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Investing with your spouse or partner: How to get started

Investing with your spouse
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Navigating your own financial life and investing to meet your personal goals can be challenging at times. Add another person like a spouse or partner to the equation and it can feel downright difficult. But to help foster a successful marriage or partnership, you’ll need to work together to achieve your financial goals. Decisions about whether to combine checking accounts or brokerage accounts may seem simple, but there are a few things to watch out for.

Your financial journey together begins with discussing money goals

The first thing you and your partner will want to do when beginning your financial journey together is to talk about both your short-term and long-term financial goals. Do you plan to make a large purchase in the next few years such as a car or a house? Longer-term goals might be focused on retirement or whether you see yourself having kids and, if so, how many?

Discussing these goals might be difficult, but it’s important to make sure you and your partner are aligned in how you think about your financial lives. Small differences such as slightly different spending habits can be managed, but when it comes to the big decisions, you’ll want to be on the same page.

You might even find that talking about your finances helps get your relationship to a more satisfying place. TD Bank found in its 2020 Love and Money Survey that 18 percent of couples admitted they don’t talk about money enough, and 13 percent said they wished they’d talked about it sooner.

Determine an investing strategy with your partner

Once you’ve identified your financial goals, you’ll be in a better position to start investing in order to reach those goals. But here again, you and your partner will need to discuss your views on investing to make sure you’re aligned, particularly when it comes to weighing risk vs. reward.

Some people have very high risk tolerances and are willing to pursue aggressive investments in the stock market or even using options contracts. Others are more risk averse and any possibility of losing money makes them squirm. Discuss your risk tolerance with your partner and work to pair your investments with your financial goals. A more aggressive approach might make sense for goals that are a long way off such as retirement or planning for your child’s education, but those wouldn’t be suitable for more immediate goals like a down payment on a house.

If both you and your partner work full-time, make sure you’re taking advantage of employer-sponsored retirement plans and contributing at least enough to receive any match offered through the plan. You might also consider opening a traditional or Roth IRA as an additional way to save for retirement.

Decisions around kids tend to have a major impact on a couple’s financial life. Whether to have them, how many to have, how to pay for childcare (or who stays at home to take care of them) and how to plan for their education are questions many couples face. According to a 2020 report from the U.S. Department of Agriculture, parents can expect to spend $233,610 raising a child through the age of 17. The amount is even higher if expected inflation is factored in and it also doesn’t include the cost of college. Raising kids brings great joy to many parents, but you’ll also want to understand how children will impact your finances.

Couples who don’t have kids face very different financial situations, particularly if both you and your partner work. So-called “DINK” couples (double income, no kids) may be able to afford more vacations or even consider an early retirement if you’re able to save enough during your working years.

Setting up a brokerage account: Joint vs. separate accounts

Once you’ve discussed your goals and investing strategies with your partner, you’ll need to set up a brokerage account to invest outside of your workplace retirement plan. Couples should carefully consider whether to set up a joint account or two separate accounts. Make sure you understand your partner’s complete financial situation before agreeing to a joint account. And if you’re not married, you should think very carefully about giving someone else access to your money via a joint account.

Many online brokers such as Charles Schwab, E-Trade and Fidelity offer a number of different account options, but there are some important factors to weigh before opening an account.

Advantages of a joint account:

  • Both you and your partner will have total control over the account, allowing you each to make deposits, withdrawals and investment decisions.
  • If you choose a joint tenants with rights of survivorship account, the account will transfer completely to your partner in the event of your death.
  • By combining your assets in one account, you may receive investment advice or counseling that you wouldn’t have access to on your own, while also potentially saving on fees.
  • It will likely be easier to manage one joint account than keeping track of multiple separate accounts, especially when trying to understand your overall financial picture.

Disadvantages of a joint account:

  • Both of you have total control of the account. This means that if things hit a rough patch during your relationship, your partner could sell everything and make withdrawals without your permission.
  • You’ll need to decide how trading and investing decisions will be made together. Do you both have to agree to an investment before you take action? How will you handle your different risk appetites?
  • If you want your share of the account to go to your heirs after you pass away, you’ll need to sign up for a tenants in common account to avoid having your partner automatically inherit your portion of the account. This type of account allows two or more people to own a set percentage of the account without the other parties automatically acquiring one owner’s portion upon their death.
  • A joint account will require more coordination with your partner than a separate account would. You’ll need to communicate on contributions and withdrawals as well as investment decisions and many other issues.
  • Creditors could target a joint account if you or your partner is in debt.

If you and your partner have different risk appetites, it may make more sense to maintain individual accounts and work with a financial advisor to understand the role your separate accounts will play in your overall financial picture. As long as you expect to meet your goals, it’s OK if one person is more risk averse than the other.

Bottom line

Communicate, communicate, communicate. Understanding your partner’s financial situation and developing financial goals together can only happen if you’re comfortable discussing finances with complete honesty. It’s likely that you’ll have some differences with your partner either in terms of financial goals or risk tolerance. But sharing those differences can help you put together an overall financial plan that will get you both where you want to be — in the short and long term.

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Written by
Brian Baker
Investing reporter
Bankrate reporter Brian Baker covers investing and retirement. He has previous experience as an industry analyst at an investment firm. Baker is passionate about helping people make sense of complicated financial topics so that they can plan for their financial futures.
Edited by
Senior wealth editor
Reviewed by
Senior wealth manager, LourdMurray