Calling All Millennial Women: Your Finances Need You

Millennials are the fastest growing group in the workforce and are dealing with the challenges of graduating during Covid and the continued wage gap. Combine these factors with the likelihood of taking time away to have children and a longer lifespan, it's more important than ever to master finances and long-term planning. 

Another layer of complexity is that most millennials are raised by parents who live with high debt-ratios. Baby-boomers were raised with a fear of owing money and made a concentrated effort to avoid it and to pay it back as quickly as possible. The next generations were handed credit like candy and indulged. Learning by example may not be the best course of action, so we've compiled some advice for the up-and-coming. 

1. Spend Carefully. 

Along the same lines as "think before you speak", think before you buy. Evaluate what long-term benefit that item is going to bring to you. When it comes to smaller regular expenses such as your daily dose of fancy coffee, invest in a fancy espresso machine at home. 

2. Build an Escape Plan. 

Life often throws challenges our way and true power comes from being able to choose your own path. Having some cash squirrelled away allows you to make the choices which are right for you and prevent you from returning back to what was keeping you in debt. 

• Set up an automatic deposit from your salary to a high interest account which you are not able to easily access. That way you never had the money, so you can't miss it. 
• Funnel your wins. Instead of "treating" yourself with your birthday gifts, tax return or bonus, treat your future self by putting it into your high interest savings account. 

3. Manage Your Debt. 

You've grown up in an era of credit and debts from student loans to car loans to credit cards. Make a list of all you owe and the corresponding interest rates. This will enable you to prioritise which debts you want to pay off the quickest. High-interest debts should be the first target to stop the cycle of handing your money to an institution. 

4. Save for Your Future. 

It's hard to look that far forward when you're in your 20's, but imagine the freedom of being able to live your life your way when you're older. With a few sacrifices, you can save now and play later. The millennial generation focuses on the importance of equality, empowerment and independence. As a millennial, it is your responsibility to implement changes in your life which align with your values. If you want to be in control of your destiny, you need to control your money. Money brings freedom and freedom brings independence. Take control of your finances and therefore your financial future. 

Article Source: https://EzineArticles.com/expert/Doug_Buss/1032256

Should Women Rule the Investment World?

 Consider: 

• In 2020, women controlled the majority of  the US nation's wealth. In fact, they control 51% of it

• By 2030, 54.9% of all Boomers will be women 

• We currently make up two-thirds of the workforce

• Women spent 81 cents of every dollar

• 80% of women will be responsible for all financial decisions in households

• 73% of all full-time working women see themselves as their family's Chief Financial Officer, moving up from seeing themselves as their family's "Chief Purchasing Officer."

Yet: 

• 90% of women feel financially insecure

• 50% fear losing it all and becoming a bag lady (and that includes 48% of all women earning at least $100,000 per year)

 • Only 1 in 5 women read the financial section of a newspaper (while 3 in 5 men do)

 • 42% of women do not know what a mutual fund is

Women have gained all of this financial and fiduciary responsibility but are not getting the information that they need in order to make sound financial decisions! Are they going to go to the big Wall Street firms to get it? (I don't think so. Wall Street has lost so much of their credibility and are only now digging out.) 

Wall Street needs to be given a good shaking and turned upside down on its head. Its language needs to be creatively communicated so that every woman gets it. Most women don't read much of the material on finance because it is as dull and dry as sawdust

Finance therefore appears to most women as overwhelming, complicated, confusing and...BORING. No wonder we're in trouble. 

 • The first question you must answer is this: "Do you know what you own and why you own it?"

I have never met one who could answer both parts. We're not talking about Monopoly money here. This is real money. Serious money. You better be able to answer this very simple question about your own money and investments or someone is sleeping at the switch

 • The female brain on money is different than the male brain on money. Ask any women who has more than one gender in her off-spring. 

