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Written by: Victoria Hasler | Hargreaves Lansdow
- Relationships involve compromise, investing together does too.
- Communication is key – your investment goals will determine your risk tolerance and time frames.
- Fund ideas for couples to invest in together.
Being part of a couple is all about compromise. Perhaps that’s not very romantic, but it’s certainly true. Compromise around timetables, holidays, what to have for dinner and, you’ve guessed it, investments. The problem is that investments can often seem much harder to compromise over than for example, dinner. It doesn’t really matter if you have cod or chicken tonight but investments really matter for your future. So, when it comes to investing your money together, communication is key. It’s so important to carve out time to draw up a budget so you know how much you have to invest, but also to talk about why you are investing and what’s important to you. Whether your money is being used for a house deposit, to start a family or to fund your retirement, thinking about your goals will help you determine your time frame and risk tolerance, both of which are vital when thinking about investments.
Once you have done this, you can start thinking about where to invest. If you have different ideas of what makes a good investment, consider more diversified investments, at least for the core of your portfolio. Funds can be a great way to go as they not only offer access to a diverse array of investments in one vehicle, but they actually outsource the decision over which exact investments to buy to an expert so you and your partner don’t have to argue about it.
How to make decisions together on your investments
If you have very different attitudes and priorities, there are steps you can take to make it easier to work side-by-side.
- Be open with one another from the outset. This should be part of an openness to talking about your finances overall and establishing common goals and approaches.
- Don’t think you have to agree about everything. Keep talking, and listening to each other to appreciate each other’s perspective, but you don’t need to hold the same views to make this work.
- Not everything has to be the same, or different. Couples often manage the majority of the investments together with one common set of goals, and separately their own ‘play’ money where they make their own decisions.
- Use all you tax wrappers. You both have your own ISA and pension allowances, so you don’t have to think about dividend and capital gains tax on this bit of your portfolio.
- Commit to learning together. If one of you has more investment experience, instead of taking charge, they can share their knowledge. In return, they will pick things up from their partner, so this is an opportunity for you to learn from one another.
- Keep discussing your goals. Things change over time, so make sure you’re still on the same page.
- Don’t forget your pensions. There are investment decisions to make here too, so once you are working as a well-oiled machine, you can address your pension investment strategy too.
Fund ideas to start investing as a couple
Total return funds
If you can’t decide where to start and your timeframe is relatively short (although you need to be thinking at least 5 years, less than that and you probably should be erring towards cash), and you don’t want to take on too much risk, you can consider a total return fund.
Charlotte Yonge and Sebastian Lyon run the Troy Trojan fund, which takes a total return approach, meaning that rather than trying to keep up with every sharp move up?? in the market. It aims to grow investors' money steadily over time, while limiting losses when markets fall. The process looks to reduce volatility compared to the stock market – it is designed to smooth the bumps. It does this through investing in a mix of shares, bonds, gold and cash.
The mix of assets, combined with the more cautious nature of the fund, means it could be a great first step into investing for a couple who can’t agree on which asset classes to hold in which quantities.
Multi asset funds
For those with a slightly higher appetite for risk and a timeframe of at least five years, you could consider investing in a multi asset fund. Here the managers invest across shares and bonds (and sometimes other asset classes too), but with more of a growth mindset.
The BNY Multi Asset Balanced fund focuses on companies with good long-term prospects from across the globe while using some bonds and cash to act as diversifiers. The fund aims to achieve a balance between capital growth and income over the long term and is managed by Simon Nichols who has built a strong track record in multi-asset investing.
Most of the fund (typically 70-80%) is invested in shares, and Nichols favours established companies with competitive advantages that often pay a dividend. Nichols likes companies that pay a dividend because of the discipline that this puts on company management teams. The remainder of the fund is made up of bonds and cash which are there to act as a diversifier when stock markets fall in value.
Global equity funds
If you have a longer time frame, and higher tolerance for risk, then you may want to consider investing in global equities. It’s hard to agree exactly which regions to invest in though, and in what proportions. Outsourcing this decision to an experienced manager with a good track record of making these decisions could be something you and your partner can agree on.
The Rathbone Global Opportunities fund invests across global stock markets (including the UK). James Thomson, who manages the fund, is one of only a few global fund managers to show they can pick great companies and perform better than the broad global stock market over the long term.
His success can be put down to a straightforward, disciplined approach, and a willingness to view the world a little differently. He looks for easy-to-understand businesses that can grow to dominate their industry and defend themselves from competition. He'll also search off the beaten track to find companies with superb potential that might be overlooked by other investors.