5 Important Tips For Investing Jointly As A Couple

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A big part of the joy of being one half of a couple comes from doing things together, right?
Like planning a vacation together, and then taking that trip.
Or going to the movies.
Or even simply spending comfort time at home binge-watching your favorite show together.

But it's not just the fun things that matter. Truth be told, couples need to each actively discuss and contribute to a lot of the other 'serious' things too.

Like financial planning for their future. And the big questions such as –
When are you going to buy your first house?
How much will it cost?
How much do you need to save for the future?
Do you need to get life insurance?
What should your retirement fund look like?

It's essential to take these major decisions jointly, so you can grow together along your journey. And when it comes to making sense of your finances for the future, investments are a big part of that puzzle. Although investments are often typically discussed in the context of an individual, couples can also jointly invest in many schemes. Additionally, it is important to come up with an investment plan jointly, so you and your partner can both ensure that you get to live the future you dream of - together.

Think you may need a bit of help with this? Here are 5 tips to help you invest jointly as a couple.

  • Establish a joint investment budget

    The first thing you will need to do as a couple is figure out an investment budget. You need to decide many key details, like the following, for example.

    • Can both of you contribute to your investments?
    • If so, how much will each of you contribute?
    • Can you both contribute fixed amounts, or will the amount vary?
    • How frequently can each of you contribute?

    All of these aspects are important. If you and your partner are both in a steady job that pays regularly, you may be able to contribute a fixed amount each month. However, if you are or your partner is self-employed, the amount contributed may vary. In that case, establish a minimum investment budget, so you can both invest consistently.

  • Understand each other's investor persona

    Just like how it's important to understand your own risk profile before you invest individually, it's important to understand each other's investor persona in case of joint investments. You may be an aggressive investor, while your partner may be a more conservative investor. You may believe that real estate is a good investment for the future, while your partner may think that blue chip stocks are the holy grail.

    It's important to understand and settle these differences before you chart out an investment plan. And while you're at it, a middleground is not necessarily the best option.

    Let's take up an example to understand this better. Say you are an aggressive investor who is keen on investing in direct equity. And your partner is afraid of the market crashing, and wants to invest in fixed income investments.

    Now, here are two scenarios.

    Scenario 1: You and your partner are both in your 20s
    In this case, since you have years ahead of you before retirement comes knocking, you can afford to take risks. So, it makes more financial sense to take on a high exposure in equity at an early age, and gradually make the shift to safer investments later in life.

    So, your investment outlook may be more relevant here than your partner's.

    Scenario 2: You and your partner are both in your 50s
    Here, you have just a decade left for retirement. So, it is generally more advisable to rely on fixed income investments that offer guaranteed returns. This way, you can preserve your capital and also set up an alternate source of income for your post-retirement life.

    In this case, your partner's conservative outlook is the better option to choose.

  • List out your common and your individual goals

    Once you've established an investment budget and understood each other's investor persona, you'll want to list out the goals you have. That gives you a better idea of what you are investing for, in the first place. And since you are investing as a couple, there are going to be two kinds of goals, namely your joint goals as a couple, as well as your separate, individual goals.

    Examples of joint goals

    • Buying your first house
    • Creating a college fund for your children
    • Saving up for retirement

    Examples of individual goals

    • Setting up your own home gym
    • Buying a premium camera to pursue your passion for photography
    • Upskilling or going back to school to improve your career prospects

    As you can see, individual goals are relevant to you and your needs, specifically, while joint goals impact both you and your partner. Once you've listed all the goals, sort them based on priority, assign a tentative timeline to each goal, and write down how much money you need to fulfill them.

    For instance, take the joint goal of creating a college fund for your children. If you and your partner are in your late 20s now, and your child is just 3 years old, that leaves you with around 15 years to get the college fund ready. So, here's what you need to do.

