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Celebrating women and wealth: A few tips to becoming financially secure

It’s important to take charge of your finances.

It’s August and as I’m typing this, I can’t help but feel so proud to be a woman. This month we are celebrating women – and all that we are. Something I believe that isn’t celebrated nearly enough in this world!

Women currently hold 40% of total global wealth (Source: Oliver Wyman; 2020).

Isn’t that incredible? This percentage is quite significant considering that women still earn less than men in most occupations and spend less time in the workforce due to, for example, taking a break in employment when choosing to raise a family. Imagine what our share of global wealth would be if we only worked equal hours.

Warwick Business School completed a study including 2 800 UK men and women, tracking their performance over a three-year period. The men outperformed the index by 0.14%, whereas the women outperformed the index by 1.94% – a 1.8% outperformance compared to the men. The same Warwick study concluded that women also trade less frequently than men. On average, women traded nine times as opposed to 13 times for men over the three-year period. My experience is that women are better at sitting on their hands when needed, and we manage investments exceptionally well.

The reality we need to plan for is the longevity of women. We tend to outlive men by roughly four to five years. This means we not only need to plan for a longer retirement period for ourselves, but chances are high that we will end up managing the family’s wealth at some point. I personally already have quite a few female clients whose husbands have passed away and they are currently managing everything. This needs to be planned for.

It’s very normal, and part of any healthy partnership, to divide the household duties. We all just have 24 hours in a day and dividing responsibilities only makes sense. The risk we have with outsourcing something completely is that we are not involved and will have no insight into the decisions that have been made. In many cases, the woman of the household takes the role of raising the children, perhaps together with juggling their career and other responsibilities. This leaves our partners to take over the financial aspect and planning.

  1. The first recommendation would be to get involved if this is your scenario. You need to sit around a table and know exactly what financial provisions and investment planning are in place for each of you, and to ensure that the planning is sufficient. This includes your investment portfolio, risk planning, medical aid and estate planning.
  2. I recommend working with a financial advisor from the start. I think it brings an objective opinion to the table, keeping a healthy neutral ground for a partnership as well. This also takes the emotion out of managing an investment portfolio and speaking about the more challenging topics like death, illness, or divorce.
  3. Review your personal portfolio. As a woman, your financial and retirement planning goals will look different. Women are likely to spend less time in the workforce, possibly earn a lower income, and face the reality of longevity. We need to plan differently.
  4. Ensure you have sufficient risk planning in place. These are the products that protect you and your loved ones. Elements that should be considered include severe illness cover, income protection, disability cover, and education protection should you have children. Having this protection in place helps to ensure that you and your family will be taken care of should anything happen and you cannot work anymore.
  5. Educate yourself. Despite the hesitation some women may feel when it comes to managing investments, women have been shown to be good at it when they take the leap. Investing doesn’t have to be a passion for you, but I believe it is important to have the basic knowledge to protect yourself. You should aim to ensure you understand some basic investment principles and know what the norm is in terms of fee structures, portfolio returns and what financial provision is required to reach your personal goals.

As with any goal in life we strive for, we need to be clear on what the desired outcome is. This applies whether the goals are losing weight, running a marathon, starting a family, or starting your own company. We need to know what to do now in order to reach the ultimate goal.

With investing, I find most investors are guilty of not having a plan: not knowing what the end goal looks like, and ultimately not knowing which next steps are required to get there. Working with an advisor will help you define those goals/requirements – and reach them one step at a time.

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