Investing For Beginners

Why does investing seem so complicated? 

The number of ways you can invest is mind boggling. The worst part is that investment world uses a different terminology. If you are new to investing it won't be long before you encounter words like "moving averages, average weighted price, open interest, futures and option, book closure" etc. Let me stop before I put you to sleep. All you really want to do is to put your money in something where it will be safe and grow. Is that too much to ask for? 

Why are there so many different investing alternatives? 

Are they really different! If you have ever been to a grocery store you will see bottles of different cleaning products, most of which will be labeled "new!" "Improved!" or even better "New and Improved!" But no matter what they call it, when its all said and done these bottles are filled with nothing more than SOAP, same as they have always been. 

Investments are no different. At first glance it may appear that all these mutual funds, Exchange Traded Funds, Index Funds, unit trust, REIT's, options, futures are unique and require encyclopedic knowledge to understand the technicalities. But more often than not what you are looking at is nothing more than just an old way of investing in a new bottle. 

Understanding investing in simple terms: 

In a family tree you will have a male and a female at top of the list from where all the other branches came out. Similarly in investments at the top you have stock and bond. All other forms of investments are some form or other of these two. And their differences can be spotted just as easily as you can distinguish a man from a woman. 

What are stocks and bonds and what is the difference between the two? 

I will compare stocks to a flashy car; all powerful snazzy, attractive, dangerous, accident prone and bonds to the family car; nothing much to look at, slow, always takes you where you are going, always there for you. 

Some basic traits of the two: 

• People investing in stocks want to see a return on their money, bond holders want to make sure the return of their money. 
• Stocks are about taking risk and bonds are about avoiding risk. 
• Stocks offer unlimited upside potential, bonds offer limited downside potential. 
• Stocks mean ownership and bonds denote loaning. So we can say one is an ownership investment and the other is a loan investment. 
• The difference between an ownership investment and a loan investment is not too hard to understand. The differences are obvious once you know what to look for. 
• An ownership investment does not have an ending date. (When you buy a stock it never becomes due, you have to sell it to get cash) 
• Loan investments almost always have a due date (e.g. your fixed deposits with the bank). An Ownership investments rarely promise a specific return. A stock price can go up 10 times or remain static for years. 
• Loan investments nearly always promise a fixed return. A 12 month deposit certificate promises 2% return. 

Third major distinction is whether you will get your money back. 

In ownership investment there might be no such guarantee.

 A stock's price can go to zero. 

The loan investments are usually backed by the guarantee of the bank, corporation or the government. 

With the above distinctions in your mind try to figure out what you are invested in. 

Few examples are: 

• your bank account or Government bonds 
• loan investment stock or mutual fund
• ownership investment 

What should I invest in? 

Having too much investment in one type can be bad for the investor. Loan investments are unable to keep pace with inflation, you might have your money safe but the purchasing power goes down. Too much risk avoidance will result in less return. 

Similarly Ownership investments can leave you without a penny in your pocket. The Idea is to keep a balance between the two. 

Neither is in a category of good or bad or one better than the other investment rather they serve different needs.

 Needs which can vary from one person to the other depending on ones investment time horizon and risk appetite. 

Stocks and bonds complement each other. 

In case you are new to investing first check your risk appetite, needs and time horizon of investments to decide where you should put your money.

6 Critical Areas of Financial Advice for Women

With more women working and our income being just as important as our partners for stability of the home, we need to consider:

Who would look after our children if they were seriously injured or died? 

What would happen if we were suddenly unable to work and bring in that income? 

What future plans could not be fulfilled if our income stopped? 

If a mother dies whilst our children are still very dependent, the emotional affects are bad enough but if you work and your income stops then the financial consequences are even greater. 

It is usual, even today, that we still remain responsible for the majority of the child care, the shopping, cooking, cleaning, washing, nursing, booking of doctor and dentist appointments, taxiing to and from school and clubs, organising holidays, birthday parties and presents - you get the idea. To have to employ someone to provide for each of these services and pay for them at a going rate would be astronomical but many women fail to insure ourselves. 

What about illness? Few employers provide any form of sickness protection meaning that in the event of a long term illness, you may receive some form of subsidy (depending on your geographic location and employer) or alternatively, you require private private insurance to cover you.

We all have future financial plans - the holiday we want, the car we are going to buy, when we can afford to retire etc and these are based on an assumption that we will continue to work and have money coming in. So if the money stops being received then these future financial plans can no longer be achieved. So insuring your ability to work and earn is vital. Don't leave it too late. 

Retirement

Traditionally women have neglected our retirement arrangements, relying on our partners to build up sufficient rights to provide for a combined old age. With the increase in divorce and women deciding to remain single the need to provide for our own retirement is now essential. 

In retirement everyone has their own individual personal allowance so even if a woman retires with a significant other, it makes sense for both to have an income that makes use of the tax allowances. A retirement fund is required on so many levels as it is the only savings plan that gives an immediate uplift when invested because the government gives tax relief on top of every individual contribution.  

