Investing by newlyweds is a marvelous opportunity to achieve financial independence at an earlier rather than later point in the marriage. However, odd as it may seem the first tip is to eliminate credit card debt and car loans and save the interest. The most that can be earned in a risk-free investment is about 2 percent on a multi-year CD. Compare this to the interest that is paid on consumer loans and credit cards.
However, even with a load of debt if your employers offer a matching 401(K) it would be wise to start investing in those plans while eliminating the credit card debt and car loans. These plans offer the opportunity to invest pre-tax dollars and accumulate profit on the investment without paying taxes until you withdraw the money. Usually, the 401(k) plans are the first investments that newlyweds should make.
Make sure that your mortgage interest is the lowest that you can obtain, but be leery about refinancing charges to get a lower interest rate. Have a professional analyze the numbers for you.
Every family and especially newlyweds should have six months of net income saved. Sounds like a missed opportunity to invest the money and see it grow, but we have learned too often in recent times that the job market is not as stable as we would like it to be.
Now that we have discussed the basics of laying a foundation for an investment plan, we should discuss the investing tips. The second tip is to pool your investment funds rather than each spouse maintaining their own.
Thirdly, recognize that our economy presents the greatest challenge ever to the small investor. Even the investors with large sums of money are having trouble investing their money for a profit. You need to define your investment goals and your tolerance for risk. If you have a high tolerance for risk, which many young investors do, then you will follow a safer investment strategy. Therefore, it is essential that together you agree on a level of risk that is acceptable.
Fourth, select a financial advisor who can recommend an investment strategy and particular investments that meet the highest ratings given by Morning Star, Standard and Poor’s Rating Services, and Moodys. These companies act as do consumer credit reporting agencies, and they will provide reports on investments that seem to be mired in financial quick sand.
Fifth, when a financial advisor recommends an investment in shares they should be prepared to provide you with the comments of these agencies on the investment. It is essential that you know the short and long-term risk posed by each of the recommending sources.
Sixth, with the guidance of the financial advisor select the dollar percentage that you should invest in each category of investments. Continue to follow this plan without interruption unless
you have a very good reason to depart from it. The so-called “knee-jerk” investment strategy leads to failures.
Continue to talk with each other about your investment t strategy because it will strengthen your relationship and result in sound judgments.