With Valentine’s Day around the corner, love is undoubtedly in the air. If you’re celebrating this year as a newlywed or as part of a new couple combining your finances, there are strategic steps you can take to set up your investment strategy for success.
Aligning your financial goals
A critical first step in your combined investment journey is aligning your goals. Whether it’s saving up for your dream vacation, purchasing your first home together, planning for a family, or preparing for retirement, each goal comes with its unique investment requirements and timeline. It’s essential to distinguish between short-term and long-term objectives, such as saving for a vacation versus saving for retirement. Balancing these needs requires open communication, careful coordination, and sometimes, compromise.
Once you’ve aligned on your goals, and this may indeed take some time, the next step is determining how much you can invest. Assessing your income, expenses, and existing savings is crucial in this phase. A good rule of thumb is to consistently invest a portion of your income, allowing your portfolio to benefit from the power of compounding over time. Remember, balancing your investment needs with your spending requirements is key to creating a sustainable financial plan.
Consider the benefits of tax deferred investment accounts
As you embark on this journey, keep in mind the variety of investment accounts available, each offering unique tax features and benefits. From Tax-Free Savings Accounts (TFSAs) and the new First-Home Savings Account (FHSA) to Registered Retirement Savings Plans (RRSPs) and Non-registered Investment Accounts, each account type aligns with specific financial goals. For instance, those planning to purchase their first home may find the FHSA beneficial, while saving for a vacation might be better suited to a savings account, a non-registered investment account, or a TFSA, depending on the timing and your specific needs.
When considering investment options, the choices can be overwhelming. Working with an investment advisor can clarify these options, which can include Exchange-Traded Funds (ETFs), mutual funds, pooled funds, stocks, and bonds. Understanding each option is crucial, as is ensuring that your choices align with your risk tolerance, investment horizon, and financial goals.
Combining your financial lives can also highlight differences in risk tolerance, investment knowledge, and financial priorities—common challenges for newlyweds and even those who’ve been married longer. Finding common ground through compromise, mutual education, and establishing joint investment policies can reflect both partners’ perspectives and goals.
While personal finance is deeply personal, professional advice is invaluable. A financial advisor will offer tailored investment strategies, nuanced understanding of complex financial products, and guidance to help you navigate through life’s financial milestones.
The benefit of personalized advice
Embarking on this journey is both exciting and significant. If you’re ready to take the next step in crafting your joint investment portfolio, our firm is here to help. Our team is dedicated to providing detailed, personalized investment advice to help families and newlyweds like you build a successful financial future together.
