Losing your heart without losing your investment

Shakespeare said it: “The course of true love never did run smooth.”

“But Bill never met a couple who had merged credit profiles without checking each other’s scores, bought a house in both names during the honeymoon phase and discovered eighteen months later, that one had a gambling habit and the other a business partner cooking the books,” says Tim Chadwick, CEO of Chadwicks.

According to Statistics South Africa, nearly half of all divorces take place within the first nine years of marriage, with more than a quarter occurring between years five and nine.

Atlas Finance points out that these are often the years when financial pressures are at their peak: raising children, paying off debt, and striving to build stability. Money is consistently cited as one of the leading sources of relationship stress.

Open discussions about finances, income, debt, spending habits and shared goals are key ways to safeguard a marriage, says Thabang Pitso, operations executive at Atlas Finance. “Love might be unconditional, but credit agreements aren’t,” he says.

Chadwick notes that love does not conquer compound interest on five hidden credit cards. “Love is the only transaction where people actively refuse due diligence. No risk assessment. No reading the fine print. Just a ring, hormones and blind faith,” he adds.

The blind faith tax

Love does not exist in a vacuum – it exists on a balance sheet, notes Chadwick.

Holistic healer Anna-Maria Vivier experienced this firsthand. “The most expensive mistake that I made, when falling in love, was giving the ‘man of my dreams’ free access to my money. Don’t let ‘love’ make you part with your hard-earned money,” she cautions.

One partner managing all finances while the other remains blissfully ignorant is like “driving a skedonk on the N1 without insurance,” Chadwick adds.

The reality is that, as human beings, we cannot always rely on ourselves to act rationally, notes Bastian Teichgreeber, chief investment officer at Prescient Investment Management.

Panic stations

Kim Potgieter, Certified Financial Planner and MD of Chartered Wealth Solutions, says the biggest financial risk in divorce is not losing half your assets but turning a shared lifetime of work into a lose-lose outcome.

“I have seen divorces where there was enough wealth to support two independent futures, yet the choices made during the divorce dismantled what had been built.

"Decisions made under emotional pressure, prolonged conflict, rushed agreements, or poorly structured settlements erode wealth far more effectively than markets ever could,” says Potgieter.

Panic, pans, and pension funds

Dimpho Sekhaolelo, quantitative analyst at Prescient Investment Management, notes that emotional selling rarely proves beneficial. “Panic driven decisions lock in losses and increase the risk of missing the eventual recovery. Fear tends to cloud judgment, causing investors to exit long term investments at precisely the wrong time.”

Frequent buying and selling results in higher transaction costs. “These costs compound over time and can materially erode returns, particularly when combined with selling assets at depressed prices,” says Sekhaolelo.

Should a relationship fall apart, Caroline Naylor-Renn, COO at 10X Investments, warns that while it might be tempting to access two-pot funds to facilitate a divorce, people should keep as much cash in their retirement accounts as possible.

“If you do decide to withdraw from your pension, remember that you are reducing your fund value and the opportunity for growth,” says Naylor-Renn. People can’t rely on being able to put money back – later might never come and the amount available for retirement will have decreased, she adds.

One expensive mistake is operating in flight mode. “Flight mode shows up when the need to exit the relationship overrides everything else. What began as an emotional exit becomes a long-term financial compromise,” Potgieter explains.

In fight mode, divorce becomes adversarial. “The focus shifts away from reaching a fair or workable settlement and towards ensuring the other person loses,” says Potgieter. She adds that the outcome is higher legal costs and eroded assets, leaving less to fund either person’s future. This is why she advocates employing qualified mediators.

When exiting a relationship, people fight over Le Creuset pans while ignoring pension fund valuations, explains Chadwick. People keep houses without calculating single income bond repayments and forget to update life insurance beneficiaries.

This means “your ex, the one who took Austin (the dog) and the Nespresso machine, still collects the payout if you step under a bus,” says Chadwick.

Naylor-Renn agrees that it’s important that you keep your provider up to date on your changing circumstances. “Be sure to update your beneficiary nomination form to state who you want your money to go to in the event of your death. No one wants their money to be paid out to their ex-partner from 10 years ago,” she says.

In addition, Naylor-Renn explains that people should “take stock of all the account numbers and passwords to any investments in your name so that you understand your financial position”.

Also check the rules of your investment provider and don’t assume that what is in your fund is solely yours, Naylor-Renn adds.

In addition, it’s important to consider that relying on a single salary means adjusting your lifestyle significantly, Naylor-Renn adds. “The adjustment might not feel pleasant, but you will have to adjust to being financially independent,” she says.

“What 'ou Bill Shakespear never mentioned is that unplanned love often does not just hit a pothole, it runs clean off the road into a catastrophic financial donga,” says Chadwick.

PERSONAL FINANCE