Women taking charge of their Finances and Investment

Recent years have seen a significant increase in women’s empowerment. Nevertheless, we still don’t earn enough money and investment as women. Finances and Investment is a aspect that we do not deal with well.

 7 Reasons women do not Invest.

1. Financial literacy among women is very low in comparison to men. Women don’t talk about money with each other or with their partners. 

Nearly one-third of the gender financial literacy gap is attributed to women’s lower confidence levels versus a knowledge gap. (GFLEC: Financial Literacy and Stock Market Participation)

2. Women are givers at the expense of themselves, Women are more generous with their money. There were many times when I found myself acting as the IMF for several people and ended up with little to do.

3. We prefer to rely on our spouses to invest for us. Many women are however finding themself having to be the breadwinners in the family.

With covid, two-income families are having to adjust to one or reduced income in the home. The high cases of divorce or the death of a spouse have left many women struggling.

4. Have children, raise them well and your kids are your future especially in the African culture. This keeps families stagnant in terms of growing wealth.

Our mothers spent their life raising children with the hope that they will take care of them when they get older. This has not been working well, since children are not always successful, even if you paid ivy league schools for them.

However, this kind of thinking keeps your family in poverty for generations because the children are not able to grow and afford to take care of their parents. It’s time we kill the black tax concept.

5. Women are more risk-averse so we will not invest in high-risk investments. Many of us are comfortable with a life insurance policy or a pension fund to secure our future.

Unfortunately, this is not enough for the kind of life you envision for yourself when you retire. You will not get to live your best life from the little pension you have been keeping away. Most of us don’t even know how much our pension will be when we are 65 years. 

The 2018 annual Transamerica Retirement Survey found women had only $42,000 in total household retirement savings, just 1/3 the median total household retirement savings for men ($123,000).

6. These days many women are breadwinners of the household, and they don’t earn much. Many of us are living hand to mouth. We don’t have any money left over for investing. We also don’t have time because we are always guilty that we don’t spend enough time without children and family. 

7. All or nothing: we want to only invest in a sure thing. Unfortunately, there is no sure thing. The fear of losing money is the biggest reason why women don’t invest.

According to Sallie Krawcheck, CEO of Ellevest, of all the assets held by women, over 70% is just in cash. Not invested.

graph from https://www.annuity.org/financial-literacy/women

How to start dealing with Finances and Investment as women

• Make Financial Goals: Why are you investing? It works better if you have an end goal. This will be your why, and it will motivate you to keep it in mind, You will be able to see your progress and celebrate your little wins if you know your goals, measure your progress as you achieve them. 
• Pay yourself first. Don’t pay everybody and leave yourself struggling. Prioritize yourself and take care of your future. Start by putting aside 10% or even 5% of your earnings before you start spending. If you earn 10,000 you can put aside 1000. That way you will have money to invest.
• Start small Start now: Starting anything is the hardest part. Don’t wait for a pay rise, don’t wait for when your children are out of school or whatever else you are waiting for. If you get started you will continue and watch yourself grow. 
• Learn: make sure you are learning about finances and investment; knowledge is power especially for women. Always research new ideas and it keeps you confident when you invest. For example, cryptocurrency is the new trend but only invest in it if you know what you are doing. 
• Outsource: Since we don’t always understand the finances and investment jargon and intricacies, it is important to know when to delegate. Having a financial planner who will assist you with your investment will put you ahead of others as well as reduce your stress.

This way you will learn from them and you can concentrate on your core business. I have used SIB four-front  who can manage your stocks for you.

• Know your risk capacity: Your peace of mind is important so that you can be able to do all your other tasks as a woman. Do not invest in very high-risk instruments that you don’t understand like stocks or bitcoin when you can’t sleep fearing losing your money.

If you can’t handle when the share prices are going up and down every day choose an investment that suits you.

• Diversify: ensure you don’t put all your eggs in one basket. You can invest in stocks, real estate, government securities, and mutual funds
• Look for long-term investments. Women are said to be better in investing but they rarely make investment decisions due to fear. It is advisable to buy investments for the long term and let them grow over time.

When you buy the treasury bonds or stocks, you can leave them and forget until the investment matures and you gain. You haven’t lost until you sell.  Take advantage of compound interest. 

• “Compound interest is a super-power”

Warwick Business School conducted a study of 2,800 UK men and women investing with Barclays’ Smart Investor, tracking their performance over three years.

Not only did the women that were examined outperform the FTSE 100 over the time period, but they also achieved better returns than their male counterparts.

National Financial Capability Study. Women are less financially literate than men, answering only 48% of questions correctly, vs. 58% for men.

• Life Insurance Policy: This is a good idea to ensure that your family or children are able to have some financial cover if you pass away. Note this is not an investment but a be a safety net for your children or family 

Conclusion

The finances and investment goal is in every women’s list of goals.  Women’s financial empowerment is not only beneficial at the individual level, but it also has the potential to impact children, families, and entire communities.