Busey Bank | Investing as a Couple: Getting to Yes

In a perfect world, both halves of a couple share the same investment goals and agree on the best way to try to reach them. It’s no secret, however, that financial disputes can cause friction in a relationship. One partner may be risk averse while the other is comfortable investing more aggressively—if so, how can you bridge this gap?

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—or at least reading from the same book—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.

In some cases, you may have the same goals, but put a different priority on each one or have different time frames for a specific goal. For example, your significant other may want to retire as soon as possible, while you're anxious to accept a new job that means advancement in your career, even if it means staying put or moving later. Coming to a general agreement on what your priorities are and roughly when you hope to achieve each one can greatly simplify the process of deciding how to invest.

Create a clear game plan

Making sure both of you know how and why your money is invested a certain way can help minimize discord if investment choices don't work out as anticipated. Second-guessing rarely improves any relationship. Making sure that both partners understand from the beginning why an investment was chosen, as well as its risks and potential rewards, may help moderate the impulse to say "I told you so" later.

Investing doesn't have to be an either/or situation. A diversified portfolio should have a place for both conservative and more aggressive investments. Though diversification and asset allocation can't guarantee a profit or protect against a loss, they are ways to manage the types and level of risk you face.

It takes two

Aside from attempting to minimize marital strife, there's another good reason to make sure both of you understand how your money is invested and why. 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 partner might have to make decisions at a very vulnerable time—decisions that could have long-term consequences.

If you're the less-experienced investor, take the responsibility for making sure you have at least a basic understanding of how your resources are invested. If you're suddenly the one responsible for all decisions, you should at least know enough to protect yourself from fraud and/or work effectively with a financial professional to help manage your money.

Tips for the more conservative investor

• If you're unfamiliar with a specific investment, research it. Though past performance is no 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 significant other is proposing but still push you out of your comfort zone and might represent a compromise position. Or you could compromise by making a small investment, watching for an agreed-upon length of time to see how it performs, and then deciding whether to invest more.
• Finally, there may be ways to offset, reduce or manage the risk involved in a particular investment. Some investments benefit from circumstances that hurt others; for example, a natural disaster that cuts the profits of insurance companies could be beneficial for companies that are hired to rebuild in that area. Many investors try to hedge the risks involved in one investment by purchasing another with different risks.

Tips for the more aggressive investor

• Listen respectfully to your partner’s concerns. Additional information may increase their comfort level, but you won't know what's needed if you automatically dismiss any objections. If you don't have the patience to educate them, a third party who isn't emotionally involved might be better at explaining.
• Concealing the potential pitfalls of an investment about which you're enthusiastic could make future joint decisions more difficult if your credibility suffers because of a loss. As with most marital issues, transparency and trust are key.
• A significant other who is more cautious than you may help you remember to assess the risks involved.
• Remember that you can make changes in your portfolio gradually. You might be able to help your partner get more comfortable with taking on additional risk by spreading the investment out over time rather than investing a lump sum.

What if you still can't agree?

You could 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.

Another approach is to use separate asset allocations to balance competing interests. If both of you have workplace retirement plans, the risk taker could invest the larger portion of their plan in an aggressive choice and put a smaller portion in an option with which could make the more conservator investor comfortable. The conservative partner could invest the bulk of their money in a relatively conservative choice and put a smaller piece in a more aggressive selection on which both of you agree.

You could also consider dividing responsibility for specific goals. For example, the more conservative person could be responsible for the money that's being saved for a house down payment in five years. The other partner could take charge of longer-term goals that may benefit from taking greater risk in pursuit of potentially higher returns. You also could consider setting a predetermined limit on how much the risk taker can put into riskier investments.

Finally, a neutral third party with some expertise and a dispassionate view of the situation may be able to help you and your spouse work through differences. Busey Wealth Management’s experienced team is here help by providing you with dependable advice and tailored solutions. Learn more by visiting busey.com/wealth-management.

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.

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