Put Cash to Work 

It is important to have sufficient money on deposit to cover day to day needs and a little extra for emergencies - the washing machine always knows to break down just as the overdraft limit is reached. But with interest rates being so low large amounts of money should not be left on deposit because it is not working. 

Women tend to be more cautious and can shy away from investments considering them to be complicated and risky. This is not the case, there are interest based investments i.e. low risk, right up to individual stocks and shares in single companies with a wealth of investments in between. 

To make money work it needs to have a spread of investment which will include Cash, but long term it will not keep up with inflation so adding other asset sectors, such as Equities, will offer a better opportunity for real growth over the medium to long term.

Make a Will

So many people think that they do not need a Will because they do not have that much to leave, but a Will is about ensuring that an estate goes where it should on death. It also ensures that any estate is dealt with quickly and efficiently. Dying intestate (without a Will) means that a set procedure is followed for the distribution of assets, which does not necessarily match a person's desired outcome. Also, sorting out a Will is the first step to reducing any inheritance tax liability on the estate.

 After hard work and sensible investing most people want to be able to pass on their assets to the next generation. Unfortunately, there is a limit to what can be passed on before beneficiaries have to pay inheritance tax. There are many ways in which the value of an estate can be reduced but this has to be done with the luxury of time so it is never too early to look at such plans. 

By looking at financial affairs early it is possible to save inheritance tax and ensure that family reap the benefits from assets that have taken a lifetime of hard work to accumulate - don't pay more tax than has to be paid to the tax man.

Get a Power of Attorney 

A lasting power of attorney (POA) defines who is responsible for an individual should they become mentally or physically incapable of dealing with their own finances or day to day needs. It is a simple way of giving peace of mind. Regardless of age, an accident or illness can happen that means that an individual becomes vulnerable. This is when a power of attorney will step in. If a POA is not in existence then legal representatives have to apply to the Courts who appoint a deputy to manage the individual's property etc, this takes time and costs more money all at a time when the family do not need any more hassle. 

As we are all living longer it means that it is now more likely that either our mind and/or body will give up on us. It is never too early to put a POA in place and if there are elderly relatives then POAs should be discussed with them too. 

Get Cashback 

When shopping online instead of going directly to the shop try a link to a 'cashback site'. Online retailers pay the cashback sites for referrals and then the cashback sites will pay part of this to the purchaser; receive money back for something you were going to buy anyway. Never join a site that asks for a payment upfront. Insure yourself and your income to protect those you love, it costs less than most people think and act now to get the benefit of female insurance rates. 

Regardless of what life throws at you safeguard some of your income, reduce your tax liabilities so that life after work  provide what you want it to. Don't accept poor interest rates, you can do better. Don't be frightened of investment, it doesn't have to be risky.  

With careful planning, potential Inheritance Tax liabilities can be considerably reduced or indeed, mitigated completely. 

May you have a long and healthy life, dying without the need of a lasting power of attorney but if it is required the family will be so glad that you have the foresight to deal with it. 

Finally, make the most of what is on offer and get Cashback where you can! 

Article Source: https://EzineArticles.com/expert/Zanne_St_John_Marchmont/1416746

24 Financial Tips for Women

As women, we must plan for the expected and have a contingency plan. We must identify possible scenarios that could occur and develop solutions on how to deal with them. 

More than 80% of women will at some point in their lives have sole responsibility for their finances. 

Every woman can and should know how to manage her own finances. 

We need to become empowered with financial knowledge which will help us make the best financial decisions throughout our life. 

Here are 24 ways for us women to manage our finances:

Spending/Budgeting 

1. Create a budget or spending plan to control spending. Make your plan flexible to accommodate for unexpected expenses and include savings goals. Include monthly expenses and debt plus your monthly income

2. Create an emergency fund to cover monthly expenses for at least 3 months

3. Balance your monthly income and outgoings and document every transaction, including credit/afterpay transactions and trips to the ATM 

4. Reduce spending by 30-50%. Spread spending for large purchases over several months to ease the burden. Buy more needs vs. wants and reduce your credit card debt

5. Set both short-term and long-term goals such as paying off a bill and saving for a property

Debt 

1. Pay down debt and get current on late accounts. Keep debt (excluding rent/mortgage) at 15% or less of your net monthly income. 

2. Keep credit card balances at 20% or less of the credit limit. 

3. Pay more than the minimum monthly payment. 

4. Pay back loans. Consider using student loan forgiveness programs if applicable

Banking 

1. Pay bills online

2. Use direct debits where possible

3. Open an account with overdraft protection 

4. Save, save some more and save some more

Estate Planning 

1. Create a will to being setting up estate planning when you have long term partner, moreso when you have children

 2. Create a medical directive to identify your medical wishes

Investing 

1. Max out your tax advantaged retirement plans. Commit to saving a set percentage of your income, so when your income increases, your contributions will also increase 

2. Control your risks through diversifying and investing in various index funds that are a combination or low, medium and high risk to limit your losses

3. Focus on long term growth. Leave your money untouched for the next 5 to 10 years to see the benefits of your money growing

