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How couples can invest in Mutual Funds

  April 16,2022

4 Things That Couples Should Keep in Mind While Investing In Mutual Funds

If you are married, you may spend a lot of time with your better half, helping them solve their problems, planning vacations or just relaxing at home.

However, couples also need to discuss investments as well. And, mutual funds are a popular investment option.

This article will look at the four main aspects that couples need to take care of while investing in mutual funds.

Do you want to maintain a joint account or an individual account?

You can use a joint account or a regular account to invest in mutual funds.

Many mutual fund platforms provide mutual fund joint holding accounts. You and your spouse must both be KYC compliant to invest under a joint account.

However, keep in mind that if there are any ELSS funds in the portfolio, only the primary account holder would be eligible for tax benefits.

How do you want to take care of goals?

The second factor to examine is your objectives. Goals help you to understand why you're investing in the first place. And, because you're investing as a couple, you'll have two types of goals: your joint goals as a couple and your different individual goals.

Examples of joint goals

  • Purchasing your first home
  • Saving money for your children's college education
  • Putting money aside for retirement

Examples of Personal goals

  • Creating your home gym 
  • Investing in a high-end camera to pursue your photography passion
  • To increase your professional possibilities by taking a course or going back to college

There are two ways to tackle joint goals: Investing together and separately. 

The first technique allows you to pool your resources and invest in a common objective. For example, if both of you are saving for retirement, you and your spouse together would buy three high-performing equity funds. If you own funds 'A' and 'B,' your spouse might invest in 'C' to supplement your portfolio. If the funds overlap, then you or your spouse can trim some of the holdings. 

You and your partner can pursue separate goals in the second strategy. You can, for example, invest in your child's schooling while your spouse invests for retirement. Because you and your spouse are investing for distinct purposes with this technique, it isn't a big problem if your portfolios coincide.

If you are investing for the same goals, keep an eye for portfolio overlap with your spouse

If you and your spouse are investing for the same goal, the funds must complement each other. It's because too many similar funds, after a certain point, don't add much to diversification.

Assume you have three large cap equity funds A, B, and C in your portfolio, and your spouse has three additional large cap funds, say schemes D, E, and F. If this is the case, diversification will not affect your portfolio.

Reach a mutual consensus for financial goals

It is natural for two people to have opposing view points on specific issues. Similarly, your partner may have different plans for specific significant financial goals in your life, such as retirement or a child's schooling. Assume your partner desires a luxury retirement, however you want a conventional or frugal one. These factors influence the amount of money needed for both of your retirement goals.

As a result, it is critical for you and your partner to communicate the visions for various financial goals in your lives to reach a mutual consensus and effectively plan investments to achieve common goals.

Conclusion:

Investing together as a couple can be tricky. So, it is essential to find a middle ground that can help fulfil the common financial goals. This post discussed the top four aspects that you need to consider as a couple when investing in mutual funds.

This blog is purely for educational purpose and not to be treated as an personal advice. Mutual fund investments are subject to market risks, Read all scheme related documents carefully.

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