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How Marriage influences your Investment Decision?

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July 27, 2023

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Marriage is a major milestone in life that has a significant impact on your tax planning and investment decisions. It not only brings you and your spouse together in a legal union, but also intertwines your financial lives. When you begin this journey as a couple, it becomes crucial to consider the impact of your marriage on your investment strategies and tax planning efforts.

By devising a comprehensive investment plan, you can navigate your financial future together as a couple and achieve your shared goals easily. However, to create an actionable financial strategy, you need to first understand how marriage influences your financial decisions and taxes.

In this article, we’ll take a closer look at this.

5 ways in which marriage impacts your tax and investment decisions

Combined financial goals

One of the primary considerations in creating an investment plan as a married couple is defining your common financial goals and objectives. These goals may revolve around important milestones like buying your dream home, saving up for your children's higher education or planning for retirement. By identifying and aligning these goals early in your marriage, you can develop a roadmap that outlines the steps needed to achieve them within the desired timeline.

Risk tolerance and asset allocation

Another vital aspect of any joint investment plan is accounting for each partner's risk tolerance. Risk tolerance measures how comfortable you are with fluctuations in the returns on your investments. It is important to have an honest and open discussion with your spouse about your risk preferences and tolerance levels, so you can determine the optimal asset allocation strategy.

This is because your spouse may be more risk-averse than you, and prefer safer investment options like fixed deposits or bonds. Alternatively, they may have a higher risk appetite and be quite comfortable with investing in equities or mutual funds.

Tax-saving investments

Your marriage also affects your tax planning efforts, and when done right, it can maximize tax efficiency — which is another key consideration for married couples. You can reduce your overall tax liability as a couple by understanding the tax benefits associated with various investment plans and products.

For example, investment options like Equity-Linked Savings Schemes (ELSS), National Pension Scheme (NPS), life insurance and tax-saving fixed deposits provide tax deductions. By leveraging these tax-saving options, you can optimize your investments as a couple while simultaneously minimizing your tax burden.

Joint investment plans

Some types of joint investment accounts can be highly beneficial to married couples. These accounts offer convenience and transparency in managing investments. In addition to this, you and your spouse can also pool your financial resources together and jointly contribute to your investment portfolio. This facilitates shared decision-making, efficient tracking of investments, and a cohesive investment strategy.

Financial protection with life insurance

Life insurance, including joint life insurance, also holds significant importance in your financial portfolio after your marriage. Including life insurance in your financial planning demonstrates a proactive approach towards securing your family's future and ensuring their financial stability during challenging times. This is because it provides financial protection and peace of mind for both you and your spouse in case of either of your demise.  

Joint life insurance covers both you and your spouse under a single policy. So, in case something untoward happens to one of you, the surviving member will receive the financial benefits from the joint life cover. These payouts can help you settle any debts left behind by your spouse and support your children and other dependents without any difficulties.

Conclusion

This sums up how marriage can impact different aspects of your investment plan and tax-saving efforts. You can optimize your financial progress by drawing up a comprehensive financial strategy accounting for your and your spouse’s goals and risk preferences. In addition to this, it is also important to monitor your progress and review your joint financial plan periodically, to ensure that your portfolio remains aligned with evolving needs, market conditions, and long-term objectives. You can also seek guidance from a qualified financial advisor if needed.  

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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