4. Invest as much as you can in tax-deferred retirement plans. Your money will grow faster and you can afford to invest more now because you won't have to pay taxes on the money until you retire 

5. Once you have decided how much to invest in each type of asset, rebalance often to your original percentages, particularly after a large market shift, upward or downward

6. Plan for the future and always have a plan A, B and C

Support and Emotions 

1. Develop a support network (friends, family, church members, join support groups and a financial network etc.) to get advice, support and encouragement

2. Think rationally and without emotion. Calm down and think logically about how to deal with your finances

3. Don't blame others for your financial mistakes. Take accountability and responsibility for your actions

Article Source: https://EzineArticles.com/expert/Harrine_Freeman/52122

Debt and Money Management - Differences Between Men and Women

In today's tough economy, it seems pretty normal to have debt. Most people today, regardless of their financial status, are into debt. In the majority of cases, financial decisions are based on emotion rather than logic. The question now is, who have more debts, men or women? What factors are behind this interesting phenomenon? 

Statistics on Debt and Money Management Between Men and Women 

• According to research, there is a significant difference between how men and women generate economic decisions. Their economic choices are actually influenced by behavioural psychology, neurobiology and brain chemistry. It was further found out that there is a substantial difference on how men and women manage money, spend resources and handle debt

• Research shows that women are more prone to impulsive buying compared to men. While 4.5% of men's population claim that they have difficulty in resisting sale, 23.7% of the women's population actually buy unplanned things which they don't necessarily need

• Most women spend for fashion accessories, dress, bags and shoes. Meanwhile, men spend most of their money on electronics, gadgets, cars, alcohol, watches, eating out and sports tickets. It is believed that women tend to overspend due to societal influence and pressure to stay in fashion while most men spend excessively to impress women. 

Men and Women in Debt Management 

• Through the years, there has been a significance rise in the number of men and women who seek for financial advice. However, women remain the #1 client of financial advisors. But this doesn't imply that women have more debts than men. Rather, women have more positive outlook that debt can be resolved and they have recognised that problems on debt really exist. Men are less likely to seek for financial advice mainly because of their ego. 

• Why is this possible? Blame it on HORMONES. 

• What Roles Do Hormones Play in Debt and Money Management The surge of testosterone hormones in the body stimulates the "winner effect" which increases their ability to take risks. While it can be beneficial at times, the "winner effect" can also drive men to produce non-feasible financial decision. 

• With each win, the level of testosterone in a man's body tends to increase. In the long, it can impair men from making rational and effective decisions. One study concluded that testosterone hormones create quick wins for men but they are more likely to be followed by losses. On the other hand, women will tend to outperform men with their steady and slow wins. 

Changes in Organisation Culture 

• Through the years, there has been a significant change in the culture of many organisations. Women are now more able to participate in decision making and of course, they are given higher positions in companies. 

• Women are believed to be better money managers, hedge funds managers and profitable investors compared to men. Men are thought to be more optimistic than women. Their intense optimism drives them to become more aggressive in making decisions. But of course, this only applies to younger males as they experience a great surge in testosterone level regularly. 

• Levels of testosterone in the body incur diverse effects to the decisions of women. Low level of testosterone makes women less productive while high levels result to the generation of selfish decisions. 

Men and Women in Making Investments 

• Since most men are risk takers, they are more likely to invest in certain business endeavours compared to women. Most women are insecure about their knowledge in financial issues which repels them from making investments. 

Men and Women in Saving 

• There have been diverse claims about the saving behavior of women. While there are researches revealing that men are great savers while women are extravagant spenders because of their spendthrift shopping activities, some researchers claim that women are indeed better savers, spenders and investors.

• Women are less likely to make investments but they are more inclined to engage in long term financial planning. While many women are less risky in making investments, studies show that they can be as productive and successful as men when they engage in certain endeavours. 

• Despite the fact that most women earn less than what men earn, women tend to save more because of their huge interest to save. In many western countries, women are claimed to be better spenders and they manage to build larger savings compared to men. 

Article Source: https://EzineArticles.com/expert/Rebecca_Sophia_Meade/1393611

Do Women Need a Female Financial Advisor?

Would it surprise you if I told you that women are better money managers than men? It starts with a different relationship with money. Women do not view money as the ultimate goal, tend not to flaunt it with objects that are symbolic of success, and don't involve it in their identity to the extent as men. Becoming a millionaire is usually not the final accomplishment and stopping point for women. Instead, money is a tool that enables women to enjoy the benefits and freedoms of life. 

When I commenced my Investing journey and spent time researching on various forums, it became clear to me that women are more careful and thoughtful about risking their money. We are not trying to score a goal during extra time in the market, but look for stability and safety in an investment. "How safe is this," was the most common question and should be asked at every turn. So, women tend to have a similar relationship with money. That is, for us women, money is not a game to see who has more, nor is it a status symbol. Since, men just view money differently, their riskier mind-set interferes with the core money relationship women have. 

