27 Apr Husband, wife, disagree about investing
Q. My wife wants to only invest in index funds, but I think we should have some actively managed funds too, and things like Real Estate Investment Trusts. How can we come to an agreement?
— In the doghouse
A. A healthy marriage comes with a lot of compromises from both sides, and money compromises are part of that.
If one of you begrudgingly goes along with 100 percent of what the other person wants to do with your investments and it doesn’t work out, that could be an “I told you so” scenario, said Brian Power, a certified financial planner with Gateway Advisory, LLC in Westfield.
Resentment might set in. Not good or healthy for a relationship.
Power recommends you each handle your own accounts the way you want.
“You can still coordinate the overall mix of stocks and bonds but your wife can use index funds while constructing her portfolio and you can use more actively-managed funds as well as broader asset class diversification, such as real estate,” he said.
Power said agreeing on how much to invest overall in stocks and bonds for your household is more important than index funds investing versus actively-managed funds investing.
How your investments are allocated between stocks and bonds determines most of the volatility or roller-coaster ride your money will go on, he said.
“No matter how you decide to move forward, you should build your stock market component of your portfolio with more in blue chip stocks — steadier performers — and less in high risk stocks — e.g. small companies and emerging markets — and never have too much of your money in any one industry or sector,” Power said.
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This post was initially published in April 2017.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.