Who Makes the Investment Decisions in Your Household?

Here’s today’s Question of the Day:

Who makes the investment decisions in your household?

I got the idea for this question from Jonathan Clement’s Getting Going column titled He Invests, She Invests: Who Gets the Better Returns? (free), in today’s Wall Street Journal. The column looked at the differences in the investment style of men and women. The main points:

1. Men typically take more risk and trade more often.

2. Women typically take less risk and trade less often.

According to the article, which sites a 2001 study, men turn over their portfolio 45% more each year than women. They attribute this turnover to men’s overconfidence. I’m not so sure about that. I would think it could be attributed to insecurity. In other words, men are looking for something better. I would think buying and holding would exemplify overconfidence. I guess it could go either way.

Anyway, I definitely take on more risk but I wouldn’t say that I trade often. I’m pretty much a buy and hold sort of guy. My wife could pretty much care less about investing. So, I would say that I make the investment decisions in our household. It works beautifully.

How about you? Who makes the investment decisions in your house? Do you both make them? If so, do you have obviously different investment styles and do these differences cause problems?

24 thoughts on “Who Makes the Investment Decisions in Your Household?”

  1. I make the decisions for us, but that is because my wife knows nothing about investing. If it was up to her, she wouldn’t even save in her retirement plan or have a Roth IRA. That’s fine with me. She’s a lawyer, so she can focus on our legal issues, and I’ll focus on our finances. Seems to be a good arrangement so far.

  2. I do the investing, and I have since we got married. The risk thing describes us to a good extent. She was adamant about the money that she rolled into an IRA from her teacher’s retirement. That job was so much sweat and tears that she couldn’t bear the thought of losing principle (it was consequently conservatively invested). Her timing couldn’t have been better since this was just before 2000.

    Starting around that time, I have contributed to IRAs for both of us. It has been more moderately/aggressively distributed among investments, and I lost money a couple of years but have done fine on average.

    After reading that 45% turnover fact I realize… I invest like a woman.

    I don’t know if it will turn out to be good or bad, but I have started taking more risk on in the past year (and going forward from here). I didn’t know my risk tolerance when I started, but I am starting to know my mind better.

    Since my wife doesn’t get so directly involved, the fact that her tolerance is lower is not so important. She’s not looking at it from day to day and getting stressed out. I try to let her know where we stand every quarter or so and that works fine.

  3. I (I’m a guy) drive the bus in our house as far as accounting and investing are concerned, but we have monthly “treasury report” meetings where we discuss our investments and our latest net worth spreadsheets, goals, taxes, etc. And whenever I make any major changes on finances, we talk about it first.

    She’s somewhat more conservative than I am, but not much.

  4. I make the investment decisions (the missus) more or less solo; although I run everything past my husband he simply isn’t much interested in investing, although has taken flyers on individual stocks occasionally. I also earn significantly more than him, so most of our savings/investment/mortageg prepay money is coming out of my account anyway. I’m definitely more conservative than him & definitely trade less, and having set my preferred allocation a while back very rarely venture too far beyond a core bunch of ETFs for retirement and a lazy fund portfolio for non-registered.

  5. Well, I’m a single woman, so the buck stops with me in my household.

    I made a decision early on in my life that I never wanted to depend on a man for my financial security. I’m assuming that there will never be anybody but me who’s going to be guiding my financial ship all the way through retirement, so I have to care about this stuff.

    I’m interested in trading, so I read a lot of different investment and trading books. I haven’t actually done anything beyond paper trading since I have a bar set for where I’d be willing to risk real money in that arena that I haven’t met yet.

    As far as managing my investments, I have a self-directed 401(k) where I’ve learned a fair bit about my tendancy to place trades too frequently. I’ve also spent a fair amount of time weighing issues of low risk vs. high risk choices in investments. I’ve selected my investments there very carefully and I avoid mutual funds in favor of high-quality ETFs, stocks and closed-end funds.

    So I guess I trade more like a man, but with womanish undertones. Also, I do monitor my accounts (401k, IRA, regular investments as well as checking) daily.

    I think for a lot of women is we often get the message early on that we don’t need/shouldn’t need to/shouldn’t want to/should defer to a man to/etc. handle complex financial affairs that we don’t develop ourselves in that direction. It’s not necessarily an inate disinterest.

    While your wives may not be interested, if you have daughters I think you could do them a real service by trying to educate them on how to be sophisticated financially.


  6. I’d say that insecurity and overconfidence are two sides of the same coin.

    As a single woman, I make all the financial and investment decisions in my household.

  7. I make the investment decisions, though I run them by my husband first. I don’t plan to trade much. And I’m fairly conservative for now (we don’t have much and I’m not risking what we can invest!).

    I think if my husband were the one to invest he would put it off and generally have a hard time because he’s like your wife and really doesn’t care. Well, he cares in a way but he has spent so little time understanding the options, etc, that he feels overwhelmed. He’d much rather have a wife who does his research, presents him with ideas and why they’re good, and then carries it out once he OKs it. Which is fine because I’d rather be the investor too.

  8. I make all of the financial and investing decisions in my household – and I invest true to my gender. My fiance trusts me implicitly (he is the creative one, I’m the one who handles the money).

  9. I make all of the investment decisions in our household also. I do confer with my wife periodically so that she understands what is going on. My background is in accounting so I have a better understanding of what is going on so she defers to me.

    I take care of all of the bills also because handling money makes her stressed out.

