Two Chefs in the Investing Kitchen | Dickinson Investment Advisors

For couples who want to make the most of their investment dollars, investing? together can be a smart strategy. But if both partners don?t agree on the same? goals and methods of investing, pooling your money can be a recipe for a? financial ? and relationship ? disaster.

If you are committed to investing as a couple, here are five steps to make it? work.

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Understand Each Other?s Goals and Fears

Before launching into investing together, spend some time learning about your? spouse?s views and goals regarding finances.

Make sure you understand your spouse?s financial history and experience? before you invest together.? It is?very common for one spouse to? want to?save a lot?while the other wants to spend heavily.? It is also common for spouses to have different levels of aversion to risk.

To find a common ground, couples need to know as much as possible about each? other?s investing styles and tendencies, their successes and failures and how? they dealt with them, along with the lessons they learned from parents and the? sources of their wealth.

Commit to Working Together

If one spouse takes the lead in investing matters,?he/she may be the person who? is most knowledgeable about a particular type of investment or the one who has? more time to monitor the investment.? Couples need to determine? who will be the main contact person, and who will analyze information regarding? the investment opportunities.? But if possible, both people should be analyzing opportunities and discussing? investments together.

It is not uncommon for one? party to take control of financial decision-making in a relationship, but doing? things together will always result in better outcomes.? More informed couples? make for better relationships, and decision-making and brainstorming together makes? for better partnerships.

Develop a Strategy Together

Once you understand your spouse?s money views and habits, and once you?re? committed to investing together, develop a workable investment strategy.? Start? by specifying the purpose of accumulating assets. ?The purpose may be to purchase? a home or second home, fund a child?s education, start a business or retire.?? Next, estimate the amount of money needed in today?s dollars to meet the goal,? and don?t forget to factor in investment variables such as available capital,? savings and time available, inflation, tax and return rates.

Your goals will determine how much you and your spouse will invest. For instance, when do you want to retire? Do you plan to? pay for college expenses?

Since everybody has different goals, it is important for a couple to talk? through each of their personal perspectives and assumptions about their future? so they are planning in the same direction.

Establish a System for Resolving Disputes

When two people are investing together, they?re bound to clash at times.? Before you and your spouse come to a deadlock, devise a method for working? through such potentialities.? One author recommends? spending half of the available cash on each person?s preferred investment, when? contention surrounds a decision about a new investment.

Another solution is to quantify investment variables such as capital, savings? and time available, inflation, tax and return rates as well as their impact on? achieving your goals.? If you can quantify these variables, that process removes? the emotion from an inherently emotional decision-making process.? It can be beneficial for couples to work with a certified financial planner? who can assist in clarifying goals and providing alternatives both can live? with.

Stay Focused on Goals

Keep in mind that investing together is a long-term process and stay focused? on your end goals rather than on individual investments.

There are?many, many?investment products available, but frequently? just one shot to achieve a goal.? Developing a well-thought-out? investment plan and strategy is far more important than selecting an investment? vehicle, yet most couples typically spend their time fretting over which stock, bond,? mutual fund or variable annuity to purchase.

In addition to focusing on your investment goals, stay focused on your? commitment to invest together as a couple.? Find time to sit? down together at least a few times a year to monitor and discuss how your plan? is working, and determine whether you need to make any adjustments due to? changes in your lives.

In summary, communicate often.? The more ownership and open communication a couple has over their? finances, the less they are apt to panic when something significant happens to? them personally or within the markets.

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[This article is adapted from "Five Steps to Effective Investing as a Couple" by Nancy Mann Jackson, published in Fox Business on July 12, 2012.]

Source: http://www.dickinsoninvestments.com/two-chefs-in-the-investing-kitchen/?utm_source=rss&utm_medium=rss&utm_campaign=two-chefs-in-the-investing-kitchen

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