Being on the same page as your spouse is absolutely critical to investing and relationship success.
There are many people you can consult when making investment decisions, including investment advisers, research firms, investment clubs, and good friends. But there is one person that you should consult first: your spouse.
If you are making investment decisions for your household, you are essentially a fund manager and your spouse is both your client and managing partner. This means that you hold a position of great responsibility because this person is relying on you to make sound investment decisions that materially affect their life.
As investors, we have to process and consider an immense volume of data and information to make sound decisions. There are entire strategies designed around how to manage this information. It can be easy to get caught up in the pursuit and forget an essential step: communication.
At the end of the day, we are each held accountable by our spouse, and there are no artful accounting tricks to obscure our performance. It not only matters how well we did — it also matters how we got there.
How to do it
Investing is inherently risky, and it is inevitable that we will lose money from time to time. Being on the same page as your spouse is absolutely critical to investing and relationship success. Over the past two years of the “meme stock craze,” I have seen inexperienced investors bet their entire life savings on obviously speculative investments only to lose all or most of their money — without their spouse or significant other knowing.
These are the situations we must avoid. I am an investor, not a gambler. Your spouse will understand when an investment loses money, but they will not be so understanding when a bet loses money.
It is important to develop an investment plan with your spouse. This plan does not need to be on paper, but it should be well understood and agreed upon. These are the major segments of our plan:
The investment goal
My spouse and I have the same investment goal: highest risk-adjusted total returns. Because we are relatively young, we have time to weather the volatility of equity markets and we don’t need income. This may be different for other couples. Volatility is unkind to the emotions of unseasoned investors. If you know that your spouse wants to avoid volatility, you should avoid assets that experience high volatility, such as crypto, commodity producers such as BHP Group Limited (BHP) or niche classes such as uranium, represented by the North Shore Global Uranium Mining ETF (URNM).
To focus on low …….