Joint credit isn’t something married couples have to dive into automatically. It should be considered as seriously as your marriage itself.
It doesn’t matter if you’re a platinum card holder with a credit score in the 800s or an infrequent bill payer who can’t buy a car without a co-signer. Your previous credit history doesn’t make one bit of difference to your partner’s credit… until you apply for credit jointly.
“Money and love don’t always mix,” says Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla. “When getting married, often one of the most difficult issues is the merging of a couple’s finances. This is especially true if one or both spouses have a lot of debt or past debt that was handled poorly.”
Since your credit reports are attached to your Social Security number, your partner doesn’t get them or your credit history. Even if you or your partner change your names, the Social Security numbers stay the same… only with an alias attached to your original name.
“Only debts and accounts that you open jointly will be tracked on both of your credit histories, and still they are tracked as part of your separate credit histories” Criscuolo says. “Joint accounts are just reported to the credit agencies under all of the Social Security Numbers that are on the account. There is no such thing as a ‘joint’ credit score.”
Engaged couples or newlyweds may be considering combining banking and credit accounts just to simplify matters, but that approach is only simple on its surface. Julie Pukas, head of U.S. cards and merchant solutions at TD Bank, notes that one member of a couple can authorize the other to use their credit card. The upside is that a cardholder with bad credit can have a spouse with good credit help them polish up their credit score and look better in the eyes of credit bureaus. However, there is a catch.
“If you have too little invested in Europe and the United Kingdom, it’s a great opportunity to invest more while prices are down,” he says.
He advises investing about 15% of your equity portfolio in Europe, with exposure to both the U.K. and the rest of Western Europe. That’s actually fairly low compared Europe’s share of the global economy, but it addresses concerns about the region’s long-term economic struggles and political gridlock.
Joe Correnti, senior vice president of brokerage product at Scottrade, notes that investors should also consider rebalancing their mix of assets around this time. If your portfolio consists of 60% equities and 40% bonds or other fixed income, plummeting stocks may have left you a little heavy on the bonds side.To keep that 60-40 balance, you can either immediately rebalance or see if your portfolio springs back quickly. However, that decision should be based on your timetable and risk tolerance.
“If you are investing for the long-haul, shedding international holdings probably doesn’t make much sense,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “While the vote in the U.K. has led to some volatility in the market, in fact this appears to be the most significant two-day disruption the market has seen, we continue to believe the markets will bounce back, and recent events will likely be viewed as an opportunity.”
Just realize that, with a gross domestic product of about $2.9 trillion, the U.K. is still the fifth-largest economy in the world. While it’s unknown what those effects might be, they aren’t going to be “nothing.”
Jacobs at Palisades Hudson recommends investing in large-cap European stocks through low-cost index funds such as the Vanguard European Stock Index Fund. You can sell losing stocks if you feel that’s the right move, as you can deduct $3,000 worth of losses per year if you don’t have any offsetting gains, but prepare to say goodbye to them for a while. A “wash sale” buyback within 30 days will knock out that deduction, so buy another similar European ETF or mutual fund if you’re having buyer’s remorse.
Also, and this is the tough part, look on the bright side and don’t get jittery. There’s a strong chance that even if the U.K. goes through with leaving the European Union, it may work out well for all parties involved. The EU will work harder to keep its house in order and its membership intact, while the UK’s decision can’t hurt the U.S. all that badly. Exports to the U.K. were less than 4% of all U.S. exports last year, and the U.K. accounts for just 3% of S&P 500 companies’s revenue.
“There won’t be mass defections of talent or wealth from Britain. New trade agreements will be negotiated, and cooler heads will prevail,” Jacobs says. “It’s not in the remaining EU countries’ interest to punish the U.K.”
That said, the Brexit didn’t happen in a vacuum. DeVere’s Green cites China’s economic growth, the U.S. election, the failure of negative interest rates in Japan and the eurozone to stimulate sustainable recovery, and the Fed’s nervousness over the U.S. economy as other concerns for the remainder of 2016. While market shocks from Brexit won’t throw the U.S. or the world into recession, they shouldn’t be viewed as anomalies, either.
“Investors have always faced some volatility but shifting fundamentals will continue to drive up volatility further in the markets for the foreseeable future,” Green says. “Not only do investors need to accept this, they need to embrace it. Volatility is good for markets and investors alike, because it generates important investment opportunities.”