Dear Plenty Community,

It’s been one of those weeks that reminds me of the Warren Buffet quote: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” 

The market plummeted after the soft jobs report and news that Japan was raising interest rates for the first time in almost 15 years. News outlets started reporting fears of a ‘recession’ and of course, that began to spread. Just as quickly, the market started bouncing back leaving consumers wondering… are we heading towards a recession? Or not? And whether we are or aren’t, this week’s blog post explores a recession-proof relationship dynamic:

When love accidentally creates unintended dependence.

On last week’s podcast, we welcomed behavioral psychologist Dan Ariely. He’s dedicated his life to writing about the predictably irrational ways people approach money, and what it takes to encourage better financial decisions. Listen in on his conversation about the psychology-backed way couples should manage money together (especially those with different incomes). 

As always, if you have ideas or questions you’d like us to answer, write in to [email protected] - I’d love to hear from you.

Cheers,

Emily

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For those that are new: 2 x 1 x 1 means

• 2 news moments in business/finance to keep you in the loop

• 1 deep dive to help you and your partner with money

• 1 tidbit for your relationship

A soft jobs report may finally catalyze lower interest rates (and why)

If you’re left wondering how jobs figures impact interest rates, you’ve come to the right place. The jobs reports show that job growth is slowing and unemployment rates are increasing. When interest rates are high, it means that it’s more expensive to borrow money. For consumers, it means you’re less likely to buy a house or a car because interest will cost more. You’re more likely to feel like things are expensive, then spend less money (which means companies make less). On top of that, for companies, it means you’re less likely to borrow money to invest into growing the company (and inevitably, hiring more people).

This system of interest rates and employment is complicated; it’s not like you can turn down interest rates and jobs pump out. Instead, you can think of it more like taking care of that houseplant… does it need a bigger pot? More air? Fresh soil? Fertilizer? More water? You can take your best guess but it’s not always certain what happens. The Federal Reserve will ultimately be left with the question: do we need to lower interest rates to encourage economic growth? Is inflation under control enough?

How Japan tanked the stock market

Japan raised interest rates for the first time in nearly 15 years, leading to a nearly 18% drop in the Japanese index. If you ever needed proof of the interconnected degree of international investing and business, all you need to do is look at the domino impact on the US, London, German, or Hong Kong stock exchanges.

But how do Japanese interest rates impact global markets? Japan has historically had near 0% interest rates. Effectively, free money. This created an opportunity to borrow from Japanese banks at nearly no cost, and then use the borrowed money somewhere else (and potentially even invest it). This is called a ‘carry trade’. For international companies or wealth managers, this was a 'low risk' way to make money. With a higher interest rate, this triggered a rebalancing as investments that used to make sense may not make sense anymore now that the ‘cost’ was higher.

If you are looking to see what the wealthy do at times like this, the more the market moves, the more opportunities there can be for tax-loss harvesting - Plenty makes this investment strategy as easy as putting money in a savings account. Learn more here.

The unintended consequences of love

What if you got married, and your partner said you didn’t need to drive anymore since you don’t like driving. Or cook anymore since you didn’t like cooking. They’re doing it out of love.

Do you think you’d get better or worse?

In this blog post, we explore the unintended consequences when you fully divide and conquer responsibilities around money, and what you can do to break the cycle.

What training killer whales can teach you about relationships

I followed the students to SeaWorld San Diego, where a dolphin trainer introduced me to the least reinforcing syndrome (L.R.S.). When a dolphin does something wrong, the trainer doesn’t respond in any way. He stands still for a few beats, careful not to look at the dolphin, and then returns to work. The idea is that any response, positive or negative, fuels a behavior. If a behavior provokes no response, it typically dies away.

Amy Sutherland spent a year at SeaWorld, watching how trainers taught killer whales, dolphins, and seals to respond to commands. What she didn’t expect, was how much was transferable to humans (we’re all animals anyway, at the end of the day!). Here’s a preview of what she covers in her book, one of my most highly recommended books for couples.

On this week’s episode

In this podcast episode, Dan Ariely talks about the importance of creating a shared financial system and the microdecisions that can strengthen (or weaken) a relationship. “A joint account is a big deal,” he stated. “It’s a commitment to shared goals and responsibilities.” He likened the shift to a long-term commitment to buying a house versus simply renting an apartment. "If you have a daily contract with the landlord, you don't invest in the apartment; you don't fix cracks or hang paintings. But the moment you commit to owning it, your perspective changes." And how setting goals together shifts our mindset to think about the future. "If we make a decision together," he explained, "we are more future-oriented and likely to override those impulses."

Plenty is a wealth platform helping modern couples invest and plan for their future together. We bring the investment strategies and products of the wealthy to the everyday household. Plenty was started by a husband and wife team dedicated to growing together. For more information, visit withplenty.com. If you ever have any feedback or questions, please do reach out to us at [email protected].

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