Dating & Investing

Dating and investing are pretty much the same

Investing your money may seem complex and intimidating, especially if you think you’ve never done it before. But it’s not a new concept that you need to learn. You may not know it but in love, you’re investing your feelings too. Because it’s the season of love and romance, we will show you that unlike your previous relationships, it’s never complicated—if you can get a whopping return on your investments in the market for relationships, you’ll likely do the same when investing your hard-earned money. The truth is: investing and dating revolve on similar concepts. They are pretty much the same, and here’s why:

You have to think about your risk preferences first.

Love, no matter how rewarding it can be, can still spawn misery. The same goes with investing your money. Deciding to start either dating or investing your money involves the same thing—accepting the risk of loss. You have to think first whether you can take this risk. A human’s feelings can be fickle, and we know that past performance is no guarantee of future success. Especially in investing, you can risk losing some, if not all, of your capital. But like love, you can always start again. Like they say, when one door closes, another one opens. *wink*

But even after accepting the risk of loss, you also have to deal with the level of risk you are willing to take. In love, it’s like deciding whether to commit to a relationship or not. Being in a relationship generally offers security. You know whom you’re going home with at the end of the night, and you’ve always got your constant, a special someone you can rely on when things go against your way. Here, you get a steady, low-risk investment—the same with putting your cash in your savings account or buying bonds. But sometimes, people prefer volatility, with uncertain periods of drought ending with big one-time payoffs that only lasts for one night. If that’s the case, then it will be like investing in equities. Either way, understanding your needs and capabilities helps determine the risks you are willing to take, be it in love or investing your money.

Human emotion is one of the biggest reasons for failure in both domains

In economics, there’s this sunk cost fallacy which describes our tendency to continue an endeavor if we have already invested time, effort, or money into it, whether or not the current costs outweigh the benefits. It’s when we say, “I already started it, might as well keep going!”

In love and dating, we usually commit this bias. When deciding whether to stay with or keep dating a person, we usually take into account in our decisions the time, effort or money we put into it. Or, we often dwell on the great times we’ve had with them even when we know it’s toxic or not good for us in the long term. This is a reminder that it’s never “a waste” to end a relationship because you once were happy. Rather, we should think about how many good times there are to come and the possibility that they could be had elsewhere.

In investing, it’s the same—we ignore sunk costs, or the costs we cannot recover anymore, and think about opportunity costs. Why hold on to an underperforming asset, when you can always find another investment vehicle that promises greater returns?

If they seem too good to be true, they probably are

Has anyone who seems to perfectly fit your description of a dream guy/girl, ever come up to you out of nowhere and asked you out for dinner? The chances are that this hasn’t happened to you, as someone else will probably have already approached or chased that person first. In the market where many parties have access to the same information about the “assets” being traded, good deals don’t stick around for long. It’s the same in dating and investing—we have to watch out for scammers and fraudsters. If someone seems to perfect, they are probably hiding something. If a mysterious investment package promises you a 30% monthly return for life, beware, because maybe you haven’t done your research.