“Women must empower themselves by being ahead of the curve as society catches up.”
Much focus has been afforded of late, to the rise of female wealth with frequent discussions on all mediums and platforms on the subject. As such, the contents of this article aims to identify the changes, trends and myth busters of female investing, with added focus towards the various options of funds and products that are most popular with female clients in recent years.
An article by FA News (2020), discusses the shift, whereby women used to rely on their partners to make majority of the financial decisions in the household. These days, women are more pro-active in taking control of their own financial situation. Previously, women would primarily focus on having bank accounts as well as company benefits including a pension or provident fund (Women and investing: The myths versus reality, 2020). Nowadays, there is more focus towards tax-efficient solutions and retirement products as well.
An article (FA News, 2020) brings to light the question of whether financial products cater to women’s needs in ways which they would like. Research shows that women ask more questions than men do, simultaneously placing a high value on opinions of peers regarding financial products. Some of the questions asked include: Will this product work for me? Are there barriers that prevent me from accessing this product? If I open an account, will I be able to get help if I need it? Ultimately the role of a financial advisor is to assist in creating strategies for reducing the financial risk when building wealth over long terms. The solutions offered puts a person on track to achieving their financial goals (Investopedia, 2020). As such, part of the financial process, especially to new, female investors is to provide peace of mind in the explanation of the fund in question.
Life is unexpected. Therefore, it is advised to secure your financial future, to ensure that there are not any implications for your finances in the future. Research also shows that women tend to be more conservative when investing (FA News, 2020). Given that women have a typically longer lifespan than men on average , it is advised that women need to include growth assets in their investment strategy to target the out-performance of inflation in the long run (WHO | Female life expectancy, 2020).
In addition, many people make the mistake of saving for retirement too late, resulting in not having the desired income or lump sum in the end of their annuity. In many cases, the retirement fund for these cases results in building enough for sustenance (Prudential, 2020).
Lastly, the most common issue that we have identified is the of not having a will. It is never easy to speak about your own morality, however it is necessary to ensure that your loved ones are taken care of in the way which you desire. Statistically, more than 50% of women don’t have a valid will, resulting in the distribution of their assets according to the law of intestacy, and if the person does not have a relative, their assets (estates) will be wound up through intestate succession (FA News, 2020).
Islamic Wills: “Every soul shall taste death” Qur’an, Surah Al-Imran (3:185). The Will gives the Testator an opportunity to help someone (eg. A relative need such as an orphaned grandchild or a Christian widow) who is not entitled to inherit from him. The Will can be used to clarify the nature of joint accounts, those living in commensality, appointment of guardian for one’s children and so on. In countries where the interstate succession law is different from Islamic law it becomes necessary to write a Will.
What are some of the common myths around women and investing, and how do we overcome these myths?
The first claim is that women are not good at investing. Fidelity (2018), conducted research showcasing that only 9% of women believed that their portfolios would out-perform men’s. In this case, this was true. Reason being, that women stuck to their investment plans and men chose to trade more often. Resulting in a lesser rate of 1% than women (FA News, 2020).
The second claim is that women are risk averse. Many articles disprove this, since women are just more conscious of their investments and gather information before they decide on how their investment choices will impact their lives over the long term (FA News, 2020).
The third is that if women save their money, they do not need to invest. Considering the negative effects of inflation over the long term, savings alone will not be able to assist in putting money away without the offering of inflation-beating returns. As such, women are more likely to realize and achieve their financial goals by speaking to their financial advisor on investments that will assist them in achieving this (FA News, 2020).
The truth is that women can be self-sufficient. This means having enough money to cover their expenses with their own assets. As such, women are encouraged to be more pro-active regarding financial decisions. It is advised to be aware of what goals you wish to achieve and actively take the step to invest and getting assistance to achieve these goals.
The reality is that society needs to get on board to understand the realities women face, to better understand their situations. With majority of women already becoming key financial decision makers in households, their financial independence can continue to grow, through saving and investing.
Women today have all the skills and resources available to make their financial futures more secure. Our financial experts have been unpacking the value of women in our economy for years and providing practical advice on the best ways to preserve their financial freedom. All that is required is the will to start – so start today.
Anglowealth is an Authorized Financial Service Provider (FSP Number: 46755)