The most important investing decision you will ever make

Over the past 20 years, I watched as a family friend built a tech business in the beer industry. Starting from scratch, it now has offices in Australia, Europe, Asia and North America. I always admired him and his success and wanted to know the secret, so one day I asked what advice he had.

‘Don’t get divorced three times,’ was the answer. For all the wealth he had accumulated, he’d have been a lot better off had he found his current wife – a real gem – at the start of his career, rather than in his 50s. 

Choosing the right partner is – by far, many would agree – the most important decision you will ever make.

In the documentary Becoming Warren Buffett, the investing icon says his life had two turning points: ‘One when I came out of the womb and one when I met Susie,’ his wife of 52 years. ‘What happened with me would not have happened without her.’

‘It's really a huge advantage from a personal standpoint to have a wonderful partner,’ Buffett told Forbes in a recent interview. ‘Who you marry, which is the ultimate partnership, is enormously important in determining the happiness in your life and your success, and I was lucky in that respect … It's much more fun achieving things in life with a partner, there's no question about it.’

You can do it, honey

Research supports Buffett's advice. A study by Carnegie Mellon University tested 163 married couples on their willingness to pursue opportunities. One member of each couple was given a choice: solve a simple puzzle, or challenge themselves to compete for a prize. 

‘Participants with more encouraging partners were substantially more likely to decide to compete for the prize, while those with partners who discouraged them or expressed a lack of confidence more often chose the simple puzzle’ the researchers found. Six months later, participants with encouraging partners reported having more happiness, personal growth, and better relationships than those who didn’t.

A Washington University study shows the real-world financial implications – having a conscientious partner is correlated with a significantly higher salary. 

‘With every one-standard-deviation increase in a spouse's conscientiousness, an individual is likely to earn approximately $4,000 more per year,’ the researchers said. ‘Employees with extremely conscientious spouses are 50% more likely to get promoted than those with extremely unconscientious spouses.’

Besides the extra encouragement received from a kind-hearted spouse, the researchers found that they were also more likely to help with household chores, allowing the other partner to focus on building a career. 

They’ll save you money, too. Per-person living expenses tend to be lower when you’re part of a couple because some costs are shared or don’t increase proportionately, such as rent and utility bills. Another benefit is that a second income provides a safety net should one partner lose their job. 

These little advantages can pay off big time, particularly if the savings are invested so that compounding can work its magic. An Ohio State University study found that married people, on average, were worth 77% more per-person compared to singles and that ‘their combined wealth increases on average by 16% for each year of marriage’. 

This makes a huge difference to your standard of living in retirement. For people over 65, single or divorced individuals are twice as likely to rely on social security payments to make ends meet. 

Whether it’s the touchy-feely aspects that get you, or the hard financial data, choosing the right partner will have a bigger impact on your financial well-being than practically any other investing decision. ‘A good marriage is like a good trade’, as poet Ivern Ball put it. ‘Each thinks they got the better deal.’