Retirement fund expert and Equifax Personal Finance Blogger Dan Solin offers an provocative new insight in his latest blog: investing with your significant other can ruin the relationship.
Dan writes: "Many couples believe in togetherness, which can be a good thing. However, there are dangers to investing jointly that should give even the closest duos pause.
Remember the best-selling book Men Are from Mars, Women Are from Venus, by John Gray? The difference in the way men and women view the world has particular applicability to investing.
As many women know, men generally don’t lack confidence. They typically love the “action” of buying and selling stocks. The fact that trading increases costs, which decreases returns, doesn’t dent their enthusiasm for risk taking. I’ve found that male investors tend to seek the “big score,” often unaware of the “big risk” of losing a significant part of their invested capital.
Many women have told me that they find the markets pretty intimidating. Many men don’t admit their fear. They believe they can handle it.
A lot of men consider themselves to be very knowledgeable investors. Women tend to have a different view of their investing knowledge. A 2009 survey found that 73 percent of men professed having “a general knowledge of stocks, bonds, and mutual funds,” compared to only 40 percent of women.
Given these vast differences in attitudes, you have to question the wisdom of men and women investing jointly.
Women should be especially wary of deferring to their spouse. According to Bloomberg.com, a Merrill Lynch survey polled 1,000 people in 2005 to determine if men or women were better investors. The study found women made fewer mistakes, were less likely to become emotionally attached to losing investments, and engaged in fewer transactions than men. A study in the United Kingdom reached a similar conclusion. It looked at 100,000 portfolios. Those managed by women significantly outperformed those managed by men."
The full blog has even more interesting information. Check it out here: http://retirement.equifax.com/2010/09/investing-as-couple.html