I want to save. My partner wants to invest in stocks. Who’s right? – USA TODAY

Posted: April 10, 2020 at 2:52 am

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Erin Lowry, Special to USA TODAY Published 6:00 a.m. ET April 8, 2020 | Updated 10:54 a.m. ET April 8, 2020

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The Warren Buffett meme with versions of the legendary investor's advice to befearful when others are greedy, and to be greedy when others are fearful, hasbeen making the rounds on social media as the markets have rocked and rolled overthe last few weeks.

There is logic in this advice. But not everyone is keen on stock market risk when so much is uncertain, especially job security. If you are part of a pair that makes joint financial decisions, figuring out what to do can be tricky.

This dilemma prompted a woman to ask me how she could convince her spouse to save and stop putting more money in stocks? It's aquestion that requires both people in the relationship to examine their tolerance for risk and to come to a compromise that makes them both feel secure.

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Please stop putting all our money into the stock market isnt going to go as far as, our jobs are both vulnerable right now and we only have three months worth of living expenses set aside, and it would make me more comfortable if we focused on boosting our savings instead of investing.

We all have differenttolerances for risk, especially when it comes to our money. The investor in this relationship likely sees this as a big opportunity, while the saver wants more control.

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Engage in a discussion that helps you gauge your risk tolerance:

Realistically, how stable is your job?Over 10 million Americans have filed for unemployment in the last two weeksand there are plenty of them that believed they were in fairly stable, recession-proof jobs. How well is your industry or company positioned in the current environment?

If we both lost our jobs tomorrow, how long can we pay all our bills? Even if you can file for unemployment, it could take weeks to get your first check, so how long are you able to cover yourself and would unemployment be enough to still make ends meet?

If youre unsure about your risk tolerance, then you can simply Google risk tolerance questionnaire and find dozens of options.

Use actual numbers to inform the choices youre going to make about saving and investing right now. Sit down together and create your bare essentials budget." This should include enoughto meet your basic needs: shelter, food, transportation, medication, utilities, insurance and debt payments.

The general rule of thumb is that you should have three to six months of living expenses in an emergency fund. And right now, it is better to be on the conservative side of that rule as were still unclear when, and if, millions will be able to go back to work.

Now, this emergency fund doesnt have to be to your typical lifestyle. Just focus on that bare essentials budget number. For example, if you need $3,000 per month for the basics, then you should have $18,000 in savings as your emergency fund.

If you don't have at least six months of emergency savings, it would be wise tofocus on contributing o retirement accounts as yourinvestment strategy and redirect other money towardsavings. That way, you'restill investing, in a tax-advantaged way, plus boosting savings to appease the risk tolerance of the saver.

There are a lot of reasons people are getting spooked by the stock market. For many of us millennials, its been a really smooth bull ride for the last decade, minus a fewblips.

There are still people on solid financial footing who are primed to take advantage of the stock market. Perhaps these two both have secure jobs and a healthy emergency savings with six months of living expenses or more. Maybethe saver is wary of the stock market period and even more anxious now that its turbulent. It is critical for the saver (and all of us) to remember that the stock market is cyclical, and all its history indicates to us that the recent volatility will end and a bull market will return.

While it may very well make sense for this coupleto keep investing in stocks, its also important to be mindful of how youre investing. Now is probably not the time to try toteach yourself day trading or complicated investing techniques unless you are comfortable losingsome money. To quote the Oracle of Omaha again:Wall Street makes its money on activity. You make your money on inactivity.

(Photo: The Motley Fool)

Erin Lowry is the author of "Broke Millennial Takes On Investing" and "Broke Millennial: Stop Scraping By and Get Your Financial Life Together."

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I want to save. My partner wants to invest in stocks. Who's right? - USA TODAY

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April 10th, 2020 at 2:52 am

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