5 Conversations to Have With Your Spouse Before Trading
Spousal Support For A Stock Trader: Part 1
You're NOT going to gamble OUR money in the stock market?!?!?! Did your spouse think or maybe say something like this when you suggested the idea of stock trading or day trading? If not your spouse, certainly it came from a friend or other family member. An enormous amount of marketing dollars are spent selling people on the idea that you are too dumb, investing is too hard and the stock market will suck all your money out of your account, so you need to pay financial professionals huge sums of money to do it for you; if the majority of people discovered how profitable stock trading can be, an enormous number of financial professionals would be seriously "up the creek". It's very sad that their success is predicated on keeping you in the dark about investing (side note: if you would like to meet competent financial advisors who can out-perform the market, email me at Brad@RealLifeTrading.com).
So how do you share your new understanding of the potential of stock trading with your spouse? Start with the WHY.
When most of us are excited about something, we start with the WHAT. Honey, I've discovered this new way to trade the stock market and anything you say after that is not heard because 'Honey' is remembering all of the marketing nonsense they've heard about how risky the stock market is.
Try starting with the WHY. Honey, I've been looking at the rate our retirement savings is growing compared to inflation and the cost of living increase, and we have to do something different to achieve our retirement goals. Start with whatever problem you were trying to solve when you became interested in trading stocks. Once your partner agrees on the problem, only then should you discuss the solution of stock trading.
When objections are raised (and they will be) it is crucial that you Listen and Understand BEFORE you respond. Some people may be worried that you are going to lose all the money, spend huge amounts of time, break the budget buying education and products and a myriad of other fears that you probably had too when you first started learning. Here are some common ones:
Lose too much money: "I will practice with fake money. Once I can do it with fake money reliably for a few months, then we can talk about trying it with a very small amount of real money." or "We can move our investments to a competent financial advisor while I am learning and practicing. When I can steadily out-perform our advisor, we can talk about moving some of the money back into our control."
Spend too much time: "Some stock traders spend less than five minutes per day trading. Also, Real Life Traders publish their trade setups as well as email me several trade setups each week" or "Let's do it together!"
Require too much upfront money "All the education is free because the creators are successful traders. Also, I can practice and learn with fake money. If I subscribe to the trading floor webinar, the fee will be paid for by one or two good trades each month."
Stock trading is gambling "I understand why you think that because I thought it too. However, with gambling, the edge is always in favor of the house. In stock trading, the market averages 10% per year, so we can have that in our favor. Also, we can get out of a stock trade if it turns against us, whereas gambling you can't get your money out whenever you want. Everyone ends up losing in gambling, but people that study and practice can become successful stock traders."
A few tips and tricks to communicate:
#1) Use "we" instead of "me or "you". Especially if you are married, approach this as a team decision yet to be made rather than one you have already made and are forcing it down the other person's throat.
#2) Express WHY you are interested in stock trading.
#3) Reinforce that Real Life Traders do not risk real money until their trading plan has been back tested as well as tested with virtual trading. Work together to identify the criteria of WHEN real money will be involved as well as HOW MUCH MONEY (start with a small amount to reinforce the losses will be limited and not be catastrophic).
#4) Be financially stable before trading. Pay off debts, create a budget and demonstrate you can be financially responsible.
#5) Be open and honest. Share your wins AND your losses; share when you traded your plan and when you deviated from your plan. The more honest you are, the more trust you will garner.
When I told my wife that I wanted to quit my 10+ year career as a successful Project Management Professional and process improvement leader (Lean Six Sigma Master Black Belt) and join the world of finance, her response in 2010 was "Stock trading is just gambling. What would you like to do instead?" Lately, I asked her why she changed her position and supported me. She told me "Because I saw your passion for helping others with finances and you have been responsible with money." Today, I tell my wife just about every day what I did in the stock market because I'm excited to share it with her; it is soooooo awesome when I tell her about my wins or losses and she responds "but did you trade your plan?" Booyacahow - she's a keeper!!!
Trade (and communicate) on Logic, Not on Hope