As Women:

 o Desire to embrace our femininity, which will yield gender-specific, different decisions about how to spend money.

o Desire to nurture our children and families, which will yield different measures of risk management.

o Are more risk-averse. When the combined housing crisis and financial meltdown of 2008 effectively wiped out half of investor's wealth, men tended to look at the world with anger, and perceived the world as being less risky. Women tended to look at the world with fear, and perceived the world as more uncertain. 

o Are less likely to go for "The Big One" 

o Trade less frequently than men. Men trade on average 45% more than women do. Single men trade more frequently than married men, who trade more frequently than single women, who trade more frequently than married women. 

o Double returns when running hedge funds. The problem is, only 6% of all hedge funds are run by women.

o Portfolio Managers average 1.4% greater returns than those run by men. 

o The work on Personality Theory, upheld by the varied disciplines of philosophy, psychology, behavioral finance, psychoanalysis, psychometrics and neuroendocrinology, shows that different personality types "see" money differently. I am using this research in my upcoming book, to turn women onto finance. It is my goal to see women fascinated by money, to choose to study it, to ignite their imaginations and to fuel their inspirations

 o Hippocrates noted personality differences as early as 400 B.C. 

o Galen named the Four Personalities. 

o Carl Jung developed Type-Trait Personality. 

o John Holland studied the "science of personality." 

o Freud, Kant, Erickson and Myers-Briggs all developed their own version of examining personality type. 

o Recent writers who ascribe to the notion that there is a "Money Personality" have got it backwards. There is not a Money Personality. We each have a personality, from which we derive the way we "see" and handle money. The way we earn it, spend it, save it, invest it, and give it away depends on our personality (not the other way around!) 

o The field of Neuroeconomics shows that "Animal Spirits" calls into question, or stresses, the Efficient Market Theory. It turns out: people do not use logic and reason to make investment decisions; they behave irrationally.

o Investors are more willing to take more risk in order to avoid losses that they are to realize gains. Investors, it turns out, essentially become risk-takers to avoid loss!

o Investors deal with fear of regret in dealing with their own money. 

o Investors tend to have over-confidence in their abilities to invest. They tend to confuse luck with skill. 

Should women rule the investment world? In many parts of the developing world, they certainly are, almost all of microfinance is dedicated to women's ventures. If money rules the world, and the hand that rocks the cradle runs the world, I would say it is fairly safe to presume that women are certainly getting there. But we need to get a grip on it. 

As a woman, you need to know who you are, where you are, where you want to be, and how money can help you get there. And in order to do all of that, you really have got to "get" money.  

Article Source: https://EzineArticles.com/expert/Carolina_Fernandez/6033

The Secret of Successful Investing Lies in Your Feminine Side

A recent survey by Fidelity Investments, for example, found that female investors outperform male investors by an average of 40 basis points, or 0.4% — a seemingly negligible difference but one that packs a punch over time.

Using current workplace savings rates and a hypothetical salary of $50,000, the survey found that women who start investing at age 22 would have $276,000 (or 15.4%) more socked away by age 67 than their male counterpart. That calculation uses the study findings that women typically save 9% of their salary annually and achieve a 6.4% annual rate of return, while men save 8.6% of their salaries each year and achieve a 6% annual rate of return.

Another study by Warwick Business School, sponsored by Barclays, found female investors outperformed males by a wider margin —1.2%

 The University of California, Berkeley famously found almost two decades ago that female investors tend to outperform their male peers by just under 1% per year.

Since the evidence for female supremacy in the investment markets has been steadily mounting. Now psychologists can identify the character traits that make up a winning investor. They're also pinpointing those traits that explain why more men end up counting their losses in the markets. 

What are those attributes that put one a cut-above the other? Women's better investment performance may be down to the simple fact that they are: 

More cautious 

Women's portfolios are more balanced and diverse. They also choose more low risk, less faddy, options. Less competitive Women invest less of their ego in a deal. They're less motivated to prove their financial prowess to others or to be in it for the thrill. 

More consistent 

Women have been shown to back a less volatile portfolio than men. They're also better at tuning out the 'information' that others may over-react to and riding out the ups and downs of the markets. 

More patient 

They engage in less fund hopping, trade less frequently and hold investments for longer. Those that trade most frequently earn the lowest returns, this is true of both individuals and mutual funds. 

Better researchers 

Although women on the whole are less experienced investors than men, they will research more thoroughly and be less swayed by the herd. 

