Newlyweds need to reconcile investment styles

June is one of the most popular months for weddings. This may be due, in part, to June being named for Juno, the Roman goddess of women and marriage. Of course, Juno and her husband, Jupiter, probably had very little trouble with money, but if you are getting married this month, you and your spouse will need to work together on your finances – which means, among other things, that you will have to reconcile your investment styles.
As you set up a household together and establish common long-term financial goals, you will need to make investing a priority. But you and your spouse may well have different attitudes about investing, and some of those differences may be due to your respective genders. A major, long-term study by researchers at the University of California found that women trade stocks less often than men, do more research before making an investment decision, and tend to stick with their investments longer.

The results? Women investors’ portfolios outperformed those of men by 1.4 percent a year, according to the study. So, one might conclude that women’s “buy-and-hold” investing style can pay off in the long run.
While it may be useful for you and your spouse to keep these gender-based tendencies in mind, you will still have to work out some common ground as you create investment strategies to meet your objectives. The key is open and frequent communication. Talk to each other and learn what the other is thinking. Ask yourselves these types of questions: Do we both want to save for a house? If so, when do we want to buy it? If we have children, do we want to help them pay for college? Do we want to retire at about the same time? What do each of us want to do during retirement?
Once you’ve started talking about these and other issues, you’ll be able to start creating appropriate investment strategies. And after you begin investing, you may well find that you can discover ways to “complement” each other’s tendencies and preferences – that is, your “aggressive” choices can balance your spouse’s “conservative” ones, or vice versa.
However – and this is an important “however” – both you and your spouse still need to be aware of the potential dangers of staying too much in your “comfort zone.” If you are an aggressive investor, willing to take greater risks with your principal in exchange for potentially higher returns, you still could get “burned” by chasing after too many “hot” stocks, many of which will have already cooled by the time you invest, and, in any case, may not be suitable for your needs. On the other hand, if your spouse is a conservative investor and consistently favors “conservative” investments such as bonds and Certificates of Deposit, he or she might not get the growth potential needed to help you achieve your joint goals. Furthermore, fixed-rate investments can incur “inflation risk” – the risk that their returns may not even keep up with the inflation rate.
As newlyweds, it’s important for you and your spouse to learn to adapt to each other’s personal styles in many ways – and it’s just as important to accommodate each other’s investment styles. It can take some work, but it’s well worth the effort.