So, you’re a newlywed! Congrats.
You’ve probably been busy planning your wedding ceremony, enjoying your honeymoon, perhaps moving to a new place, and otherwise settling in as a married couple. So, if you haven’t had time to create and agree upon an investment style and strategy, that’s understandable.
Investing as a couple doesn’t mean you need to adopt one another’s investment philosophies and risk tolerance, but it can be extremely helpful to be clear about how one another feels as you create investment goals for your portfolio. (Also consider discussing how you feel about socially responsible investing, as increasing numbers of people feel passionate about aligning investments with their personal ethics.)
As an overview of our tips for newlyweds, we’ll discuss:
• agreeing upon finances in a marriage
• sharing financial information with one another and merge investing, as desired
• creating or build upon an emergency fund
• investing together (or separately) as a married couple
• different generations may need different investing strategies
We’ll share seven tips relevant to today’s market, plus how SoFi can help with your investments and financial plan.
Love and Money Tips for Newlyweds
Having a common vision about how to spend, save, and invest money will likely go far beyond simply creating a budget and financial strategy. Agreeing upon money can also be important to protect your marriage. According to PsychCentral.com , money arguments are “by far the top predictor of divorce.”
Citing a study with data collected from more than 4,500 couples, they noted the following:
• how much money you make and how much you are worth aren’t factors, with money arguments happening at all levels
• couples take longer to recover from money arguments than any other type
• couples typically use harsher language during financial-based arguments
• continuing financial arguments tend to lower the “relationship satisfaction” of a couple
Additionally, Dr. Sonya Britt (professor at Kansas State University) suggests that couples educate themselves about finances, and then create a financial plan for today and for your future. She even suggest financial planning as part of premarital counseling, including a look at one another’s credits reports.
Money.USNews.com suggests, as an important step, that each of you organizes your finances, and then analyze where you are, right now. This might include each person sharing his or her tax returns from last year, recent pay stubs, credit card bills, student loan balances, and more. You could then each create a net worth statement where you list your assets and liabilities.
Because this can be an intimidating process and because your spouse may feel vulnerable when sharing, it’s important to “be respectful, not judgmental” during this discussion. Then, what happens when you combine net worth statements?
What does this comprehensive financial statement look like? How much money is currently in savings? Investment funds? Retirement accounts? (And, during this process, check to make sure you’ve changed beneficiaries wherever it’s needed.)
Agreeing Upon Savings
After you’ve taken a good look at your assets and liabilities, and created a budget, you can gain visibility into how much money you can save and invest. And, here are more money tips for newlyweds. If you aren’t satisfied with how much money you’ve put away into an emergency fund, then it makes sense to focus on that first.
Looking for a place for you and your partner to save money together? With SoFi Checking and Savings® account, you and your +1 can easily merge your finances and continue to get 0.20% APY, no account fees, unlimited ATM reimbursements, and more.
Create specific goals and then set up automatic deposits to make that happen. As you see financial successes as a team, this will likely inspire you to save and invest even more.
In general, an emergency fund should contain enough money for three to twelve times what you spend monthly, with many people suggesting six months’ worth as your target.
Talking About Investment Strategies
As step one, consider why you want to invest. The “why” will help to direct the “what,” because selecting the right investment strategy differs by financial goals.
Saving for retirement is a pretty universal goal, so ask yourself these questions:
• At what age would you like to retire? If you were born after 1960, the retirement age for full Social Security is 67.
• How much money (in today’s dollars) would you need to live on each year?
• How long do you expect to live? That can be a tough question to answer but, statistically, people born in the 1980s have an average life expectancy of 70 for men, 77.4 for women. When planning for retirement, though, it can make sense to plan on 90 for men and 95 for women.
You can use our retirement calculator to help determine, hypothetically, how much you should be investing for retirement.
It may help to think of emergency savings and retirement savings as being the two bookends, and then you can determine what other savings and investment goals you have in between. These can include:
• buying a home
• starting a family
• opening a business
• traveling
After you’ve determined your goals (be specific!), then you can calculate how much money you’ll need to achieve each one, and on what timetable. Now, reverse engineer to calculate how much you’ll need to save or invest each month to reach your goals.
Compromising on Style
No post on investing tips for newlyweds could be complete without discussing what to do if you have different investing styles, which could include differing levels of risk tolerance.
Maybe she has an aggressive investing style, wanting the biggest return on investment possible, willing to take chances to get that pot of gold—while he may want to increase financial wellness but is less comfortable with high volatility.
What’s most important is to openly communicate and seek solutions. These could include:
• have separate investment accounts, one more aggressive and one more conservative
• on joint brokerage accounts, the investment strategy could be more moderate
• keep a more robust emergency fund to help reassure the more conservative member of the couple
Here’s something else to consider. You may be a newlywed couple in your twenties—or in your sixties. Wise investment strategies can vary by generation, and SoFi has an article about investment strategies by generation. And, no matter what generation you are, we invite you to download The SoFi Wealth Investing Guide. This guide provides step-by-step information about investing, including:
• goal setting
• understanding tradeoffs between risk and reward
• learning about different types of investments
• choosing an investment portfolio
As one more resource, we’ve also created a list of seven investment tips for today’s market. As an overview, they include:
• Start now, start small: The sooner you start to invest as a couple, the longer you can keep this money invested—which naturally gives it more time to grow.
• Focus on investing, not on picking stocks: If you’re not comfortable picking individual stocks, that’s okay. You can work with a wealth advisor.
• Diversify: When you invest in more than one type of investment, you can feel less anxious when the market fluctuates.
Have long-term goals: We covered this earlier in this post, but it bears repeating.
• Understand your risk tolerance: It’s your money. You’re in control. A quality advisor will work with your risk tolerance, no matter where it falls on the spectrum of conservative to bold.
• Consult with an advisor: This can help you choose a portfolio of investments that will facilitate your ability to meet your investing goals.
• Opt for the lowest fees: Investment fees and advisors fees can take a chunk out of earning, so consider choices with limited fees (or even zero management fees).
Investing with SoFi
With SoFi Invest®, you pay zero in SoFi management fees. Absolutely zero. And, you can start online investing with as little as $1. You can also access the SoFi financial advisor team who can help you to create a personalized financial plan.
The curated portfolio will be based on several factors, including your age, assets, and income. We can track your portfolio and adjust it, as needed.
At SoFi, we put your money to work, with benefits including the following:
• We will work with you to help you achieve goals; that’s because we map out a plan together—and then help you to stick with that plan.
• We believe in diversification, so we aim to reduce some of your portfolio’s risk by investing in ETFs.
• When it comes to portfolio selection, we actively manage passive assets to give you the best of both worlds.
• Plus, we automatically rebalance your investments, as needed.
At SoFi, you can count on real advice from real advisors. Better yet, it’s on the house! You get access to financial planning services with human advisors at no extra charge.
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