‘Women & Investing part 1’ by Bill Dodd published in Great Health Guide (Sep 2015). Always wanted to know how to invest but find it daunting with all the information out there? Join us on this great series about women & investing. The first part of this series, Bill explains how to start investing & how to find further information about investing.
Read other Finance articles on Great Health Guide, a hub of expert-inspired resources empowering busy women to embody health beyond image … purpose beyond measure.
FINANCE: Women & Investing Part 1
written by Bill Dodd
The aim of this series on investing is to provide an understanding of the need for all women to have a knowledge of investing, how to invest and how to find further information on investing.
With the introduction of the internet there is a huge amount of information available, so much in fact that it is often difficult to find specific information which will help with our investment needs. This problem is further compounded by the investment professionals, all of whom are aggressively promoting a diversity of investment products and competing for our hard earned money.
These investment professionals often charge very high fees and may or may not be competent. These investing challenges apply to all Australians but women have particular issues.
In previous generations, few women took an interest in financial matters which were left largely to the men. This has had to change for a number of reasons and although all Australians need to become smarter with their money, women face some unique issues when it comes to handling money and investing.
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In Australia about 50% of women over the age of 50 are single. Many women make the decision not to marry. Half of all marriages end in divorce and statistically during the first year after a divorce, a woman’s standard of living falls by an average of 70%.
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It is estimated that up to 85% of all women will be responsible for their own financial well-being within their lifetime. This is as a consequence of many women deciding not to marry, high rates of divorce and women living longer than men.
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Past generations have been able to rely on a government pension in old age. We are now aware that governments of the future will have a limited capacity to provide pensions and such pensions will be meagre and go only to the very needy.
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Women who are aware of these issues can plan their investments so that they can achieve a reasonable standard of living in retirement. They will take responsibility for their own investments and start investing early. Personal responsibility means learning about investing, understanding the alternatives and keeping good records. Many people prefer to invest their money directly but others would prefer to use a financial professional such as a fund manager or a broker to do the actual investing.
Whichever approach is taken the investor needs to understand how her money is being managed and maintain a regular record so that progress of the investments can be monitored.
Australia is a world leader in superannuation. Nearly all Australians will have superannuation through their employer but very few take an interest in how those super funds are invested or the actual performance of the investment manager. It is my experience, having given investment courses for the Australian Investors Association and the Australian Shareholders Association in all states, that very few Australians take an active interest in investing. Even professionals such as doctors, lawyers and academics, tend to take little interest in investing. They will leave the investment of their assets (and thus their quality of life in retirement) to professionals such as fund managers without question, despite the fact that a big percentage of fund managers significantly underperform the equity market index.
There are some myths about women and investing. A recent poll in the USA showed that only 52 percent of women have the confidence to invest, as compared to the 83 percent of men who claimed to be confident investors. It is probable that these figures represent the over confidence of the male since there is ample evidence to suggest that women make better investors than men because they are less ego driven.
The following are questions that every women (in fact every Australian) needs to ask:
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How much money will I need in retirement?
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Will my superannuation be enough and how is it being invested?
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How will I achieve my investment goals?
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Should I invest personally or should I use a professional?
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Where can I get independent advice?
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How can I learn to invest?
