Financial Planning For Living Together (Live-in Relationships)


According to Indian Law, living relationships are legit

Modern live-in couples are upbeat about sharing their expenses equally

Financial planning is not meant for married couples only. Financial planning is important for everyone even when couples are just living together.

According to Indian Law, living relationships are legit. Couples might get children out of wedlock and it is then the couple’s duty to make their child’s future safe which is why proper financial planning is a must to make sure that everything goes on smoothly. People might think live-in couples are not legally bound but they are definitely emotionally and morally bound, they maintain integrity with each other and that’s enough for a relationship to work flawlessly. So the point is that marriage is not the sole factor or a deciding factor that’ll determine whether a live-in couple should or shouldn’t start planning about their finances. Modern live-in couples are upbeat about sharing their expenses equally, much like sharing their lives and living space – so going about it in a planned manner becomes crucial to keep things sorted.

In this blog, we shall look at some very effective ways in which live-in couples can put their money in places from where they can derive profit and can reap benefits in the future.

Planning out investments – what options are feasible

Planning your investments systematically is perhaps the most important part that you need to discuss with your partner. There are many asset classes like stocks, bonds, real estate, precious metals, where you can invest your money to attain a strong financial backup. Each of these investment options has its unique benefits.

  • Precious metals –Investing in precious metals like gold is beneficial because they have a trend of increasing in value even when tough economic times prevail in the market times or say during those periods when inflation is pretty high. You can plan to invest in Gold bonds like “Sovereign Gold Bonds”. These are hassle-free as you and your partner will not need to stock real gold and therefore, there will be no worry of security of the precious metal.

 

  • Stocks –Stocks have an excellent return value and give fast returns but the risk is high so both of you must assess your risk appetite before investing in stocks. Bonds provide secure interest incomes although returns are comparatively lower.

 

  • Real estate –Real estate as an investment option is excellent if you and your partner can be patient for a few years after investing, it has been noticed that real estate has a very high return value and with time they can be one of the best options for investment in the market.

 

  • Debentures –Debentures are excellent investment options too and they most often provide higher interest income than bank interests. These are issued by companies and they act basically as loans taken by the company from you, so in lieu of the loan (that you provide the company), they offer you an interest.

 

  • Higher gains – It is a tried and tested fact that mutual funds give better returns. As per the analysis of the Indian market, it has been revealed that in the case today in Mumbai, you want to invest 50 lakhs in real estate after say 10 years you will receive 15% return on the capital that you have invested which means you will get ₹2,02,27,789 approx. whereas if you invest the same amount in a mutual fund, you can at least benefit 18.03% which means you will get ₹2,62,35,786  that too in just 5 years. So you can already understand how much you are gaining.
  • Artwork and other commodities –Another great option for investment is art and collectibles, these are especially beneficial if you or your partner have a good understanding of art and know the value that these investments can fetch.
  • Cash – The last thing that you must hold as an investment option is cash; this is needed for meeting day-to-day expenses and making frequent purchases.

Overall, understanding the available investment options, discussing with your partner and being transparent will strengthen your relationship as well. So, this can be a very healthy way to get started with financial planning and fund allocation.

Getting insured

Live-in couples should also invest in life insurances and health insurances.

Life insurances, especially term life insurances are very beneficial in the unfortunate event that you or your partner dies. Term life insurances generally have very high returns for low premiums because there is no maturity value associated with it when the term of the insurance gets over. A life insurance policy that comes with a maturity value associated with them generally offers lesser benefits compared to term life insurances.

In case of a medical emergency, the mediclaim will help whereas if you both have a child then it is better to make your child the beneficiary of your life insurance because life insurance generally requires you to make your spouse the nominee or someone who has blood-relation with you. Life insurance is helpful for your child (if you have any with your live-in partner) and not your live-in partner as such because you both aren’t married. Since both of you are working individuals, both can invest in life insurance to make sure that even after you are gone, your child’s future is safe and sound.

Balanced investments and returns

You both can discuss and open a PPF account for your child where both of you can contribute small amounts for the future of the child. If you both don’t have a child then it is always better to keep the investments separate thinking about all the practical possibilities that the future might hold. People think live-in partners tend to separate quite often. You can also invest in a balanced fund which is a hybrid kind of mutual fund which invests for income and capital appreciations. If you are looking for growth by eclipsing the inflation and want immediate income then balanced funds can be very helpful. Balanced funds are invested in all kinds of assets including stocks, bonds. that have medium to low risks.

Plan to pay off debts together

As mentioned before, live-in couples today want to share all their expenses, which is perhaps the fairest thing to do. And that applies for repaying loans too.

If you have taken a loan together, then make sure to pay off the debt together. Talk to your partner freely and maintain transparency all the while. Financial problems can always show up but you can tackle them smoothly by discussing everything in details. Even though taking a joint home loan might not be technically feasible at this point in India, you can plan to source the funds by equal means. Even if both of your names do not appear on the official papers, you can plan out to share the load of EMIs. After all sharing is caring!

And if you see that procuring a home loan will be too much expensive, then it is better to not go for it at all; instead, opt for a rented house and share your rent equally.

Mutual funds are beneficial

In case you both have a child together you have to plan about his or her future, education. So, it is better to invest in mutual funds meant to secure the future of children. You are the child’s guardian and you can assist him or her to invest in mutual funds plus you can handle the mutual fund investment till your child becomes mature enough and reaches the required age to handle the investment on his or her own. These mutual funds too are high performing and you can get good returns. In case of some mutual funds for kids, the risk involved is pretty less.

You have your financial goals right?

So to meet the goals you and your partner can invest in mutual funds. This way you both will be able to keep a check on your expenses plus remember both of you are doing something constructive. Categorize your goals as short, medium and long term goals. A great financial plan based on goals can enable both of you to enjoy financial freedom. Keep your finances separate because you don’t want to face any sort of untoward situation in the future. As stated earlier live-in relationships are based on emotional aspects and law has got nothing to do with these kinds of relationships so, it is always better to keep risks at bay.

Final words

Summing up in very simple words, live-in couples should always remember to cut their coat according to the cloth to avoid misunderstandings with their partner.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh / Enquire