12 investment mistakes couples make |
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Recognize that you're going to have to revisit those allocation plans as your life changes.
One detail that often gets lost in the shuffle: beneficiary designations. One spouse or the other may not
have updated beneficiary cards on various brokerage and retirement accounts, which means whoever they named at 21 or 22 (a
parent or former spouse) will inherit the accounts, regardless of remarriage, kids or wills.
9. Commingling inherited assets
"One of the worst things you
can do is put it in an account with both names," says Warner, partner in ElderLaw Services of South Carolina.
If you're planning to use that inherited money during retirement, keep it in an account under only your own
name. Once the money's been placed in a joint account, many states consider it marital (read "joint") property. That means
if the marriage splits up, you could lose 50 percent long before you reach 65.
10. Investing in things they don't understand
"Too many people
today are investing in things they don't understand," says Warner.
That puts you at a disadvantage in several ways: First,
you might not have bought what you think you bought. Second, getting
out of it could be more difficult than you planned. Stick with tried-and-true
vehicles that you understand and trust.
11. They don't know how their adviser makes money
When someone
is giving you investment advice, you need to understand how that person gets paid -- and by whom. Depending on how the person
is compensated, "there can be economic biases," says Tignanelli.
The professional offering advice might be making a
sales commission, a percentage of the profits earned over a period
of time, a flat fee, or a combination, depending on who you hire,
the title and the rules specific to that field.
Warner is leery of taking advice from advisers who actually work for the brokerage houses or who hold the
assets. "I think it's a conflict," he says. Another benefit to going with a smaller independent: more time and attention
for clients with smaller portfolios.
Beware of institutions that push their own proprietary products, says Warner, who includes language in trust
documents prohibiting institutional trustees from investing in proprietary products.
Whatever ground rules you set for your own adviser, finding an impartial advocate and understanding exactly
how that person gets paid can make you a more savvy investor, Tignanelli says.
12. Not collecting that 'free money' at work
If your employer
offers a match for 401(k) contributions, take the money. Too many couples don't, says Bendix. It's "wasted, because they feel
they can't do it," he says.
But once they get through the initial pinch, they do just fine, he says. Says Bendix, those automatic payroll
withdrawals are "a great forced savings."
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