    • Assess how much the top courses in prestigious universities cost today
    • Account for inflation
    • Calculate how much you will need to pay for your child's college education 15 years from now
    • Come with an investment plan to save that amount
  • Consider financial products that offer joint benefits

    After identifying the top goals you want to save up for, and having allotted a timeframe and an amount to each goal, you need to pick the right financial products to meet these targets. Some financial products offer joint benefits for couples. Check them out below.

    • Joint savings accounts
      As a couple, you can open a joint savings bank account with your preferred banking partner. This makes budgeting and money management easier, and also helps you manage your common finances better.
    • Joint demat accounts
      If you and your partner are young enough now, your joint investment portfolio could benefit from some equity exposure. Joint demat accounts can be useful here, since you get to save on demat account maintenance charges. It also allows you to keep your investments transparent.
    • Home loans
      A joint home loan can be extremely beneficial, since it comes with massive tax advantages. You and your partner can each claim principal repayments up to Rs. 1.5 lakh and interest repayments up to Rs. 2 lakh as deductions each year. That's a total of Rs. 3 lakh as deductions for principal repayments, and Rs. 4 lakh as deductions for interest repayments!

      So, if buying a house is one of the top goals on your list of joint milestones, consider opting for a joint home loan if possible.
    • Medical Insurance
      Medical insurance can be expensive on an individual, case-to-case basis. However, a joint health insurance plan or a family floater plan can actually be more cost-effective, since it covers you, your partner and your children for nominal premium rates. Plus, it offers tax1 benefits under section 80D too!
    • Life Insurance
      Many life insurance plans also give you the option of a joint life cover. This means you and your spouse are both covered by the same life insurance policy. Depending on your collective age, the premiums charged for a joint life cover may be more affordable than buying two separate life covers.

      The ABSLI Guaranteed Milestone Plan, for instance, gives you the option to cover your spouse too under the same policy. You can choose this option at the time of policy purchase.
  • Ensure that you don't lose sight of the end goals

    Lastly, ensure that you don't lose sight of what you are investing for. When you have two people in the mix, there are many joint goals and many more individual goals that you'll have to account for. And that can make it easy to forget why you started investing in a particular scheme, in the first place.

    If you find that your joint and individual goals are starting to get hard to keep track of, try and have separate investments for your individual goals. That way, it can be easier to identify the goals tied to each investment.

    For example, you can have a joint savings account for your common goals, and a separate individual account to save up for your separate goals. Just remember to keep the priority in mind, so you don't accidentally route all your savings for a hobby when a major life goals still needs to be met.

Summing up

So, as you may have figured, investing as a couple may seem a lot like investing as an individual. But it does come with its own set of challenges and advantages. The trick is to understand how to deal with the pitfalls, and how to play to your strengths as a couple. And as always, if you're having trouble finding a middle ground, financial advice is only a call away these days. So, don't hesitate to seek professional help from experts if you need to.

Read next: MISTAKES TO AVOID WHILE INVESTING FOR YOUR CHILD'S FUTURE

One of the primary goals for investing as a couple is to ensure that your child's future is financially secure. So, it helps to know what mistakes you need to steer clear of when you're investing for your child's future. Our blog outlines some such common mistakes.

Read it here

LIFE INSURANCE, LIKE INVESTMENTS, CAN ALSO OFFER JOINT BENEFITS FOR COUPLES!

Take the ABSLI Guaranteed Milestone Plan, for instance. You get the option to cover your spouse too in the same policy. So, with one plan, you get a life cover for two people. Talk about getting your money' s worth!

And that's not all. With fully guaranteed2 benefits on maturity, guaranteed2 additions to boost your corpus, and other customizable add-on rider benefits, this plan helps you meet all your couple goals smoothly!

Know More

1Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
2 Provided all due premiums are paid
ABSLI Guaranteed Milestone Plan (UIN: 109N106V10) is a non-participating traditional insurance plan. All terms & conditions are guaranteed throughout the policy term. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for sub-standard lives, smokers or people having hazardous occupations etc. The insurance cover for the life insured (including minors) will commence on the policy issue date.
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