Investment Mistakes Couples Make

By: Angela Howard Email
By: Angela Howard Email

If two heads are better than one, do couples have an advantage when it comes to investing? We posed this question to certified financial planner Bruce Hagan. Here's what he had to say:

"It’s difficult enough for two people to share a closet or a bathroom, much less financial priorities, money styles and investment strategies. Couples actually have to be careful not to undermine each other when it comes to investing."

Hagan went on to say that the biggest stumbling block for couples is communication, or lack thereof.

"Often couples aren’t on the same page. In the first meeting I might ask a couple to tell me their goals and sometimes one parties’ goals are quite different than those of their spouse," he said.

Hagan also says differences in background and approaches to saving money effect the way couples invest too. Behavioral finance is a field of study now. Some people, according to Hagan, come from families where from an early age, part of their weekly allowance always went into a piggy bank and saving is a way of life. Others, possibly from a family with similar incomes, saved sporadically or not at all.

Hagan says, having savings can be a defining part of who someone is, but others may see saving as something that's nice to have, but not a necessity.

We asked Hagan: Do you find that one spouse is usually more in charge of the investment decisions than the other?

His response: "I see that a lot and sometimes it’s because one just has a stronger interest or more time to be involved, but it can be a problem. One party may desire the potentially bigger returns of stocks and is willing to take more risk. The other may be more cautious and prefer more fixed income investments. I like to work with a couple and develop an Investment Policy Statement and an Asset Allocation Model that everyone agrees to that keeps on the same path."

Hagan also said not contributing fully to retirement accounts, skipping regular account maintenance and putting things on cruise control are all problems as well.

"You need to sit down together quarterly and review where you are and discuss possible changes with your advisor. Having too many small accounts; consolidate to make management easier."


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