Investing with your spouse or partner: how to get started


Navigating your own financial life and investing to achieve your personal goals can sometimes be difficult. Add another person like a spouse or partner to the equation and it can seem downright difficult. But to foster a successful marriage or partnership, you’ll need to work together to achieve your financial goals. The decision to combine checking accounts or brokerage accounts may seem straightforward, but there are a few things to watch out for.

Your financial journey together begins with a discussion of your financial goals

The first thing you and your partner will want to do as you begin your financial journey together is talk about your short and long term financial goals. Do you plan to make a major purchase in the next few years such as a car or a house? Longer-term goals could focus on retirement or whether you are planning to have children and, if so, how many?

It can be difficult to discuss these goals, but it’s important to make sure that you and your partner are aligned with how you view your financial life. Small differences such as slightly different spending habits can be managed, but when it comes to big decisions, you’ll want to be on the same page.

You might even find that talking about your finances helps bring your relationship to a more fulfilling place. TD Bank found in its Love and Money 2020 survey that 18% of couples admitted they didn’t talk enough about money, and 13% said they wished they’d talked about it sooner.

Determine an investment strategy with your partner

Once you identify your financial goals, you’ll be in a better position to start investing to achieve those goals. But then again, you and your partner will need to discuss your perspective on investing to make sure you’re aligned, especially when it comes to weighing the risk versus the reward.

Some people have a very high tolerance for risk and are ready to make aggressive investments in the stock market or even use options contracts. Others are more risk averse and any possibility of losing money makes them squirm. Discuss your risk tolerance with your partner and focus on matching your investments with your financial goals. A more aggressive approach might make sense for distant goals like retirement or planning your child’s education, but these wouldn’t work for more immediate goals like a down payment on a house.

If you and your partner both work full-time, make sure you take advantage of employer-sponsored pension plans and contribute at least enough to receive any compensation offered by the plan. You can also consider opening a Traditional or Roth IRA as an additional way to save for retirement.

Decisions about children tend to have a major impact on a couple’s financial life. Whether it is to have them, how much to have, and how to plan their studies are questions that many couples face. According to a 2020 US Department of Agriculture report, parents can expect to spend $ 233,610 raising a child until the age of 17. The amount is even higher if the expected inflation is taken into account and also does not include the cost of university studies. Raising children brings great joy to many parents, but you will also want to understand how children will impact your finances.

Couples who don’t have children face very different financial situations, especially if you and your partner are both working. So-called “DINK” couples (double income, no children) can afford more vacations or even consider early retirement if you are able to save enough during your working years.

Creating a brokerage account: joint accounts vs separate accounts

Once you have discussed your investment goals and strategies with your partner, you will need to open a brokerage account to invest outside of your occupational pension plan. Couples should carefully consider whether to create a joint account or two separate accounts. Make sure you understand your partner’s full financial situation before accepting a joint account.

Many online brokers such as Charles Schwab, E-Trade, and Fidelity offer a number of different account options, but there are some important factors to consider before opening an account.

Advantages of a joint account:

  • You and your partner will have full control over the account, allowing you each to make deposits, withdrawals and investment decisions.
  • If you choose a co-owners account with rights of survivorship, the account will be fully transferred to your partner in the event of death.
  • By combining your assets into one account, you can receive investment advice or advice that you would not have accessed on your own, while potentially saving on fees.
  • It will likely be easier to manage a joint account than it is to keep track of several separate accounts, especially when trying to understand your overall financial situation.

Disadvantages of the joint account:

  • You both have full control of the account. This means that if things go wrong during the course of your relationship, your partner could sell everything and make withdrawals without your permission.
  • You will need to decide how the trading and investing decisions will be made together. Do you both have to accept an investment before taking action? How will you manage your different risk appetites?
  • If you want your share of the account to revert to your heirs after your death, you will need to sign up for a joint tenants account to prevent your partner from automatically inheriting your share of the account. This type of account allows two or more people to own a set percentage of the account without the other parties automatically acquiring an owner’s share upon their death.
  • A joint account will require more coordination with your partner than a separate account. You will need to communicate on contributions and withdrawals as well as on investment decisions and many other matters.
  • Creditors might target a joint account if you or your partner is in debt.

If you and your partner have different risk appetites, it may make more sense to maintain individual accounts and work with a financial advisor to understand the role your separate accounts will play in your overall financial situation. As long as you expect to achieve your goals, it doesn’t matter if one person is more risk averse than the other.

At the end of the line

Communicate, communicate, communicate. Understanding your partner’s financial situation and developing financial goals together can only happen if you are comfortable discussing finances honestly. You are likely to have differences with your partner in terms of financial goals or risk tolerance. But sharing these differences can help you build a comprehensive financial plan that will get you both where you want to be, both short and long term.

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