But, what bothered me the most about being researching the financial industry and meeting Financial Advisors, is that women were treated differently and even inferior by other men. It was not uncommon to see a male financial advisor talk to my husband when we as a couple met for advice. I understand that it is a male dominated field, but there is no excuse for this behavior as I was practically ignored, despite undertaking all the financial aspects (including investing) in our household. Speaking with other women, they have all had similar experiences.

In retirement, low risk investing is not only practical, its essential because you don't have time to start over. A study found that female hedge fund managers out-preformed men by 10% over a nine-year period in 2019. A hedge fund, originally named to hedge against market losses, has evolved. Now it is a managed fund (not indexed) that is less regulated in terms of using leverage. Using leverage dramatically increases investor risk. 

The study points out four primary differences. 

1. Women are less competitive and less preoccupied with beating an index

2. Women take fewer risks in the market as with other areas of life

3. Women do more homework and stay in investments longer

4. Women realise they are not in control

Realising you are not in control of all factors gives women the perspective to not panic. So, women need a female financial advisor because: 

1. Your relationship with money is similar on an emotional level

2. Safety and sustainability of your money is the priority, especially in retirement

 3. Female advisors tend to establish a more personal relationship with clients

4. Women, with the same experience as men, are better investors on average

There is a deeper sense of trust with another woman

Article Source: https://EzineArticles.com/expert/H_Lee_Johnson/2155805

Investment Tips for Women

Avoid procrastination and become one of the many Femvestors. 

Yes, ladies we are busy. We're managing our careers, raising a family, furthering our education, running a home or fostering a business. Who has the time to think about investment options? Often these professional women have no workable investment plan. 

Compared to men, women face different obstacles when it comes to planning for our financial future and retirement. We face different life challenges and investment risks. We also live longer, which means we need to consider different investment strategies when planning for retirement. 

Here we've listed a few investment tips for women who want to take the plunge, but don't know where to begin. 

Start now! 

No matter how young you are, it's never too early to start saving. Waiting for something? Well don't. When planning for your financial future, the old adage 'There's no time like the present' holds true. But if you haven't managed to start investing from a young age, then that don't let it stop you from starting now. Late is better than never if you still need to plan your investment strategy. The time is now; avoid procrastination. 

Plan your financial goals 

Think about your future and educate yourself about your investment options. Where do you want to be financially in 5, 10 or 15 years time? What sort of lifestyle do you envisage? How would you like to see your wealth grow? What are your retirement plans?

 Using the SMART system for goal setting can help you realise objectives that are specific, measureable, attainable, relevant and timely. 

Get clued up 

Inform and educate yourself. The internet is loaded with useful resources that will help you plan your investment strategy, including our blogs and daily posts online. All of these cover the investment basics.

Know your options 

Do research into equities, money markets, property and bonds. These words might not mean much now, but if you want to make a smart choice, then knowing your investment options is a good place to start.

Get involved 

Many women consider it traditional that the man should take care of all financial matters, but this is no longer appropriate. Only you can be responsible for your future financial security. By getting involved in the financial decisions of your family, you can learn and educate yourself about your investment options. 

Join an investment club 

Investment clubs offer a community where people can pool their resources and knowledge for the purposes of investing. First-time investors can also learn about their investment options and different markets from more experienced club members. 

Women-only investment clubs are also growing in popularity. Enquire with your friends to see if they can recommend a club for you. Meetup is a good starting point if you are struggling.

Get professional "Fiduciary" advice 

Once you have done your homework and thought about your investment goals, make sure you also get the advice of a trusted advisor. Being prepared before you meet with them will mean you get the most out of the session(s). But while it's good to prepare yourself and to know the basics, there is no replacement for professional advice, especially when it relates to taxes, estate planning and fees.

Source: https://EzineArticles.com/expert/Kathy_E_Roberts/1202759

Ladies - Our Money Matters

Sooner or later nearly all women, because of divorce or other lifestyle changes, come nose-to-nose with the financial area of our lives, this is a given. It's true - you do not want to learn how to handle money matters in a crisis; it's better to learn while you can be patient and reflective and embrace your financial well being.

But so many of us confront our cash concerns only at the worst moments in our lives-when we divorce, when our partners die, when we lose our jobs, or when we face a health crisis. When is a good time to start caring for our financial future? 

Today! It doesn't take a course in economics to see that the longer we wait, the worse off we may be. The facts aren't always easy to face, but they are potent persuaders. They show the need to create a sound base for our future financial life now, whether you're married, single, widowed, divorced, or partnered. All women, working and non-working, need to provide for the years when our earning power has diminished or ended altogether. We wil need cash-just as Sophie Tucker said: "From birth to age 18, a girl needs good parents. From 18 to 35, she needs good looks. From 35 to 55, she needs a good personality. And from 55 on, a girl needs cash."

We all know this to be true, or we should, because we live in a time of extended longevity. According to the Centres of Disease Control (CDC), a fifty-five-year-old woman today has about 26.2 years left to live. Thus, she can anticipate living to the age of eighty-one. A man's life expectancy is a few years shorter-seventy-five. And the truth is that with good health, we can live well into our nineties. 