Sure, these aspects of the female psyche also make women more conservative investors than men. And so they may not reap the stratospheric profits (or make the mega losses) that men do. But, by investing in funds that are consistently good over time women's net returns are higher. And isn't that what counts in the end? 

Of course, many men have what it takes to make them top-notch investors. But their winning traits may not be the customarily masculine ones. The truly top male investors may be more in touch with their feminine side than we'd think. 

Apart from a lack of estrogen and fewer handbags, what else accounts for the winner-loser divide? There are three key psychological traits that, when it comes to making the savviest investment decisions, can trip men up every time.

These are: 

Attitude to risk 

Men are less risk averse than women and will back portfolios that are more uncertain. They're more likely to put all their eggs in one basket instead of opting for a safer, more diverse portfolio. Men's higher earnings and greater net worth also makes it easier for them to take greater risks than women. 

Overconfidence 

Overconfidence is consistently found in more men than women, research shows. And this is especially true in male-dominated arenas such as finance. They overestimate the returns their investments will bring and the certainty of the return. They also have a misjudged overconfidence in the accuracy of their own knowledge and over-rate their own ability. In a Gallup study, both men and women expected their portfolios to outperform the market but men expected theirs to outperform it by a greater margin. 

The herd instinct 

Constantly monitoring the market can fuel men's over-activity and cause them to act irrationally. Men are more likely to get drawn into financial follow-my-leader games and information cascades. They also fall foul of being too well informed, instead of tuning out the endless stream of news and financial information and sticking to an annual portfolio review. 

Despite women having more of the innate skills that could earn them the best returns, still lamentably few of them are in the game. Male investors outnumber females by 8 to 1, and a mere 3% of hedge funds are headed by a woman. Simonne Gnessen, who owns Wise Monkey Financial Coaching and has a predominantly female clientele, says women could do with borrowing some of that male over-confidence. "Many women have exactly what it takes to reach dizzy financial heights," she commented, "the only thing holding them back is knowing that they have it and acting on it." 

Source: https://EzineArticles.com/expert/Karen_Pine/520953 

Source: https://blog.massmutual.com/post/women-investing-right

Why Us Women Fall Off the Financial Cliff

Why do so many women leave their financial future to chance? Why do women face so many challenges with their finances? If you could learn how to overcome your financial concerns, would you take action? After speaking to several women, which is the reason for writing my book which will be published later this year "Femvestors". Women don't get involved with their financial security. We leave it up to a myriad of other possibilities. 

Us women already face additional challenges that are unique. First, we have a longer life expectancy. According to "Statista 2021 Report" for developed countries, the average life expectancy for a man is age 79 and for a woman it is age 82. That's a 3 year difference, which means retirement savings must last longer. With longer life expectancy comes the possibility of health issues and the need for long term care planning. 

According to the World Economic Forum Global Gender Gap Report 2020, worldwide, women on average earn around 20% less than our male counterparts for equally valuable work. Major variations exist across countries and regions- the gender wage gap ranges from 3% in Luxembourg to a staggering 37% in South Korea  – no country in the world has yet achieved income parity, however, Iceland is on track to become one of the first countries to achieve this. The impact is that we are contributing less to our pensions, superannuation, 401ks and social security, resulting in less retirement savings to draw income from in retirement. We also have less discretionary funds to invest and save to sustain our lifestyles now and in the future. 

Women also fall into the role of primary care giver taking more time off from our careers to fulfill care giving roles to either our children, elderly parents or a sick spouse. Less time earning income further reduces their ability to save. 

Women tend to rely on our partner to manage investments, balance budgets, and create financial plans. With the divorce rate at 50% (and climbing post Covid), us women could find ourselves single and not knowing where our money is or how much it is worth. Even worse, not knowing if our partner carefully managed the family assets or possibly squandered them away. For the widowed woman it may mean trying to manage our finances with little knowledge at a much older age after a lifetime of being out of the financial picture. Many women don't plan for the possibility that we may lose our partner's pension and other benefits. Either of these cases could come with detrimental effects.

