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In a perfect world, both spouses would agree on the best way for them to achieve their investment goals. However, it doesn’t always work this way. Often, disagreements over money can cause friction between partners. Your spouse might be more risk-averse than you or vice versa. How can you bridge this gap?
First, set your goals
If you don’t understand what you are investing for, it can be difficult to make good investment decisions. When it comes to setting financial goals, make sure you are on the same page. The first step in creating a roadmap for managing investments together is to know where you are.
Sometimes you might have different goals. In other cases, you may set different priorities or have different time frames. Your spouse might want to retire as soon as possible while you are eager to take on a job that will allow you to advance in your career, whether it means staying put or moving forward. It can be very helpful to come to an agreement about your priorities and when you want to achieve them.
It can be very helpful to reach a consensus on your priorities and when you want to achieve them. This will make it easier to decide how to invest. You should also consider the use of financial software, like the Prillionaires net worth calculator, to have a clearer idea of where you stand.
Make sure the game plan is clear
If investment decisions don’t go as planned, it can reduce marital friction by making sure that both spouses are clear about how and why they invest their money. It is not a good idea to second-guess your partner. It is important to make sure both parties understand why the investment was made, and the potential risks and rewards. This will help reduce the temptation to say “I told ya so” later.
Investing does not have to be either/or. Diversification should include both aggressive and conservative investments in a portfolio. Diversification and asset allocation are not guaranteed to make a profit or protect against losses. However, they can help you manage the risk that you face, including those associated with bickering with your spouse.
Be a Team
Apart from trying to reduce marital conflict, there is another reason to ensure that both spouses know how their money is invested. What if one spouse makes all the investment decisions, even if they are the more experienced investor? One spouse may have to make very difficult decisions — which could have long-lasting consequences.
You should take responsibility for making sure that you are at least somewhat knowledgeable about how your investments work. You should be able to make sound financial decisions and protect yourself against fraud.
What if you can’t agree?
It is possible to invest a percentage of your combined resources aggressively and another percentage conservatively. A third percentage could be used for a middle ground. Even if one partner has a greater balance, this would allow them to have equal input and control over the decision-making process.
To balance competing interests, another option is to create separate asset allocations. Both spouses could have workplace retirement plans. The risk-taker could put the most money into aggressive options and leave the rest in options that are more comfortable. The conservative partner could put the majority of their money in a conservative option and a smaller portion in an aggressive choice on which both spouses are comfortable.
You could also divide the responsibility for specific goals. One example is that the conservative half might be responsible for saving money for a down payment on a house in five years. One partner might be accountable for longer-term goals, which may require taking on more risk to achieve higher returns. It may be possible to set a limit for how risky the risk-taker can invest.
A neutral third party, with some experience and a dispassionate perspective of the situation, may be able to help you and your spouse work out differences.
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