The Other Way to Losing Half Your Money — Divorce

Share markets are bouncing back strongly. Property markets are regaining strength. Confidence levels are at all-time highs.

Ironically, the higher asset prices go, the more a growing number of people stand to lose.

And I’m not talking about those who are shorting the market.

In fact, the affected parties are most likely long in the market…owning residential real estate, superannuation funds and direct share portfolios.

Here at Port Phillip Publishing our primary aim is to help you invest in winning strategies and/or to avoid substantial losers.

If we do our job correctly, then you should experience an appreciation in your capital base.

But if you do not pay attention to other areas of your life, then you are at risk of losing half (or more) of your appreciated capital.

How so?

HOODWINKED! Why Australia’s ‘miracle’ economy is a farce

As reported by BBC News on 3 December 2020:

Divorce rates are increasing around the world, and relationship experts warn the pandemic-induced break-up curve may not have peaked yet.

Divorce can be costly. Financially and emotionally.

John Cleese famously quipped about his three failed marriages, ‘it was the most expensive sex I ever paid for’.

According to Our World in Data, around half the couples who married in the 1970s did not stick around for the ‘till death do us part’ of their vows.

This is most likely where the conventional wisdom of ‘50% of marriages end in divorce’ comes from.

Port Phillip Publishing

Source: Our World in Data

[Click to open in a new window]

Divorce rates in the US have fallen somewhat in subsequent decades. However, I suspect this could be due to more people cohabiting and not opting to take the walk down the aisle.

In the UK, the not so fun facts on divorce are:

  1. 42% of marriages end in divorce
  2. 45–49 is the most common age bracket for divorce
  3. 62% of divorces were on petition from the wife

A word of advice for the married blokes out there…if you’re in the high-risk age bracket…DO NOT take your wife for granted. My tip…buy some flowers, pour her a glass of her favourite tipple and talk to her about her day…not yours.

The Rum Rebellion is not a marriage guidance newsletter. However, having recently witnessed the ending of a long-term marriage, I can tell you, it can be far more destructive to your finances than a rout on Wall Street.

In my opinion, it makes good sense to do your utmost to mitigate the risk of such carnage to your capital.

Happy wife, happy life

Every husband has used that line at one time or another. The reality is there’s a good deal of truth in that saying.

In 1938, Harvard University commenced the Grant Study of Adult Development.

The purpose of the study was to chart the physical and emotional health of 268 Harvard students…one of whom was John F Kennedy.

Every two years, the men were evaluated by questionnaires, personal interviews and from medical data supplied by their doctors.

More than 75 years of data was drawn upon to publish Triumphs of Experience: The Men of the Harvard Grant Study in 2012.

The author, Dr George Vaillant, had been involved with the Grant study from 1966 to early 2000s.

In reviewing the book, Charles Barber from The Wilson Quarterly wrote (emphasis added):

Triumphs of Experience elegantly summarizes the findings of this vast longitudinal study, unique in the annals of research…[The] book analyzes how the men fared over their late adulthood, and indeed their entire lives.

In it, Vaillant masterfully chronicles how their life successes, or lack thereof, correlate with the nature of their childhoods, marriages, mental health, physical health, substance abuse, and attitudes.

Extensive quantitative findings are interspersed with the detailed stories of individual study participants…Many of its findings seem universal. If they could be boiled down to a single revelation, it would be that the secret to a happy life is relationships, relationships, relationships…the other overarching message of this book is that resilience counts…

The quality of our relationships is the secret to a happy life.

According to the current director of the Grant study, Robert Waldinger (a psychiatrist at Massachusetts General Hospital, and an associate professor of psychiatry at Harvard Medical School):

The clearest message that we get from this 75-year study is this: Good relationships keep us happier and healthier. Period.

Waldinger expanded on this message in the Harvard Gazette (emphasis added):

The surprising finding is that our relationships and how happy we are in our relationships has a powerful influence on our healthTaking care of your body is important, but tending to your relationships is a form of self-care too. That, I think, is the revelation.

According to Waldinger (emphasis added):

When we gathered together everything we knew about them about at age 50, it wasn’t their middle-age cholesterol levels that predicted how they were going to grow old…It was how satisfied they were in their relationships. The people who were the most satisfied in their relationships at age 50 were the healthiest at age 80.

The reason for this is rather obvious.

Unhappy people experience higher levels of anxiety and stress in their lives (emphasis added):

When stress starts interfering with your ability to live a normal life for an extended period, it becomes even more dangerous. The longer the stress lasts, the worse it is for both your mind and body. You might feel fatigued, unable to concentrate or irritable for no good reason, for example…chronic stress causes wear and tear on your body, too. Stress can make existing problems worse.

American Psychological Association

The Harvard Grant Study provides us with that most valuable of commodities…20/20 hindsight.

We don’t have to reach age 90 to find out what works and what doesn’t.

If you want to increase the odds of living a long and healthy life, then work every day on the quality of your relationships…especially the one with your partner.

What’s the lesson in this for you and me?

Creating a truly happy life requires much more than money alone.

I’ve watched people commit their lives to making a fortune, but along the way they’ve lost the love and respect of those who were once closest to them. Was it really worth the price?

They lost sight of the fact that money is only one facet of life.

The lesson to a truly satisfying, rewarding and rich life is in the quality of the relationships we have.

Invest in these with the same commitment you apply to learning about and investing in markets and watch the emotional dividends compound.

Robert Waldinger (the current director of the Grant study) gave a TED talk titled ‘What Makes a Good Life’…attracting 36.2 million views.

For those interested in investing 15 minutes of their time to learn about what makes a good life, here’s the link.

By the way fellas…don’t forget those flowers.


Vern Gowdie Signature

Vern Gowdie,
Editor, The Rum Rebellion

PS: In a brand new report, market expert Vern Gowdie warns of the dangers waiting in a post-COVID-19 world. Plus, he outlines the steps you should take now to protect your wealth. Learn more.

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion