The Smart Couple’s Guide to Investing for the Future

Mar 28, 2024 | Finances, Relationships

Hey there, you financially savvy duo! If you’re ready to level up your financial game and build a rock-solid future together, you’re in the right place. When thinking about investing for your future as a couple, there are several key areas you’ll want to look at, many of which most couples completely avoid! So grab your partner’s hand, and let’s delve in!


Why investing for the future matters

Before we jump into the how-to’s of investing, let’s take a moment to understand why it’s so important. When you think of investing, the first thought that comes to mind is likely related to finances, like investing in the stock market. While this is key, of course, in order to arrive at your desired happy future, it’s equally key that you invest in yourself and one another too. So here, we’re going to look at both aspects and how best to approach them as the smart, savvy couple you are.  

Know why you’re investing

Let’s start with finances. Before going on any journey, it’s key to know why you’re even starting. It’s time to set your financial goals as a couple. Sit down together and dream big – what do you want your future to look like? Do you want to buy a home, start a family, or retire early? Do you want to change careers, start your business, or relocate to a different country? Whatever your goals may be, make sure you write them down to be specific, measurable, and achievable. 

According to research by Gail Matthews, Professor at the Dominican University of California, writing down goals increases your likelihood of achieving them by a whopping 42%! So grab a pen and paper and start writing! I learned from my early mentor, Bob Proctor, the power of keeping a goal card. Perhaps you may choose to write your goal down on a small piece of paper to keep in your pocket or wallet, to serve as a constant reminder of why you’re following certain habits or taking different actions. 

Investing in your safety net

Before diving into the world of financial investing, it’s crucial to lay down a solid foundation. One of the first essential steps is to set up your emergency savings fund. This fund is like your safety net, acting as a buffer against financial challenges, such as an unexpected expense or loss of income. It will provide that peace of mind and stability during such turbulent times.

It’s key you put these savings in a high-yield savings account (HYSA), not just a regular savings account. This ensures your money is at least growing in line with inflation, so you’re not losing any value on your funds. Avoid the temptation to invest this money, too. You want to ensure quick and easy access to this cash when you need it most.

Investing in your financial well-being

It’s no surprise that debt brings with it all sorts of emotional stress and relationship strain. According to a survey by NerdWallet, the total average American household debt is over $167,947, and findings by Forbes Advisor show that 54% of U.S. adults feel increased stress because of their outstanding debt, and 60% admit that financial stress has led to relationship issues.

There are plenty of strategies to deal with debt, but the first step is to schedule a money date with your partner or spouse. This is the time for you both to communicate openly about your debt reality and create a shared budget to track expenses and identify areas where you can cut back in order to pay down your debt faster.

Many people assume they can’t invest until they’re debt-free, but that’s not completely true. As long as you’ve paid down your high-interest rate debt, that’s any debt with interest above 7%,  you’re ready to get started. So, set your debt paydown plan together and stay focused on the end goal.

Investing in your financial education

‘Don’t invest in what you don’t understand.’ You’ll hear me say it time and time again because I’ve seen too many eager, newbie investors throw money at the stock market without any idea how it works. And lose a lot of money as a result. It’s one of the many reasons my business, The Witch of Wall Street, exists. Investing in your financial education now ensures your success with investing later. This will save you time and a great deal of money by avoiding expensive investment manager fees, bad deals, and loss-making strategies.

While hiring a financial advisor can provide valuable guidance (just be sure to pay on an hourly rate or a project-specific rate), it’s vital to take an active role in managing your finances and understanding the investment choices available to you. When it comes to your money, never take a back seat! By investing in your financial education now, you’ll be better equipped to make smart investment decisions as a couple and achieve your long-term financial goals together.


Stock market investing

Investing in the stock market is one of the true forms of passive income whereby you can set it and forget it, allowing your money to work hard for you instead of the other way around. Smart couples will realize that stock picking, hunting for unicorns, or the next Apple, is a losing game and more akin to gambling in Vegas than investing for your financial future. Definitely avoid this!

Instead, investing in index funds or their twin, exchange-traded funds (ETFs) is a much better approach for the majority of investors looking to achieve consistent, long-term returns. Why? Because they have built-in diversification, which, if I put my mind back to my University days, was one of the stand out lessons our finance professors loved to talk about. 

It’s the old adage of “don’t put all your eggs in one basket,” which may sound obvious, but too many investors miss this point. With these funds, you’re not trying to beat the market, which even Wall Street can’t do; instead, you become the market.

Just keep in mind when you’re investing that you’re doing so in the most tax-efficient way available to you. For example, using retirement accounts, whether it’s a 401(k), IRA, or Roth IRA, which gives you tax advantages and means you get to keep onto more of your money over time. 

Investing in the magic of compound interest

Albert Einstein famously called compound interest the “eighth wonder of the world,” and for a good reason – it has the potential to turn small investments into significant wealth over time. When it comes to investing, time really is your best friend, so it’s key to get started as soon as you can.

So, what exactly is compound interest? In simple terms, it’s the interest earned on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only applies to the principal amount, compound interest allows your money to grow exponentially over time. Let’s take a look at an example. 

Suppose you invest $1,000 in a retirement account with an annual interest rate of 8%. At the end of the first year, you’ll earn $80 in interest ($1,000 x 1.08), bringing your total balance to $1,080. In the second year, you’ll earn interest not only on your initial $1,000 but also on the $80 you earned in the first year, bringing your total balance to $1,116 ($1,080 x 1.08). This compounding effect continues year after year, resulting in exponential growth of your investment over time. It really is like magic!

Because of how compound interest works and its exponential growth, the earlier you start investing, the more time your money has to compound and grow. This is key to remember when reviewing your financial goals and getting to a position where you’re ready to invest in your future together. You can find out more about financial investing here.

Investing in your mindset 

While investing offers the potential for significant returns, it’s essential to acknowledge that the stock market is volatile. Prices can and do fluctuate wildly in response to economic events, geopolitical tensions, or even – and this may come as a surprise – investor sentiment. Yes, how investors are feeling. Market volatility can be nerve-wracking for the untrained investor, which is why it’s essential to invest in your mindset by investing in your financial education. This will help you both maintain a long-term perspective and avoid making impulsive, loss-making decisions. Be sure you’re doing this together so you’re both on the same page.

According to the Dalbar QAIB report, which reviews the impact investor emotions have on investor returns, it found that individual investors tend to underperform the market, not due to lack of intelligence, bad timing, or management fees, but due to emotional reactions to market volatility. The antidote? Patience, discipline, and sticking to your investment strategy. This will ensure you survive the market’s ups and downs and come out ahead in the long run.


Investing in each other

Finally, as much as you focus on investing in your financial future, don’t forget to invest in each other too. Your relationship is the most valuable asset you have, so make sure you’re nurturing it and investing time and energy into your partnership. According to research by relationship experts at the Gottman Institute, couples who invest in quality time together are happier, healthier, and more resilient in the face of adversity. So take time to set not only a money date but plenty of ‘you’ dates, too – your relationship will thank you for it!


Final thoughts

As you embark on your journey to financial freedom, remember that the decisions you make today will shape your future together. Investing, both financially and personally, in the ways we have explored here is a journey, not a destination. So take the time to educate yourselves, set clear goals, and work together as a team. With dedication, determination, and a sprinkle of financial know-how, you can and will create the life you’ve always dreamed of. Happy investing!

You are writing your life story. Get on the same page with a prenup. For love that lasts a lifetime, preparation is key. Safeguard your shared tomorrows, starting today.
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