I found this a very interesting article by Dana Dratch @ Bankrate, where she present 12 investment mistakes a couple makes.  I comment on her points but the article is definitely a must-read.

1. Too many accounts – Honestly I have to agree.  Even personally it’s easy to get caught up in having too many accounts.  DH and I have one checking, one taxable, one online MM, and Roth IRAs, and 2 401ks (both DH’s).  But it’s easy to see it growing because unless we consolidate his 401ks, they’ll keep accumulating as he changes jobs and the same will go for me.  And I can understand how a couple would mean to consolidate but never get around to doing it.  Thus the number of accounts becomes unweildy.

2. One spouse dealing with advisors -This is another common mistake.  Only one half of a couple really caring about the finances.  One spouse getting financial advice and understanding the family finances.  My mom is a clear case of this, she had never meet with the financial advisor until after she retired.  Even now, she prefers to not meet with them and says my dad will handle it.  Unfortunately what happens when he dies (he’s 20 years older…)?  This ignorance could lead to a lot of financial problems in the future.

3. Not saving enough – Well since the savings rate is negative, I have to assume this is a no-brainer.  We all want it everything and we want it now.  As a society we have to learn to save, but it’s not fun.

4. Too much Cash – Sounds like a good thing right?  Wrong.  Problem is instead of investing their retirement money, or other long term money, people are unsure of what to do.  So instead they plunk it down in cash, where it’s possibly losing money because of inflation.  Again my mom is a great example of this.  She had saved in a 401k while working, but never invested it.  It sat in a money market during the great 1990s.  Well she lost big on compounding interest.  And now she’s got a lot less than had she even invested in a conservative 50% stocks/50% bonds portfolio.

5. One party not voicing investment decisions – This sort of follows along the lines of only one person meeting with a financial advisor.  This means if you lose big in investing, the one not giving an opinion can blame the one doing the investing.  Not a good way to manage finances.

6. Failing to Diversify Investments – Because couples have many different investment accounts, it can be difficult to diversify properly. Often couples will pick many of the same mutual funds, thus decreasing the diversity of the couple.  This can be risky.

7. No Shared Goals – I think this can be difficult to pin down.  Goals change as couples change.  I guess the main thing is communicating and sharing what you feel is important.

8. Skipping account maintenance – It’s very easy to get caught up in life.  But the article suggests people care more for their cars and maintenance than they do for their investments. It suggests meeting and discussing every 3 months.  I think this is too often. Once a year is probably better.  Because it’s easier to schedule and that way you aren’t scared out of your investment strategy by a bad market. The opportunity to bail out of a bad market is too easy if you meet too often.  Also if you sit once a year, maybe a couple can do account maintenance with taxes.

9. Comingling inherited assets – The article suggests if you split up before retirement you could lose you half your inheritance.  True, but this is something that should probably settled on a couple by couple basis.  Maybe you’d prefer to use the money now to pay off the house instead of investing it for retirement?  This is not necessarily a mistake.

10. Investing in things they don’t UNDERSTAND – This happens all the time even to single people.  I think many people get caught up in “fast” money investments.  The lure and promise of making a quick buck.  Bad idea.  No such thing as easy money.

11.  Not knowing how an advisor is paid – No matter how much I reiterate to my mom how her advisor is paid, she still doesn’t get it.  Yep she has no idea how her advisor is paid.  How?  Well they use Merrill Lynch and they invest in C shares of mutual fund.  Yep they basically pay 1% of any money to the advisor.  Gotta love it!  Many people make this mistake, if you do use an advisor try to understand how they work.

12. Not collecting “Free” money at work – Passing up a 401k match.  This is again a no-brainer and not for married people.  Yes maybe it’s easier to excuse when you are married and say you have so many other expenses to pay for like house, kids, car, etc.  But it’s just unwise to pass up a RAISE!  Got your attention?  Well it’s a raise if you take the 401k match, just not one you’ll seen anytime soon.

This was a fun article to read.  I suggest skimming it and seeing which points are applicable to you.  But these are great tips for common mistakes made by any investor.