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Effective Investing as a Couple

February 08, 2019 · < 1

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Effective Investing as a Couple

You know you want to invest your money, and you know your finances are at least partially combined with your significant other’s, but you don’t know how to invest together. Should you simply merge all of your existing accounts into a joint investment account? What should you do if you each have different goals for your future?

No wonder it seems like money is one of the most common reasons for divorce . It can be a source of stress and investing isn’t the only financial decision you’ll have to make as a couple. Long before you get married or buy a house together, you’ll need to make some decisions about how to combine your finances.

But once you’ve tackled the questions of how (and how much) to merge your money, then you should consider what to do with your investments and your long-term financial planning.

The sooner you start investing, individually or together, the sooner you can potentially start accumulating returns (depending on market forces). Some good rules of thumb, whether solo or as a couple: diversify, start small, have long-term goals, and look for low fees.

Now how do you make that work for both of you, to get started investing together? And what other money tips for couples will set you on a healthy path towards your financial goals? Get all your financial info out and get ready to have an open conversation with your partner.

Investing Together

For most couples, the reason they want to invest together is fairly simple: They live together and spend together and are planning a future together, so investing is an obvious next step.

Nine out of 10 couples buying a house, then that might mean having a joint investment account or a joint brokerage account in order to plan for your joint goals. Or it could make sense for you to share some accounts as a couple and to keep some separate.

Related: Examining Male vs. Female Investment Behavior

It can also be practical, in terms of financial returns, to invest together. Combining your money can potentially pay dividends—as you reinvest your larger returns, they accumulate and may go further. Why have two smaller portfolios when you could have one bigger one?

And why use just one person’s investing smarts, when you could use two? Some studies, for example, have found that women tend to be better investors —largely because they tend to trade less (incurring fewer fees) and take a longer, safer view of the market. So combining your skills could work out to both of your advantages.

Some Challenges With a Joint Investment Account

It’s common for different people to have different goals and strategies with their money—even people who are in a relationship. However, the danger comes when you don’t communicate about your different goals or your shared finances.

A great first step is to understand your joint finances. Understanding your joint finances means making sure both of you know the passwords to all of your joint accounts, how much is in those accounts, even where the checkbook is.

You also want to have a clear understanding of how much debt you each have and what your plan is to tackle it together: Will you pay off grad school or credit cards first? How much will you invest after accounting for expenses and debt? Will you put it towards retirement or towards other long-term financial goals?

Before you start investing, one option is to track your spending in order to know what you’re both spending on and how much you can reasonably put into long-term savings or investments.

This isn’t to place blame on one person for spending more or to fight over daily expenses! In fact, you might decide to allocate a certain small portion of your monthly income to each person to spend on what they want without judgment. You can do this in a joint cash management account like SoFi Money®. You and your +1 can have a single place to access your cash.

An important thing to do is to lay out a plan and communicate clearly about what you want to do with a joint investment account before you ever even open one. And even after you start investing together, keep a monthly money date to sit down and handle your finances.

Tips for Opening a Joint Investment Account

Here are some money tips for couples that applies to almost everything: it’s all about communication and compromise. That’s true when it comes to investing together too.

•  Decide on your investment goals for your joint brokerage account upfront—as opposed to goals for any other accounts or money you have. That means deciding: What do you want to save money together for—a vacation, a house? When do you want to retire and how much do you need at retirement? If you disagree about retirement plans, can you compromise? And how much are you going to set aside for each of your goals, with what strategies? Use automatic contributions from your paychecks to put away money in retirement or investment accounts.

•  A corollary to having joint goals for your joint investment accounts is that it’s OK to have separate financial goals too—as long as you’re on the same page. You can set aside some amount out of your discretionary income, like 1%, for each of you to spend as individual fun money. Or maintain smaller separate accounts, in addition to your joint accounts. A TD Bank study found that 42% of people in relationships who have joint accounts also have separate accounts for reasons ranging from independence to emergencies. One strategy is to use your individual retirement accounts, which generally have to be kept separate for each person, as a place to play with your individual investment strategies.

•  The reality is you’re likely to have different risk tolerances, which can heavily influence your investment strategies. That’s not necessarily bad. It’s one thing to know you should invest when the market is down; it’s another to have the risk tolerance to do so. If you have different tolerances, they might balance each other out. Or you could end up magnifying each other’s worse tendencies, depending on what your tendencies are. Talk to a wealth advisor to get a real understanding of both of your risk tolerances, instead of just thinking you know. And figure out if you’re going to balance each other out in your joint portfolio, or if you need to find a compromise.

•  Take a long view on your joint financial goals. While you may disagree about whether to buy a new couch, you should agree on when you want to retire. (Not that each of you need to retire at the same time.) The added benefit of a long view is that, while the market can go up or down in any given year, by some estimates, on average and in the long run, it gives around a 10% return .

•  Establish a system for resolving disputes before you get started investing. Even in the healthiest of relationships there are bound to be disagreements. Before you open a joint investment account, decide how you’re going to resolve disputes about whether to invest in one asset or to rebalance your portfolio. One way could be to establish objective parameters—will this move us toward our financial goal per the expected returns v. risk. Another option is to let each person try their own strategy with a small amount of money, and bring in a financial advisor for guidance on bigger issues.

There are a lot of different strategies you can utilize to invest together as newlyweds or if you’ve been married for years. Some couples like to split the difference in their retirement accounts, allowing each person to use their own strategies for those investments.

Others like to set aside extra money to “play” with, while focusing the main investing on their joint brokerage accounts. Depending on your relationship, it might make sense for one person to take the lead, if they’re more interested in financial details, but both of you should be involved in the discussion and in all meetings with financial advisors.

Don’t be Afraid to Ask for Help

Even the most communicative and well-informed of couples might need a little extra help when it comes to money advice.

That’s when a financial advisor can come in handy, simply to give you an outside perspective on financial strategies and an objective assessment of your risk tolerance. (Often what we think we’ll do is not the same as what we actually do when presented with market ups and downs.)

As a SoFi Invest® member, you have complimentary access to a financial advisor who can help recommend a portfolio strategy that’ll work for both of you.

Plus you can have different portfolios for different financial goals. That can let you invest as a couple, with joint goals and with your own separate goals that might have a different asset allocation and strategy.

Ready to get started investing as a couple? You can open a joint investment account today with just $100 and pay no SoFi management fees.


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