most effective way to save would be to make regular contributions as a percentage of salary.

The first reason for following this approach is that your savings rate will keep up with your ability to save, as the money saved as a percentage of your salary will remain a constant.

The second reason is that your savings discipline will not be eroded over time, as will be the case with a fixed amount where your savings rate will drop over time as your salaries increase.

The third reason is that this will be an equaliser in terms of who contributes what so that if both contribute 10%, for example, you will both have made an equal commitment towards saving, given your economic realities.

- Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

 

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

absa  |  money clinic  |  investment
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

A cash flow crunch often occurs in small businesses trying to balance cash coming in with cash going out. Watch this video to help you improve.
 
 

Go solar and save

Households may have to examine alternative forms of energy after Eskom has been given permission to raise electricity prices above the 8% previously granted.

 
 

Start saving...

Where can you stash your cash?
Time the key for retirement saving
Dummy's guide to saving
Save money with affordable account

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...