Lack of financial knowledge ranks high on the list of challenges facing us. Traditionally, we are not encouraged to educate ourselves on financial issues. More than 70% of men say they have a good understanding of stock market basics, but less than 45% of women feel that way. This puts us at a disadvantage to our male counterparts. This lack of knowledge leads us to be more conservative, under utilising stocks, bonds and other invests. As a result our long term returns and ability to hedge inflation are affected. Research released by HSBC showed that many women are not prepared for retirement, with just 24% of women in their 50's claiming to have a financial plan in place. 

After learning about the challenges us women face with our finances, do you want to leave your financial future to chance? What are you ready to do to overcome these financial concerns? Please consider taking charge of your future by working on a financial plan. Don't let a longer life expectancy, lower earnings, and lack of financial knowledge take you off course. Make a plan to take charge today!

 

Article Source: https://EzineArticles.com/expert/Bill_Leavitt/1496352

A Woman Needs Cash

Are you thinking - how much money will I need to have invested so that I reach a point in my life where I will no longer have to work - and maybe I work only because I chose to? Imagine - you get up every morning knowing that you completely design your day and that your financial needs are handled. Will you want to alter your lifestyle a few years from now?

Let's say you're now forty years old. You're single with an annual income of $60,000. Your closet holds clothes you adore, you eat out occasionally, go to the movies on weekends, go to concerts every now and then, and enjoy a vacation away from home once a year. Or perhaps you're married with a joint income of $100,000. You and your Partner get away on weekends, drive two cars, play tennis, entertain friends as well as generally travel each year (excluding Covid periods). 

Now, how much cash will you need in order to continue that lifestyle once you stop working? The temptation is to say, "A lot." But how much is a lot? And where is it going to come from? There's an old saying about how you find wealth: You can marry it, inherit it, or earn it. (Of course, you can also steal it-but stealing rarely works for long run, and we're going to keep things honest here.) Let's say the only wealth you have and are likely to have is what you earn. And with your $100,000 salary, you spend about $6,000 a month for mortgage payments or rent, car payments, clothes, food, entertainment, and credit cards. To maintain this lifestyle, you'll need to have invested $1 million by the time you stop working so that at a (fairly typical) 10% rate of return, you and your husband can continue to receive the same income as you do now- $100,000 a year. 

Similarly, with a yearly income of $60,000, you'll need to have invested $600,000 by the time you ease out of working in order to support your lifestyle. 

Basically, then, you can add another zero to whatever you currently earn to determine a ballpark figure of how much you will need to have by the time you ease out of working so that you can maintain your present cash flow. 

Of course, inflation changes that canvas. You won't know what the rate of inflation will be at the time you decide to stop working, but inflation has been running at an average rate of 3% per year for the past decade. A moderate inflation rate, like the one we've experienced over the past decade, will increase the amount of savings you will need by a greater or lesser extent, depending on how far into the future you plan to live on the cash flow from your investments. 

Now, that $1 million we just discussed might seem like a whole lot of money. But let me tell you about a jewel for your financial treasure chest. This second gem is called the "Rule of 72." It's a simple mathematical calculation to help you understand the growth of your money. Here's how it works. Take whatever rate of return you expect to earn, and divide the number 72 by it to determine how many years it will take for your money to double at that rate.

For example, let's say the rate of return you use is 10%, as an average rate of return in the stock market. Divide 72 by 10. This equals 7.2. That means it will take almost seven and a half years for our money to double at that rate. Why use the stock market? Because it's the fastest and most proven way to double your money. A savings account at a bank currently averages 1%, and it would therefore take seventy-two years for your money to double. Underlying the Rule of 72, then, is the principle that a fair rate of return makes a significant difference in the growth of your money. 

The Rule of 72 is a handy tool for forecasting the growth of your money and determining its future potential for you. And it exemplifies the power money can have for women. Who would want to miss the opportunity to put this resource to work in her life?

 Voila!, by adding a zero to your current income you will determine how much money you target to save - and by saving dollars in an investment account - and monitoring the growth of this money on a yearly basis you can determine how quickly you will be a woman with cash and the financial freedom that you can create for yourself. 

Article Source: https://EzineArticles.com/expert/Joan_Perry/216137