Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0

The end of a marriage is one of the most devastating life experiences a person can be asked to endure. For the divorced woman, the mitigation of family upheaval is paramount. The following eight investing tips are provided here for the benefit of the divorced, or soon-to-be divorced woman to use stave off financial uncertainty when the unthinkable happens.

Watch Those Mutual Fund Expenses

Many women use mutual funds as a tool to simplify investment decisions. It's a good idea. Not all funds are equal however. The wise investor chooses funds that have the lowest possible expense ratios (below 1.50 percent for stocks). Industry studies prove that keeping investment costs down will improve the odds of earning a respectable return over time.

Don't Ignore Bonds

Stocks and mutual funds invested in stocks are highly effective tools for generating growth across time. By no means should the divorced woman ignore the appeal of bonds. Bonds provide safety, income and a splendid feeling of security when market volatility kicks in. The closer one is to retirement date, the more exposure they should have to bonds and other fixed-income investments.

Understand the Meaning of Equitable Distribution

“Equitable distribution” is a legal term used to justify the division of property and responsibilities (including debt) after a divorce. According the legal professionals at Blumenauer Hackworth, the courts can consider just about anything when making such a determination. For this reason, it is a very good idea for a woman facing the possibility of divorce to protect her rights concerning possible court-imposed equitable distribution judgments.

Find Your Risk Tolerance Level

All investment activities involve some risk. Risk and reward go hand-in-hand. It's very important for you to appreciate the true risks your investment activities expose you to. It's also important that you are at all times comfortable with such risks. One can never make sound investment decisions when they are worried sick about losing money.

Think Twice Before Filing Jointly With the IRS

After a divorce, it may seem like a "no-brainer" for a couple to continue filing jointly with the IRS. This could be a dreadful mistake. When you fix your signature to a tax form, you are testifying to the veracity of everything on it. Even if you are not directly responsible for a misrepresentation, you can be held responsible for it. If you can't be 100 percent comfortable with this, don't do it.

Choose a Fee-Only Financial Adviser

The National Association of Personal Financial Advisors (NAPFA) exists to promote the growth of the fee-only financial advisory industry. The association strongly urges divorced women to consider fee-only financial advisers who will serve their clients without complicating the relationship with commissions and other incentives that create a conflict of interest between client and adviser.

Consider a Roth IRA

A Roth IRA permits you to make contributions to your future retirement with after-tax dollars. Your Roth IRA contributions will grow tax-free each year because taxes are deferred until much later. Moreover, you can generally make withdrawals of your money tax-free and penalty-free once you reach the age of 59 and a half.

Open Accounts in Your Own Name

A newly single woman will need her own bank accounts and credit cards. It is never too soon to open these up. It is wise to use an altogether different bank than the one where the joint accounts are set up.

Professional financial advisers often counsel clients who are recently divorced. What they commonly wish for is a client wise enough to come before them prior to their actual divorce. In this way, the client's most effective financial options and strategies can be discussed long before expensive remedial action needs to be taken.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.