  10. I pick the stocks. My husband keeps my risk taking tendencies in check. I always give him a heads up when a security is going to be bought or sold.

    When we update finances, Mr. H handles the bookkeeping of the investments. I take responsibility for entering in all the checking, cash, and credit card purchases. That way, each can see what’s going on and where we’re at.

  11. I make all the financial/legal/investing decisions in our house. Hubby just is. not. interested. I make the decisions, tell him what I’m doing and why, and then do it.

    If I hadn’t we’d still be in debt up to our eyeballs!

  12. I do all the investing and money management. I enjoy doing it, and my wife doesn’t.

    On the opposite side, she likes to cook and I like to eat.

    A match made in heaven!

  13. Like Kin, I make all of the financial decisions in my marriage. I’ve found that a lot of household tasks are assigned based on which person is more particular about how they are completed, which isn’t always the same as liking that chore. In my case, I ended up with finance because I am more concerned with long-term planning and financial security than my husband. On the upside, he keeps our home clean, our cars maintained, and he gets along better with my family than I do!

  14. While I make all of the invmnt recommendations (because I have the experience and am much more interested in it than wife), the final decisions are always made jointly. If I cannot sit down and explain what I’d like to do to my wife in layman’s terms, then it probably doesn’t make much sense. She’s a smart cookie with a good instinct for money issues, so I have come to trust her judgement. It’s also important for her to have a veto on money issues (since I generate 90% of the income).

    And it provides her with enough knowledge that if something happened to me, she would not be completely in the dark (we’ve seen and heard about this happening to couples one too many times). I also like the fact that if we make these decisions jointly, there can be no ill feelings or finger-pointing in the future if something goes bad. This way we’re both accountable for the decision.

    Lastly, working with a planner also makes it easier since we review this stuff at least once a year, sometimes more frequently.

  15. I make the investment decisions in our house. Hubby once bought stock and it lost 40% of its value, but he wouldn’t sell until we finally got rid of it 2 years ago. He also had us contributing to 2 really lousy mutual funds. We consolidated everything in 2005 into Vanguard funds and are doing better in the last 3 years than we had the 7 years before. He’s happy, I’m happy, and we’re finally getting ahead …

  16. I handle the investing and most of the finances. I have always been the most budget aware. My investing knowlege has grown with our savings. That is good because it takes confidence and experience to handle a sizable portfolio in today’s market. I generally tell my husband what I am thinking of doing before I do it . He does look at quarterly statements.

    Now that the children are grown the income our investments throw off are some years greater than my husband’s income.(I am not employed outside the home.) When this becomes the norm he will retire- but I am beginning to wonder if I will ever truely retire from managing the portfolio. Actually I have a plan – my children are good students and someday they can manage ours – the way I am still guiding telling the youngest newly graduated child in her investments .

    By the way, I once thought my husband had totally tuned out what I was doing – he has no intrest in finance. I signed us up for a seminar on investing about 5 years ago. It became aparent from the coments he made during it that he had been listening and knew what to do – that he just trusted me to do it.

    Men I know tend to be more competative in investing – they want to beat the market . As I age I appreceate Index funds more and more. And symplicity.Woefully, most women my age know virtually nothing about finance- but often like to hear some rules of thumb and then want to learn more- often finally realizing that eventually their standard of living and ability to retire depends on a grasp of the situation. I have been told I should teach a class but I do not have true credentals…..

  17. I handle the investing in our house. My husband doesn’t have any inclination to do the research or bother with keeping up with investing information (prospectus info, etc.). He isn’t unaware – I keep him fully informed as to what we are doing.

    He tends to be much more conservative than I am, and definitely more reactionary. I tend to curb my risk to appease his need for security, but the fact that I really don’t monkey with the money too much is the real benefit to me doing it. I tend to invest in a well-diversified array of index funds (domestic, international, small cap, large cap, bond funds, etc.), and then just sit on them. I rarely move money from one fund to another unless it’s the annual rebalancing.

    I don’t think it’s overconfidence on his part that would have him moving money more, I think its insecurity. He tends to run from negative returns.

  18. I personally think that both partners/spouses should have an equal share in all financial decisions, as both are affected by whatever is done. Also, I think that once they can appreciate finances, children should be involved in household economics (paying bills, budgeting, saving, etc.). Obviously decisions are made by adults, but it gets kids thinking about an important aspect of life. http://www.richmoneymillion.com

  19. My husband is clueless when it comes to financial planning, with respect to savings, 401(k), other investments. He has lived his life with the fly by the seat of your pants attitude, and as such, I am the first and final word when it comes to financial montiroing and planning. Given the prospect of having children, this is even more important, because I will be sure to pass on the knowledge of how to save and what it means to be an investor.

  20. In our house I do all the financial planning. My husband hasn’t written a check out for anything other than pizza the 17 years we have been together. He has no idea how much is in the checkbook. He tells me what he wants and waits for me to tell him when we can afford it. Once I asked him how much he thought he had in his 401k account. He was off by 25,000. It works that one of us just does it because we both have about the same views of spending with me just being a little bit more the saver. However this is starting to cause me some problems because the accounts are getting up there. A 3% drop is alot to me now. I wish I had someone to sound off my ideas and he just looks at me and says “whatever you think.” That is why I spend time on blogs like this. So one point for the wife doing the books and one point for women being conservative because once the balances got up there I went from all in to mostly out.

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