You may have received several reminders from transfer agents about the last date for filing nominee details for your investments. It is important to ensure that the wealth you accumulate is available to the beneficiary at the time the money is required to meet a life goal. For instance, parents creating an education fund for their child must ensure that the wealth accumulated in the fund is easily accessible at the time the child turns 18. This requires that you thoughtfully craft your investments. In this article, we discuss two factors that are important in this regard — spousal involvement in investment decisions and ownership of the investments.

Also read: The mystery about investment

Spousal involvement

Two heads are typically better than one for decision making. You should, therefore, involve your spouse in all the investment decisions you make for the family. It is even better if your spouse does not understand the world of investments as you do! Why? The more you know about investments, typically the less you are likely to explore the obvious questions.

A case in point is bank deposits. You may know how to anticipate interest rate changes. While you may be focussed on which tenure to select to optimise returns, your spouse may suggest that you break your deposits into smaller amounts and stagger the maturity amount through the term period chosen. Bond laddering, to use a technical term. Why? The argument may be that having cash flows through the year is much better than having lumpy flows at any point in time.

Of course, involving your spouse may not be an easy task if your spouse is uninterested in participating in the investment discussions. You must, therefore, address the other important benefit of spousal involvement — being aware of the investments. This makes it less likely for a third party to scam your family out of the investments after your lifetime. At the very least, your spouse will know how much wealth the family has and where the investments are located. Involving your child may be an arduous task but perhaps, beneficial if your child is above 18.

Conclusion

A simple way for spousal involvement in family finances is to jointly hold the family wealth. An alternative is to hold in “either or survivor” mode. That way, one of you can continue to operate bank deposits and savings accounts after the other’s lifetime; your child will be the nominee for your goal-based investments in equity funds and bank deposits.

(The author offers training programmes for individuals to manage their personal investments)

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