There are milestones to which most couples look forward and for which they prepare — such as getting married — but the same can’t always be said for making joint investments. What you do with your money is an important and impactful consideration to make; one that requires forethought to avoid miscommunications and other potentially relationship-damaging issues down the road. So why not start out on the right foot with these first-time investing tips for couples?
Lay everything on the table
Investing is exciting, but without the money to cover it, you could inadvertently throw yourself into a major debt problem. First, look at your credit scores, your bills, and your current budget. Then determine how much disposable income you can reasonably part with without compromising your main financial responsibilities. Also review how much you’ve got in your emergency fund in case things go awry. Next, discuss how much each of your separately want to invest. Don’t just go along with your partner because you think they know more than you, or are putting on the pressure because they have more money to invest than you do.
Take a crash course
You may not know much about investing — and that’s OK. Not every first-time investor has a business degree or a financial advisor. However, it’s important to do your due diligence.
“Spend time learning about the investments together and discuss the goals and investment strategy, but don’t force it onto your partner if they aren’t ready,” adds Shawn Beyer, owner of Breyer Home Buyers in Atlanta. He adds, “Investments are risky, and everyone’s risk tolerance is different.”
Recognize your strengths
When making your first investment together, assess each other’s risk tolerance and investing experience and play to each other’s strengths.
“I’ve worked with couples where one spouse was a seasoned investor and the other spouse was just getting started,” says Jon Dulin, who shares personal finance tips at MoneySmartGuides. “It’s important for the spouse with knowledge to take things a little slower as their partner gets comfortable investing. For example, when my wife and I started investing together, I had to dial back the risk. My wife grew up without money and liked having it in a bank account. To her, investing was too risky. I agreed to have a less risky portfolio in exchange for her educating herself about investing. She did, and as the years passed we have increased our stock allocation.”
Keep communications open
One of the biggest missteps of first-time partner-investors is lack of communication. It’s crucial to keep an open and honest dialogue about your investments and, moreover, your finances in general.
“Make a deal that all decisions related to your investment, including adding or removing any funds, will be discussed and agreed upon beforehand,” advises consumer savings expert Jill Caponera. “Fighting over money can get ugly fast, so making sure you’re in agreement about your overall financial goals, and discussing these goals often is key. If you need help reaching a middle ground, consult with a financial advisor or a knowledgeable family member or friend for advice.”
Ensure you’re on the same page
When deciding on investment options, couples should have a common goal. Investments can only prosper and pay off if you’re both in it to win it. If you’re not on the same page, your efforts may be derailed — which could tank the investment. And money matters can get costly if they lead to a separation or divorce.
Keep an emergency fund
Investing is exciting, and it’s tempting to take that big risk and empty your savings on a hot tip — but the only thing that’s good for is going into the poor house. Smart, money-conscious couples will save specifically for an investment while minding their ability to not only cover their current bills on their existing budget, but also continue to put away cash for emergencies. Many investments take time to payoff. If you can’t afford to invest going bankrupt, then you need to reevaluate your priorities — as well as how you can make your dreams come true without losing your ass.
Take the long view
Despite booms and busts, remember that over the last 100 years, the stock market has historically performed better than bonds and real estate, and certainly better than cash sitting in a bank account.
Adds Avi Lele, CEO of Stockpile, “A thousand dollars invested in 1900 would have been worth $20 million in 1999. A 10-plus-year time horizon can help you keep perspective and weather the ups and downs of the market.”
Monitor your investments
Have you invested in individual companies? If you have, follow any news and the quarterly and annual reports of these companies, which are all available online.
“You can also listen in on the earnings calls of these companies and hear how management teams respond to some of the hard-hitting questions asked by professional investors,” Lele says. “You’ll learn a lot in the process. Most importantly, it will also hone your investment skills and help you in your future investment decisions.”
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