Most women can expect to be on our own at some point in our lives. Many, of course, remain single. Others, by either choice or circumstance, become single. At least half of all first marriages end in divorce or separation, and so do more than half of all second marriages. Many women base their lifestyles on a two-income household, and women who work at home as mothers and homemakers choose to depend on their husbands or partners for financial support. Our longevity means that most of us will be living for a long time. So divorce and other life circumstances are likely to leave many of us women in charge of our financial lives, regardless of income, and whether we are ready or not. 

Many men are providers for their wives and children and carefully plan for the time when their spouses-whether working or nonworking-will be on their own. Others, however, are less responsible, through either ignorance, carelessness, or unwillingness to face the harsh realities of life. In too many cases, this means that these men are leaving their wives and children to slide into poverty after they die. 

If you've digested all this, then your stomach may be burning by now. Every single one of these contingencies is a serious challenge to us.

And these realities shed a very different light on the belief that many of us have- that saving and investing money is inconvenient and risky business. If you take these considerations very seriously, then you'll realise that spending your money as you earn it, without putting it to work, is the real risk you face, and it's a far greater risk than the chance that you'll lose money by having an agreement with yourself to regularly invest your money in a way that nurtures and benefits you. The real risk most women face is failing to invest actively. 

And part of this life process is being patient and trusting the reality that your money needs time to grow. This is a reality that it's not going to sprout overnight like a flower. It's going to grow based on consistent investment action, and not based on hot tips, inside information, advice from a psychic hot line, or by chance. Believe it or not, your money can grow for you and substantially ease financial worry.

I am encouraging you to realise your superpower as a woman and accept what might seem a revolutionary concept: You can, you will, and you must have control over your financial life. Taking financial control is part of our natural evolution and the last step in our liberation as women. The freedom we enjoy today came in stages: from education to the vote, to control of our health to increased employment opportunities, to more power in our relationships. 

Most of us have gone to work, and some of us have made a lot of money in these changing times; others have remained at home, working in alignment with a partner to raise families and run households. In either case, today's generation of women has greater freedom and opportunity than previous ones. But have we made this new freedom work for us? The truth is, regardless of age, occupation, marital status, or future promise, we must all go to the next level and actively develop our financial well-being - we must have 'financial legs'. 

It's not that we consider our financial lives unimportant. Nor do we purposely shirk responsibility. But centuries of cultural biases, misconceptions, and fears conspire us to hold us back. We are not supposed to be interested or involved in money matters some think; in reality, many of us are unprepared to tackle the issue and we put it out of our minds. Certainly, like so many passages in life, taking charge of our financial life is a path to new challenges. (Plenty of men are intimidated about money matters, too-even if they're too macho to admit it.) But investing is also one of the most enjoyable things you'll ever do because it leads to your financial security. 

Watching your money work for you is a singular treat, one that can give you pleasure as it raises the quality of your life. How can you envision financial opportunity? Begin by understanding and dumping the influences that keep you from this very important stage in the cycle of life. 

At stake is a secure future for yourself and your family. The bottom line-for you and me and everyone-is that you will probably have to manage a large sum of money-perhaps millions-by the time you stop working if you hope to live as well as, if not better than, you did during your working years. So if you don't begin the process of investing now, you can't be certain of a healthy-and happy-financial future. 

Anyone can successfully manage her money life. It doesn't matter whether you're young or old; married, partnered, or single; divorced or widowed; employed or unemployed; rich or poor. What is important is that you see yourself as a woman with cash and investments. 

Now is the time to nurture yourself to develop strong, sensible money strategies, whether you're just starting out or have already made some headway with investments. Handling your money, you will realise, it is a fascinating journey towards emotional and personal wholeness. 

Article Source: https://EzineArticles.com/expert/Joan_Perry/216137 © 2021 EzineArticles

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

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

Learn From Your Investment Mistakes

Every one makes investment mistakes. From the time we were born, we learned from the mistakes we made. As investors, we need to learn from our investment mistakes by recognising when we make them and make the appropriate adjustments to our investing discipline. When we make a losing investment, do we recognise our investing mistake and learn from it, or do we attribute it to some outside factor, like bad luck or the market? To make money from your investments and beat the market, we must recognise our investing mistakes and then learn from them. Unfortunately, learning from these investing mistakes is much harder than it seems. 

Some of you may have heard of this experiment. It is an example of a failure to learn from investing mistakes during a simple game devised by Antoine Bechara. Each player received $20. They had to make a decision on each round of the game: invest $1 or not invest. If the decision was not to invest, the task advanced to the next round. If the decision was to invest, players would hand over one dollar to the experimenter. The experimenter would then toss a coin in view of the players. If the outcome was heads, the player lost the dollar. If the outcome landed tails up then $2.50 was added to the player's account. The task would then move to the next round. Overall, 20 rounds were played. 

In this study there was no evidence of learning as the game went on. As the game progressed, the number of players who elected to play another round fell to just over 50%. If players learned over time, they would have realised that it was optimal to invest in all rounds. However, as the game went on, fewer and fewer players made decisions to invest. They were actually becoming worse with each round. When they lost, they assumed they made an investing mistake and decided to not play the next time. 

