Investment Strategy? We’ll Never Agree on That!

Couples may lack a basic understanding of investing. Telling someone their feelings are wrong or should know more than they do is a losing proposition. Acknowledge the desire for safety or lack of experience someone may feel. Historical data showing returns of stocks over bonds despite higher volatility and the long upward trend of a balanced portfolio may comfort the novice investor.

If a couple disagrees about the percentage of stocks in an overall portfolio, It’s possible to blend investment preferences into a middle ground, combining an aggressive strategy with a conservative one. The result is a balanced or moderate investment approach.  If she wanted all stocks and he wanted all fixed income, a 50-50 mix of stocks and bonds might enable each to feel their preferences were taken seriously.

In discussions with clients, we often point out that an investment portfolio is only part of their wealth. We encourage ExxonMobil employee clients to consider their pension benefit as they invest their EMSP—the pension benefit doesn’t depend on stock market performance; it can be taken either as an annuity (effectively, fixed income) or as a lump sum (cash). Additionally, many couples have equity in their home and prospects of Social Security benefits that may provide a healthy percentage of daily living expenses. These other assets mitigate the “risk” of the EMSP or other equity-heavy investment accounts. A partner who seeks safety can appreciate that the “risky” investment account is not all the couple’s wealth.

Most advisors agree that investing cash needed within a couple of years in stocks or intermediate or long-term bonds is not prudent. Market corrections are commonplace; you don’t want to have to raise cash by selling stocks at the bottom of a bear market. The person desiring security can legitimately seek a conservative investment for assets to fund near-term needs. Retirement assets invested for ten or more years should be able to ride out market volatility. Couples should consider the timing of cash needs in determining an appropriate investment strategy. Safety is a good attribute for near-term needs.