Investing for Women
Let’s face it. Money matters, so whether you are single or married, a career woman or homemaker, you need to take charge of your financial affairs. Managing your money wisely is a prerequisite for financial comfort.
The principles of investment planning—starting early, having a long-term plan and investing regularly are the same for men and women. So, why do women have special investment needs? If you look at the life patterns of women, you’ll see that:
- Women tend to live longer than men.
- Our careers are interrupted by family needs.
- More often than not, women prefer a conservative investment strategy.
Given inflation and the many responsibilities we have taken on, as well as the high aspirations we have, there is a compelling need for women to take charge of our financial planning.
We’ve all seen maps at amusement parks or shopping centers featuring as arrow alongside the words “You are here.” Looking at your financial picture is like looking at one of these maps—with one big exception. It’s up to you and your financial advisor to draw the map and pinpoint where you are.The 3 most important aspects of this picture are :
- Your risk tolerance
- Your time frame
- Your personal circumstances
Your “risk tolerance” is basically your comfort with an investment option. The risk spectrum ranges from “safe”, with little risk of loss or volatility (like a money market fund), to very “risky”, volatile investments (some equity funds or sector funds).
You need to determine your own “comfort zone.” For example, if you don’t like to be awake all night wondering about your investment, you can invest in moderate risk funds managed by professional fund managers.
Also, you need to keep in mind “inflation” and “taxes”. With the so-called safe but low return investments, you can actually end up worse-off when these two are taken into account.
Your time frame.
When we talk about an investment’s time frame, we mean the time between when you make the initial investment and when you’ll need the money.
If you start an investment with the goal of paying college tuition for a 2-year-old child, you’ll need the money starting in about 16 years. If that child is 15, you’ll need the money starting in about 3 years.
Every investment has its own time frame depending on your goal and life stage. And the time frame can change as the goal approaches.Knowing where you are in life stage, will determine what type of investment strategy you should use. Choose Your Life Stage Starting out
- You are single, young and have started earning
- You are taking control of your finances for the first time
- You are married or going to be married
- You have children or planning to have them
- You have to plan for your children’s education or marriage
- You want to buy a new house
- You are divorced or separated from your partner
- You are widowed
- You need to take the responsibility of raising your children on your own.
- You are retired or going to retire
- You want to plan for your retirement