So how do we learn from our investing mistakes? What techniques can we use to overcome our "bad" behavior and become better investors? The major reason we don't learn from our mistakes (or the mistakes of others) is that we simply don't recognise them as such. We have a gamut of mental devices set up to protect us from the terrible truth that we regularly make mistakes. We also become afraid to invest, when we have a losing experience, as in the experiment above. Let's look at several of the investing mistake behaviors we need to overcome.

 I Knew That 

Hindsight is a wonderful thing. Looking back, we can always say we would have made the right decision. Looking again at the experiment mentioned above, it is easy to say, "I knew that, so I would have invested on each flip of the dice". So why didn't everyone do just that? In my opinion, they let their emotions rule over logical decision-making. Maybe their last several trades were losers, so they decided it was an investing mistake and they become afraid to experience another losing trade. 

The advantage of hindsight is we can employ logic as we evaluate the decision we should have made. This allows us to avoid the emotion that gets in our way. Emotion is one of the most common investing mistake and it is the worst enemy of any good investor. To help overcome this emotion, I recommend that every investor write down the reason you are making the decision to invest. Documenting the logic used to make an investment decision goes a long way to remove the emotion that leads to investment mistakes. To me the idea is to get into the position where you can say "I know that" rather than I knew that. By removing the emotion from your decision, you are using the logic you typically use in hindsight to your advantage. 

Self Congratulations 

Whenever we make a winning investment, we congratulate ourselves for making such a good decision based on our investing prowess. However, if the investment goes bad, then we often blame it on bad luck. According to psychologists, this is a natural mechanism that we, as humans possess. As investors, it is a bad trait to have as it leads to additional investing mistakes. 

To combat this unfortunate human trait, I have found that I must document each of my trades, especially the reason I am making the decision. I can then assess my decisions based on the outcome. Was I right for the right reason? If so, then I can claim some skill, it could still be luck, but at least I can claim skill. Was I right for some spurious reason? In which case I will keep the result because it makes me a profit, but I shouldn't fool myself into thinking that I really knew what I was doing. I need to analyse what I missed. 

Was I wrong for the wrong reason? I made an investing mistake, I need to learn from it, or was I wrong for the right reason? After all, bad luck does occur. Only by analysing my investment decisions and the reasons for those decisions, can I hope to learn from my investing mistakes. This is an important step toward building genuine investment skill. 

Luck Becomes Insight 

The market is comprised of a series of cause and effect actions, which are not always transparent. This cause and effect has created some interesting behaviors by some very successful people. I am sure you have heard of many "superstitions" that people hold to be true to help them perform well. 

As humans we tend to think that luck is insight. We fail to analyse effectively the situation and the real reason for our success or failure. In investing this behavior will lead to ruin. To help overcome our natural tendency, we must document our investing decisions and then assess the results. This assessment process helps us learn from our success and from our failures and is critical for each of us if we hope to become successful investors. 

Learn from Investment Mistakes 

To help avoid investing mistakes, what should you document before you make an trade? I like to look at three categories regarding a stock I am considering. 

First, I look at a series of fundamental information such as earnings yield, return on capital, revenue growth, insider holdings, sector, and free cash flow. The fundamental information helps me identify if this is a good company with growing earnings, good management and has potential. 

After reviewing the appropriate financial information including SEC documents, I identify the risks inherent in the company. These risks might include competition, market share, insider transactions, and any litigation that the company is experiencing. You need to try to identify every possible risk and assess them critically. 

Finally, I look at the chart of the stock, seeking to identify support and resistance zones. This gives me potential entry points, exit targets, and the trailing stop loss. I complete these sections with a written trading strategy describing how I expect to make my trades. All these investment factors should be documented before making a trade. Once the trade is complete, I review them to see what I can learn so I can avoid any investing mistakes in the future.

To learn from our investing mistakes, we need to document our actions before we make the decision. We also need to be honest with ourselves when assessing our results. As we have seen, it is quite easy for each of us to put on rose-colored glasses and think we are better investors than we really are. We need to assess critically our investing abilities without distorting the feedback we receive from our decisions. Those of us who are able to learn this valuable skill will benefit greatly. Those of us who are unable to apply this learning will be destined to mediocrity at best and likely lose much of their capital before they quite investing.

 Article Source: https://EzineArticles.com/expert/Hans_Wagner/33314 

Understanding The Most Important Investment Concepts

It's always good to have at least a basic foundation of fundamental investment knowledge whether you're a beginner to investing or working with a professional financial advisor. The reason is simple: You are likely to be more comfortable in investing your money if you understand the lingo and basic principles of investing. Combining the basics with what you want to get out of your investment strategy, you will be empowered to make financial decisions yourself more confidently and also be more engaged and interactive with your financial advisor. 

