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Each year as March comes around, we have a wonderful spotlight on women. How far they’ve come, how far there is left to go. In a financial setting, there’s been some fantastic research showing the increased enthusiasm of women to use the volatility of 2020 to begin investing or increase their exposure.
However, I believe it is time to shift the narrative onto what is not being said.
A challenge that I routinely face as an adviser is the commonly held view that investing is a nice-to-have.
Women (and indeed everyone) must update their thinking that investing is not optional, it is mandatory. If we are intending to be alive in more than three years, we must be using our resources with a growth mindset. This means we must invest and expose ourselves to some risk to provide the opportunity to earn a return above the cash rate.
Through technology, workplace reform, cultural evolution and a myriad of other factors, the balance of equality between men and women is shifting. Not fast enough, but it is moving.
However, this doesn’t address the issue of equity between men and women.
Remember equality is about making sure the starting line is even, that we’re provided with equal opportunity for success. Equity however addresses the finish line, and this is where the gap really isn’t closing in a meaningful way. We see this evidenced by equal numbers of men and women recruited in graduate roles, but stark contrasts at management level, or by closing the gender pay gap, but still showing a substantial discrepancy in superannuation balances between men and women at retirement.
Investing with purpose, passion and consistency is one way to tackle this.
Right now, we all have access to investments. The rise of the ETF and the competitive marketplace for trading has made investing both affordable and accessible everyone. It is no longer a meaningful barrier (although awareness of this is still a challenge).
So, let’s be less polite, less indulging, and perhaps less patient when talking about women and investing. Instead, let’s become assertive, unequivocal, and clear in our message. More women need to invest…And women need to invest more.
It’s not negotiable or a nicety. Instead, it’s as fundamental a part of your financial hygiene as brushing your teeth is a part of your daily routine. Your goals may be as specific as ‘I want to have $35,000 available in 2025 to pay for my Masters’ or as open as ‘I want the freedom to walk away from my job and not worry about my mortgage’. But if your goal is more than three years away, you must be investing with the same (if not greater) importance that we currently associate with saving.
So, how do we do this?
Investment strategies must be fit-for-purpose with your goals and financial situation. If we work backwards from what you’re trying to achieve in the future, and then overlay with the realities of your current financial position, it can be simple to determine an appropriate investment strategy.
For example, if you are investing for the very long term, superannuation may be the most appropriate vehicle. However, if you’re looking at a timeline of 10 or more years, perhaps for an education goal, or flexibility before superannuation becomes available, an insurance bond may be more suitable.
If you’re investing for the short to medium term, say three to five years, perhaps a simpler strategy of direct shares or exchange traded funds could work for you. This option might even be suitable if you’re starting with little or no capital but looking to build up over time – maybe for a property deposit or to pay for a sabbatical.
Maybe you’ve even got a large chunk of cash to start with, and property might be an investment that is accessible.
Ultimately the important thing to remember is that there are many options available, depending on your timeline (which will be driven by your goals) and what resources you have available.
The key is to get started – line up the strategy that works for your goal, and then get moving because one this is for certain, you won’t reach your goals by doing nothing.