BMO Financial Group

BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

August 10, 2012 09:00 ET

BMO InvestorLine: Are You and Your Partner Investing Soulmates?

BMO identifies possible solutions to ease financial friction among couples when it comes to investing habits

TORONTO, ONTARIO--(Marketwire - Aug. 10, 2012) - With wedding season in full swing, BMO InvestorLine encourages couples across the country to have the "Financial Talk" before they take their vows.

"Finances can be one of the most common sources of disagreement among couples and a difference of opinion on money matters can affect everything - from a couple's household budget, to their retirement investments," said Cesar Rainusso, Vice President, BMO InvestorLine. "Ensure you and your new spouse have a 'prosperous' financial future by having an open dialogue early on that addresses these financial concerns and how, together, you can turn 'my money' into 'our money'."

Couples may not always be a perfect match when it comes to their finances and investing strategies. Some situations include:

Saver vs. Spender: One partner tends to be a saver; they make regular contributions to their savings accounts, including a retirement plan, and try to invest any extra cash. The other may not have a financial plan and spends any extra money.

Helpful tip:

A couple in this situation would be wise to talk about their financial situation and investing habits early on to prevent friction down the road. They can choose a realistic amount to invest each month towards their goals and set aside a separate amount to spend on themselves and each other. Compromising will ensure the saver has the financial security they desire, without leaving the spender feeling deprived of the things they enjoy.

Sharing and Risk Tolerance: Couples often decide to share an investment portfolio, however when it comes to risk tolerance many partners do not match up. One partner may be a more aggressive investor, investing primarily in risky investments that offer the potential for higher returns, while the other partner prefers investments that are more likely to preserve principal, even if that means earning lower returns.

Helpful tip:

Diversifying a shared portfolio can help couples meet both investment styles. Selecting a mix of investments such as stocks, for higher returns, and more conservative options like bonds and cash, to insulate against market volatility, can provide couples with a strong portfolio that will meet their shared short-and-long term financial goals.

Agree to Disagree: There are a variety of strategies that individuals employ which make them feel confident and comfortable with the growth of their investment portfolio. While many couples are able to meet in the middle and find something that works for both sides, sometimes a compromise cannot be reached when it comes to investment strategy, the asset mix in their portfolio and how it is managed.

Helpful tip:

If partners are unable to agree, it may be more beneficial to create separate investment portfolios. With individual portfolios each partner can be comfortable with their investments and how to best manage those assets.

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