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You’re conservative, they’re risky: How to invest together

June 10, 2020 • 5 min read

What we'll cover

  • How to set joint investing goals and strategies  

  • How to navigate your differing risk tolerance 

  • How to invest in the future of your relationship 

Money plays a significant role in many stages of relationships, from date one to planning a wedding. Once you’re well beyond the who’s going to pay dinner-date-wallet-dance phase and possibly married or planning on it in the future, it may be time to step into a new frontier of financial conversations: investing together.

Whether you’re building a family or planning your retirement, conversations about money are crucial. As you grow as a couple, you want to explore investing with your significant other.

But if approaching this topic is tough or your investment styles sway in different directions, don’t panic. Try these tips for talking about investing and building a strategy that works for you and your significant other.

1. Be #couplegoals by setting investing goals.

When you discuss finances with your partner, try not to think of it as a chore — but an opportunity to get closer and build a strong backbone for your future. While it may be stressful, it’s important to be candid and honest in order to have productive conversations. And don’t forget: You’re on the same team.

A good place to start is to outline your investment goals. Whether you have been investing for a while or are new to the market, outlining what you aim to achieve through your investments is a critical step to financial success.

If you don’t know where to begin, try thinking first of your short-term goals, or those you hope to achieve in the next one, five, or 10 years . Maybe your number one priority in the beginning is to build an emergency fund together. That way, you can both feel secure about your finances should a financial emergency arise, like a surprise visit to the vet for your dog or a new transmission for your car. Then, your next goal could be upgrading your kitchen or moving into a larger home in the next few years.

Once you’ve defined your short-term goals , you can discuss what you’d like to achieve together in the long term. These goals may include having children and saving for their future or something fun — like building a vacation home for your family.

By determining joint goals with your significant other (whether it’s accumulating enough for a home down payment, saving for your children’s education, or building a robust retirement fund), you can be sure you’re on the same page. Remember, it’s okay to have differing or additional personal investment goals. The important thing is that you’re open and communicative about them — and that you’re reasonably aligned on major lifestyle goals, like retirement.

Investment goals: Yours, mine and ours. A Venn Diagram with your goals, your partner’s goals and shared goals in the middle. Under your goals: Updated your master bath, Become a certified yoga instructor, Donate to your alma mater. Under your partner’s goals: Pay off student loans, Add to their guitar collection, Upgrade the family car. Under shared goals: Put your kids through college without loans, Pay off your mortgage early, Visit all 7 continents, Retire near the beach.

2. Build a joint strategy you can stick to.

After defining collective and individual goals, you can create concrete plans to pursue them. You’ll want to determine how much money you need to hit your objectives, as well as figure out your investment timelines. If you’ve already separated your goals by short-term and long-term, you’ll have a better idea of when you’d like to achieve everything.

These factors can help you decide how much money you’ll each need to allocate toward your goals — whether it’s on a biweekly, monthly, or annual basis, plus how much market risk you’re willing and able to take on.

For instance: If you aim to have $100,000 socked away in 18 years for your child’s college fund, you’ll likely want to create a unique investment strategy — whether it’s different monthly allocations or higher-risk investments — than aiming to sock away $30,000 in five years to buy a home.

When discussing your investment strategies for various goals, you might consider opening a joint investment account. While retirement accounts are for individuals only, a joint investment account may make sense for things like saving for your kids, purchasing a home, or starting that business you’ve been dreaming of together.

If you and your significant other are unsure about the best path to take when investing to reach numerous goals, speak to a financial advisor. Having an informed outside opinion may help you both feel more confident about your investment strategy.

Once you have an investment strategy that you’re both comfortable with, make sure to document it. This can help you stay accountable, provide a point of reference, and remind you of your goals, if you need investment inspiration. Plus, you can come back to your strategy and make adjustments over time if your financial situations change.

3. Navigate differing risk tolerances.

When it comes to investing, everyone’s risk tolerance is different, so it’s quite possible that you will prefer a more conservative or aggressive approach than your partner. That’s okay, but it may mean taking extra time to compromise or figure out individual investment strategies.

The important part is being honest about your risk tolerance and finding investments that you’re comfortable with. You don’t want to find yourself in a situation where your holdings make you toss and turn with stress night after night. This can lead to emotional investing and hurt your overall returns.

If you favor a more conservative investment strategy and your partner is more aggressive (or vice-versa), you might think of it as an opportunity to balance each other’s investments. One partner can focus on keeping holdings secure and stable, especially during market volatility, while the other puts their focus on maximizing growth.

Think of it as an extension of your portfolio diversification. While you may hold a portfolio of primarily income-producing securities (like bonds), your significant other may invest more heavily in blue chip stocks or index-tracking exchange-traded funds (ETFs).

Keep in mind, you and your significant other are working together to achieve your financial goals — and like many aspects of a relationship, a dose of compromise is often the key.

Conservative vs. aggressive asset allocation. You and your partner both invest in individual retirement accounts, but you have different risk tolerances. Here’s how your asset allocation may differ. Conservative or preservation of capital approach: 70% fixed-income securities, 20% equities, 10% cash vs. Aggressive or growth-focused approach: 70% equities, 25% fixed-income securities, 5% cash.

Invest in your relationship’s future.

While you and your significant other have come a long way since then, talking about money might stir up some nerves similar to those first-date jitters. Fortunately, these conversations are an exciting step to building your financial future together.

When you’re ready to dive into the market, start by defining your joint investment goals, mapping out a timeline, and forming a strategy that accommodates both of your risk tolerances — and you can be on your way to a promising financial future.

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