Below are a few basic principles that you should be able to understand and apply when you are looking to potentially invest your money or evaluate an investment opportunity. You'll find that the most important points pertaining to investing are quite logical and require just good common sense. The first step is to make the decision to start investing. If you've never invested your money, you're probably not comfortable with make any investment decisions or moves in the market because you have little or no experience. It's always difficult to find somewhere to begin. Even if you find a trusted financial advisor, it is still worth your time to educate yourself, so you can participate in the process of investing your money and so that you may be able to ask good questions. The more you understand the reasons behind the advice you're getting, the more comfortable you will be with the direction you've chosen. 

Don't Be Intimidated by the Financial Lingo 

If you turn on the TV to some financial network, don't worry that you can't understand the financial professionals right away. A lot of what they say can actually boil down to simple financial concepts. Make sure you ask your financial advisor the questions that concern you so you become more comfortable when investing or alternatively teach yourself as there is plenty of resources on the Internet such as Tick Tok, Youtube, Facebook groups and Instagram. Your can also follow podcasts, listen to Audio books or pick up a hardcopy.

ISA's, IRA's and Superfunds Are Containers to Hold Investments-They Aren't Investments Themselves 

The first area of confusions that most new investors get confused about is around their retirement vehicles and plans that they may have. If an investor has an individual retirement accounts, a retirements plan at work, you should understand the differences between all the accounts you have and the actual investments you have within those accounts. Your ISA, IRA, Superfund or 401(k) is just a container that houses your investments that brings with it some tax-advantages. 

Understand Stocks and Bonds 

Almost every portfolio contains these kinds of asset classes. If you buy a stock in a company, you are buying a share of the company's earnings. You become a shareholder and an owner at the same time of the company. This simply means that you have equity in the company and the company's future - ready to go up and down with the company's ups and downs. If the company is doing well, then your shares will be doing well and increase in value. If the company is not doing well or fails, then you can lose value in your investment. 

If you buy bonds, you become a creditor of the company. You are simply lending money to the company. So you don't become a shareholder or owner of the company/bond-issuer. If the company fails, then you will lose the amount of your loan to the company. However, the risk of losing your investment to bondholder is less then the risk to owners/shareholders. The reasoning behind this is that to stay in business and have access to funds to finance future expansion or growth, the company must have a good credit rating. Furthermore, the laws protects a company's bondholders over its shareholders if the company goes bankrupt. 

Stocks are considered to be equity investments, because they give the investor an equity stake in the company, while bonds are referred to as fixed-income investments or debt instruments. A mutual fund, for instance, can invest in any number or combination of stocks and bonds. 

Don't Put All Your Eggs in One Basket 

An important investment principle of all is not to invest all or most of your money into one investment. 

Include multiple and varying types of investments in your portfolio. There are many asset classes such as stocks, bonds, precious metals, commodities, art, real estate, and so on. Cash, in fact, is also an asset class. It includes currency, cash alternatives, and money-market instruments. Individual asset classes are also broken down into more precise investments such as small company stocks, large company stocks, or government issued bonds. 

The various asset classes go up and down at different times and at different speeds. The purpose of a diversified portfolio is to mitigate the ups and downs by smoothing out the volatility in a portfolio. If some investments are losing value at some particular period, others will be increasing in value at the same time. So the overarching objective is to make sure that the gainers offset the losers, which may minimize the impact of overall losses in your portfolio from any single investment. The goal that you will either have with your financial advisor and/or robo advisor to help find the right balance between the asset classes in your portfolio given your investment objectives, risk tolerance, and investment time horizon. Unless you choose to undertake your own research and create your own portfolio. This process is commonly referred to as asset allocation. 

As mentioned earlier, each asset class can be internally diversified further with investment options within that class. For example, if you decide to invest in a financial company, but are worried that you may lose your money by putting everything into one single company, consider making investments into other companies ( Company A, Company B, and Company C) rather than putting all your eggs in one basket. Even though diversification alone doesn't guarantee that you will make a profit or ensure that you won't lose value in your portfolio, it can still help you manage the amount of risk you are taking or are willing to take. 

Recognise the Tradeoff Between an Investment's Risk and Return 

Risk is generally looked at as the possibility of losing money from your investments. Return is looked at as the reward you receive for making the investment. Returns can be found by measuring the increase in value of your investment from your original investment principal. 

There is a relationship between risk and reward in finance. If you have a low risk-tolerance, then you will take on less risk when investing, which will result in a lower possible return at any given time, relatively. The highest risk investment will offer the chance to make high returns. 

Between taking on the highest risk and the lowest risk, most investors seek to find the right balance of risk and returns that he/she feels comfortable with. So, if someone advises you to get in on an investment that has a high return and it is risk-free, then it may be too good to be true. 

Understand the Difference Between Investing for Growth and Investing for Income 

Once you make the decision to invest, you may want to consider whether the objective of your portfolio is have it increase in value by growing overtime, or is it to produce a fixed income stream for you to supplement your current income, or is it maybe a combination of the two? 

Based on your decision, you will either target growth oriented investments or income oriented ones. U.S. Treasury bills, for instance, provide a regular income stream for investors through regular interest payments, and the value of your initial principal tends to be more stable and secure as opposed to a bond issued by a new software company. Likewise, an equity investment in a larger company such as Apple is generally less risky than a new company. Furthermore, Apple may provide dividends every quarter to their investors which can be used as an income stream as well. Typically, newer companies reinvest any income back into the business to make it grow. However, if a new company becomes successful, then the value of your equities in that company may grow at a much higher rate than an established company. This increase is typically referred to as capital appreciation. 

