Imagine a couple who have opposite approaches on how to build a nest egg. One spouse believes in investing conservatively so the couple can live their lives without worrying about the markets, even though it means saving more each year to invest. The other spouse believes in investing aggressively, trusting that a portfolio heavily weighted in stocks will deliver higher returns over time – and will allow for more discretionary income to enjoy life now. Though these opposing views might sound like trouble, they may hardly present a problem, and can even work to each spouse’s advantage.
The compromise solution
The couple is putting together a non-registered portfolio designed to eventually support their retirement. They agree to deal with their differing views through compromise. With their advisor, the couple develops a portfolio that balances fixed income and equity investments so that each spouse compromises equally on risk level. They also allocate only minimal amounts to the most highly aggressive and most conservative investments.
This arrangement is mutually beneficial, as the conservative-minded spouse gains more exposure to market opportunities, and the aggressive investor is kept from placing retirement savings at potential risk.
The net effect approach
Not everyone is comfortable with a compromise solution, and that’s fine. Say a couple with opposite investment philosophies designates their Tax-Free Savings Accounts (TFSAs) to fund retirement. Both spouses can remain true to their individual investment personality, resulting in a conservative TFSA and an equity-oriented TFSA. The net effect as a couple is a favourable combination of capital preservation and growth potential – easily accomplished, without conflict. The same strategy can apply to Registered Retirement Savings Plans (RRSPs) and separate non-registered accounts.
If you and your spouse ever feel at odds over conflicting investment ideas, talk to your advisor. They’ll help you develop investment solutions that could ultimately benefit you both.