Investing as a couple: Getting to a compromise

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In a perfect world, both halves of a couple would share the same investment goals and agree on the best way to reach them. In reality, statistics show that disagreements about money are one of the key factors that lead couples to seek marriage counseling. You may be risk averse, while your spouse may be comfortable investing more aggressively. How do you bridge that gap?

First, define your goals
Making good investment decisions is difficult if you don’t know what you’re investing for. Make sure you’re on the same page when it comes to financial goal-setting. Knowing where you’re headed is the first step toward developing a road map for dealing jointly with investments.

Make sure the game plan is clear
Making sure both spouses know how and why their money is invested in a certain way can help minimize marital issues if investment decisions don’t work out as anticipated. A diversified portfolio should have a place for both conservative and more aggressive investments.

It takes two
If only one person makes all the decisions — even if that person is the more experienced investor — what if something were to happen to that individual? The other spouse may need to make decisions at a very vulnerable time. If you’re the less experienced investor, make sure you have at least a basic understanding of how your resources are invested.

If you’re the more conservative investor:

  • If you’re unfamiliar with a specific investment, research it. Though past performance is not a guarantee of future returns, understanding how an investment typically has behaved in the past or how it compares to other investment possibilities could give you a better perspective on why your spouse is interested in it.
  • Consider whether there are investments that are less aggressive than what your spouse is proposing, but still push you out of your comfort zone. Compromise.

If you’re the more aggressive investor:

  • Listen to your spouse’s concerns. Additional information may increase a spouse’s comfort level, but you won’t know what’s needed if you automatically dismiss any objections.
  • Concealing the potential pitfalls of an investment you’re interested in could make future joint decisions more difficult. Particularly if your credibility suffers because of a loss.
  • Your more conservative spouse may help remind you to assess the risks involved, or keep trading costs down by reducing the churn in your portfolio.
  • Keep in mind that you can make changes in your portfolio gradually. You may be able to help your spouse get more comfortable with taking on additional risk by spreading the investment out over time.

What if you still can’t agree?
Consider investing a certain percentage of your combined resources aggressively, an equal percentage conservatively, and a third percentage in a middle-ground choice. This would give each partner equal input and control of the decision-making process, even if one has a larger balance in his or her individual account.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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