Here’s what every woman needs to know about investing

Thomas Barwick | Getty Images

Despite the devastation caused by the epidemic, the financial impact of women in the United States will only increase in the coming years.

At the moment, as more and more women are embracing their economic power, they are increasingly tackling the fundamentals of personal money.

McKinsey projects that by 2030, American women will control the lion’s share of the সম্প 30 trillion in financial assets owned by Baby Boomers. Accelerating this change – which competes with the US annual GDP – is a 30% increase in the financial decision-making of married women compared to just five years ago.

Younger women seem to be more engaged. According to the Boston Consulting Group, a significant 70% of women in the millennium reported taking the reins for all financial decisions, echoing the results of other recent studies.

More from personal money:
Camilla Elliott, the first black head of the CFP board, is in favor of diversity
The rank of women, young investors will increase in the next decade
There remains a lack of diversity among financial advisers

The longevity edge of women also plays a role. McKinsey estimates that on average, women tend to live five years longer than their males. But it can be a double-edged sword. According to the BCG, about 30% of women have portfolios in slow-growing assets like cash and bonds (only 17% vs. men). This choice for stability could create a deficit for women because they live longer – it is now a bigger threat that inflation has raised.

So, whether you are already a part of this growing movement or are taking the first steps towards educating yourself financially, here is a simple list of five things you need to know.

1. Know your number

To really get control over your finances, there are various statistics at your fingertips. By far the most important is cost. How much do you spend now and how much do you expect to spend in the future? While this may sound scary, a good place to start is to understand your take-home salary and how much you spend monthly or annually. From there, you can achieve what you are saving.

Remember, when projecting your future burn rate in retirement, don’t assume you will spend less. Experience has shown that between travel, healthcare and simply long-term survival, costs are not as low as you might think.

After all, know the value of your assets across all of your accounts – not just retirement, checking and savings – and how you’re currently investing. Ideally, keep all this information in one place where you can check in regularly (half or annually). There are many online tools and financial aggregators that can help you keep track.

2. Expect the unexpected

No one likes to think about the worst situations like losing a job or getting sick but it is important to protect against them. Create a cash reserve to cover six months of expenses (assuming you are still accumulating assets, as opposed to spending from your portfolio).

Many women already own life insurance, but don’t forget about other types of protection, such as short-term and long-term disability – especially if you are an earner. Believe it or not, the disability policy is more likely to be tapped. According to the Social Security Administration, a 20-year-old has a 25% chance of becoming disabled before reaching the age of 67, with a 13% chance of death.

Even those two principles are not enough. You can consider long-term care insurance, and an umbrella policy for property and accidents. And if you bought insurance more than five years ago, revisit your policies – pricing and product features change.

3. Get your financial house in order

The tidying up began during the epidemic because many women had “married” their place of residence. But what about organizing your financial environment? This means knowing your family’s financial advisors and how to access all your accounts. As many as possible, consider using a password management app to keep track of them. Securing this information will be important in your search for your number.

Next, collect the estate-planning document (trust, will, etc.) and figure out which one is effective when. Check them every three to five years, or when changes occur such as births, deaths, marriages, or divorces – or as external factors such as rising rates, inflation or the evolution of tax laws. Also make an old age care plan and communicate it with your kids. HBO’s hit show “Inheritance” is a great reminder of how difficult situations are and how many are not in the right position when their parents become disabled or ill.

4. Create your dream team

Merciful Eye Foundation | DigitalVision | Getty Images

Assemble a team of financial trustees to call as your needs develop. Connect with trusted professionals with whom you feel comfortable and build a personal relationship with each of them. It is especially important that families are divided and victorious

Even if only one of you attends a meeting with external advisers, make sure the advisory team resonates with both. In a BCG study, many women expressed dissatisfaction with their current asset advice, with nearly one-third reporting that their relationship managers addressed them differently because of their gender.

What about one-stop shopping? It may sound convenient, but it rarely works in practice. You will probably need an individual tax professional, attorney (depending on your stage of life), financial advisor and insurance professional – although they should be able to connect and coordinate seamlessly for you.

And even if you “inherit” a team, you may need to make changes to make it your own. No matter who is sitting across the table, you have the right to stand up for yourself and be a lawyer.

5. Your favorite fund

No matter how you build your assets, you are in a position to make decisions that can be truly empowering and effective. For many women, wealth is the way to the end – but which “end” is most important to you? What are your priorities? What makes you happiest?

Deliberately taken, investment decisions begin to be fulfilled Explore your values.

This is why hiring a financial partner who understands your hopes and dreams is one of the best things you can do. Work with someone you can trust.

Helping kids get a higher education, giving a gift to a favorite charity, taking a break or investing for an impact can all be within reach. All you need is strategic advice from someone who will help you adjust your financial decisions to your standards.

Beta Kiris, co-head of investment strategies at Bernstein Private Wealth Management

Leave a Reply

Your email address will not be published.