Committing to a huge financial decision is never easy. It’s a process of back-and-forth, pros and cons, self-doubt, and infinite, exciting potential. For many, this is the decision to make a significant investment. We all know how critical due diligence is, including asking serious questions!

For many of us, these decisions aren’t ours alone. You have a spouse or partner who makes this a joint effort. There’s so much to consider when you’re on the edge of a significant investment move. Let these questions help steer the conversation so you can make informed, wise decisions for your family’s financial future.

9 Key Questions to Ask Before You Make a Big Investment

Question #1 – How does this investment align with our financial objectives?

First things first, figure out your financial goals. What are your priorities? Do they differ from those of your partner? Sort out what matters most to you and your family. From there, you can better investigate investment opportunities and see how they work towards short- and long-term targets.

Question #2 – What is our risk tolerance individually and together?

Your risk tolerance plays a critical role in evaluating investment opportunities. Keep in mind, though, that individuals all have different risk tolerance. What your spouse thinks is “risky” may differ from your point of view. Come together, discuss risk, and find common ground. 

Question #3 – How do our age and future financial needs impact the investment horizon?

Things like age, retirement targets, existing investments and accounts, and financial needs impact what makes a good investment and what doesn’t. Consider an investment’s potential for growth and scaling. Is your tentative timeline realistic? 

Question #4 – Does this investment fit into our broader diversification strategy?

Diversification is vital to any successful investment portfolio. When you’re about to dive headfirst into a new opportunity, you must understand how it fits together in your overall portfolio. What purpose does it serve? What gaps does it help fill? How does it impact risk exposure? What immediate and long-term benefits are there to diversification?

Question #5 – Have we conducted thorough research and due diligence on the investment?

This question should be obvious. But have you truly covered all your bases? Are there any lingering questions or uncertainties? Talk it over with your partner. While you can’t expect to know everything, you must put your fears to rest before you go all in.

Question #6 – Which experts will we consult before and during this process?

You can’t expect to make a well-rounded decision without consulting the experts. Sometimes, we need that objective viewpoint that isn’t muddied by emotions or personal attachment. Consider financial and investment advisors, tax experts, and lawyers. They may help you see things you hadn’t considered!

Question #7 – Do we have an exit strategy, and are we prepared for potential liquidity constraints or penalties if we need to sell prematurely?

Every investment demands an exit strategy. It’s not anticipating failure; it’s playing smart. Are there penalties in play for pulling out too soon? How liquid are these assets? Are there alternatives outside of typical exit strategies? 

You don’t need to have everything figured out, but you need to know what options are on the table with a basic understanding of the procedure, benefits, and drawbacks.

Question #8 – Do we have contingency plans in case of unexpected financial setbacks or changes in circumstances?

Life can be unpredictable. You could experience job loss, an accident, or other costly life event. These things can impact your ability to invest as well as the timelines for your financial goals. If you need to pull money, where will you pull it from? How will you adjust your portfolio? How will your budget change? 

This isn’t necessarily a question of exit strategy – it’s more about planning to be financially agile in a crisis! 

Question #9 – Have we considered legal implications, such as ownership structure or estate planning?

Legal implications are often greater than we anticipate. Consider who should be on deeds, how to incorporate new assets into estate planning, tax implications, and business entities. Will you form an LLC? Invest through an IRA? What are your plans for passing assets on? 

If you’re genuinely thinking about the long-term, you must consider what happens to your investments after you’re gone.

While there are more questions worth asking, these should help you begin discussing your options. 

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