Whether you are looking for growth, income, or both, your decision will fully depend on your individual financial and investment objectives and needs. And, each type may play its own part in your portfolio. 

Understand the Power of Compounding on Your Investment Returns 

Compounding is an important investment principle. When you reinvest any dividends or other investment returns, you begin to earn returns on your past returns. 

Consider a simple example of a plain bank certificate of deposit (CD) that is rolled over to a new CD including its past returns each time it matures. Interest that is earned over the lifetime of the CD becomes part of the next period's sum on which interest is assessed on. At the beginning, when you initially invest your money compounding may seem like only a little snowball; however, as time goes by, that little snowball gets larger because of interest compounding upon interest. This helps your portfolio grow much faster. 

You Don't Have to Go at It Alone 

A Financial Advisor or Robo Advisor can give you the investment guidance that you need so that you don't have to stop yourself from investing in the market because you feel like you don't know enough yet. Knowing the basic financial principles, having good common sense, and seeking guidance along the way can help you start evaluating investment opportunities for your portfolio and help get you closer toward achieving your financial goals. 

Article Source: https://EzineArticles.com/expert/Yulian_Isakov/836688

8 Causes of financial failure

Struggling financially? A lot of people are, even though they give everyone the impression that they have it all made. They are working, live in a nice house and drive a nice car, but are living from payday to payday. Here are 8 major causes why people are struggling today.

Living beyond your means 

There is no getting away from it. If you spend more money than you earn then you must be getting your extra money from somewhere and that almost always means borrowed money, also called buying on credit. There is a cost to all of this and it is called interest. If you are in the habit of buying stuff on credit then the interest you are paying during your lifetime will add up to a fortune. The interest is sometimes called dead money because you have nothing to show for all of the interest you are paying. Think of what you could have spent with all of that interest. It is almost too painful to even think about but if you are to avoid poverty then you need to pull your head out of the sand and face the facts; your financial future depends on it. 

Keeping up with the Jones's 

Some people try to keep up with their peers with whatever they are spending their money on. It's a compulsion that will cost you plenty. Living up to some kind of self image will severely dent your finances and will prove costly by the time you stop working. You may think your peers are doing well financially to afford this stuff or even think they have done well for themselves but what you don't know may surprise you. That they may be up to their eyeballs in debt. Even if they are living within their means to finance their lifestyle, it does not mean you have to keep up with them. Don't be a people pleaser and live up to other people's expectations, live according to what is the right course of action for your own circumstances and you will be far happier. 

Consumer Debt 

Consumer debt or dumb debt as it is often called is purchasing stuff with borrowed money. It is spending tomorrow's income today. Debtors are usually oblivious to what is happening to the so-called stuff they bought on credit; that their newly acquired possessions are worth less the minute they have bought it. A crucial factor which needs to be observed is this; The money owing on the item is always more than what the item is worth. So many people are caught up in the debt poverty cycle and it is not just those on lower-incomes; in fact people on a middle -income are prone to this trap.

Commercial Greed 

Commercialism during the 20th century has brought a lot of prosperity; it has provided jobs and created countless businesses but there is another side to it. Social media and society has caused us to have an insatiable appetite for things. People are not content with just stuff they need but keep wanting more. This all has to be paid for, it is money that could have been used to build a financial base for their future. 

Addictions 

Addictions are very expensive; just ask any smokers. One does not need to be a mathmatician to calculate how much cigarettte smokers are paying for their addictions. It is estimated at over $A100 per week. That equates to $5200 per annum. No wonder many smokers are broke. It is the same with those who are addicted to alcohol and the pokies. 

Financial illiteracy 

Financial illiteracy is the major cause of financial poverty and it is not only those with low incomes who are financially illiterate; people on a high income can also be guilty of this. You hear stories of successful sports people who earned millions during their heyday but are broke years after their retirement. It is important to save and invest your money during your best earning years to set you up for when you are no longer earning as much. 

Irresponsibility 

Not taking responsibility for your own finances is irresponsibility. They will come up with all kinds of excuses why they or are not contributing to savings, and investment opportunities. Excuses such as, "You can't take it all with you," "I might die before retirement," or "I'm only young." People who are irresponsible with their finances tend to be irresponsible in other areas of their lives as well. Making commitments whether it is in a relationship, owning a house or car, or saving for your retirement takes responsibility

Bad Company 

There is no doubt that bad company is a major reason why so many people are living in poverty. It has been said, "You are the average of the five people you spend most of your time with," so it pays to examine who you are hanging out with and ask whether their attitudes and opinions on finance are influencing your money habits. In order to grow you need people to help and encourage you. This sometimes means separating from bad company. Some find that hard but in the long run it is all worth it.

Article Source: https://EzineArticles.com/expert/Robert_Alan_Stewart/2287449