Tips for investing couples
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Question: My spouse and I just tied the knot this year and I’re eager at the prospect of sharing our lives together. One of the things I want to achieve now as a couple is to be financially secure. I would like to invest our funds together. I would like to know of any tips or advice you can offer for couples who are investing? – Solomon P.
Answer:
Since you are asking about investing, I assume that you have funds tucked away already. This can provide as your starter money pot which you can put to work.
If you don’t have funds built up yet, make sure that you establish an emergency fund first. THIS IS A MUST. Ideally, your emergency fund should be able to sustain six months’ equivalent of living expenses. This amount will guarantee that you and your family will be all right if something undesirable happens, such as a accidents, job loss, illnesses etc.
With an emergency fund out of the way, you can take a more active role in investing. Since you are going to invest as a couple, below are steps you should follow:
1. List common goals. Spend an hour or two with your wife and map out financial targets for the family. Some of these goals may be for the medium term (such as a new house) or for the long term (such as a worry-free retirement). If you are planning to have kids, you must also take into account financial goals to meet their educational expenses.
2. Have the same opinion on a time horizon for investing. Based on your goals, you can set a time frame to achieve them. With a concrete goal and a specified time frame, you are more likely to achieve your goal. For instance, you can say that you’d like to have your dream home in 10 years. You can then prioritize saving for the building expenses of your house, or saving for the down payment of a house and lot purchase in the next ten years.For your nest egg for retirement, start saving as early as now so you won’t have to catch up and put in big amounts later in life. Compound interest will make your money increase over time.
It may be useful to discuss with a financial planner together to plan an investment strategy considering your goals, time horizon for investing, and your investment personality.
3. Be sincere about your individual assets and liabilities. By clearing this up early on, you will keep yourself from anxiety and potential disagreements later on.
4. Commit to talk about investment selections before arriving at a decision. Being the head of the family does not mean that your wife cannot share her own ideas in investment decisions. Make investing a mutual activity and settle on on your options together.
5. Get to know each other’s willingness to take risks. In investing, there is always a certain level of danger. Investments with lesser risk, such as time deposits and money market instruments, may be good for people who are old-fashioned and are cautious of risking their money. Investments with higher risk, such as stocks or equities and real estate are well-suited with those who are more aggressive. There is a middle ground, investments like bonds and bond mutual funds or bond unit investment trust funds, for instance, for those who are prepared to take just a slight more risk in the anticipation of earning a profit, but are hesitant to go “all the way” in investing.
Find out at what level of risk you and your wife are comfortable with. Take investments suitable for that level. In case you differ in your appetite for risk, find a common ground.
6. Organize the number of investment accounts. Don’t swell out your investments much among multiple banks, brokers, or financial institutions as it will take time to keep track of everything. Keep things simple!
7. Analyze your investment portfolio on a regular basis. Evaluate your investment’s performance against your financial targets. Fine-tune your approach if needed.
8. Store vital papers safe. Have your documents kept in a safety deposit box in a bank or in a well-protected safe at home. Keep copies in a classified file which you and your partner can only reach. Let each other know where vital docs are so these can be effortlessly retrieved in case of an urgent situation or upon the unfortunate death of any of you.
I hope you find these guidelines useful. I hope that you will be successful in the future!
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