Written by:
Kira Vermond
THE GLOBE & MAIL
October 25, 2022
📰 Read the FULL ARTICLE here.
💻 Read an excerpt below.
[...] ample research suggests many women feel far less comfortable investing and taking on risk in their portfolios. What’s more, according to a 2021 Fidelity Investments study, only one third of women see themselves as investors and 70 per cent say they think they need to know more about picking stocks before they become more active.
That lack of confidence can lead to playing it safe – even for those who can actually afford to take on more risk. While women in Canada will inherit an estimated $900-billion by 2026, only 62 per cent of women identified as high-net-worth feel financially secure.
But Cindy Marques, a certified financial planner and co-founder and CEO of MakeCents in Toronto, which offers financial coaching for millennials, is not convinced caution is necessarily a bad thing for some women. It makes sense to consider the whole picture, she says, before making decisions about what to invest in.
“It’s not because we’re fearful of risk, we’re just very aware of risk – we’re risk aware versus risk averse,” she adds, explaining that while men generally tend to focus more on returns and how to chase them, women have a more holistic view of investing. “For us, it’s about ‘what can this money do for me and my family?’ We’re not trying to gamble or chase that huge payout. We’re going to choose lower-risk options because we’re trying to be mindful of what can happen if things don’t go well.”
Many women feel the stakes are higher because they have less money to play with in the first place – generally they earn less than men and cumulative lifetime savings are lower when, for example, they step away from the work force to care for family, she says.
A strong portfolio can change that. Even earning a few percentage points more over the course of 20 years can mean the difference between travelling the world in retirement or vacationing closer to home. For instance, a $25,000 investment earning 3-per-cent interest compounded monthly is worth $45,518 after 20 years, while the same amount would be worth $100,968 if the investment earned 7 per cent instead.
[...]
For women, the solution is not throwing caution to the wind and chasing windfalls or investing in the next hot thing. Instead, says Ms. Marques, when women create a strategy, they’ll make investing decisions based on facts – not fears.
Know your target numbers. If you don’t know how much money you need to fund your retirement, how can you decide how much risk to take on? Instead of aiming for an arbitrary number, work with an adviser and go over what you’ll receive from the Canada Pension Plan (CPP) and Old Age Security (OAS), corporate pensions, rental properties and other investments. Don’t forget to take inflation into account.
Assess continuing contributions. Can’t stomach the up-and-down swings of investment volatility? A more conservative investment might make more sense but know it could mean either putting more money aside in savings each month, rethinking when you’ll retire, or scaling back retirement plans.
Update annually. Crunching the numbers once isn’t enough, Ms. Marques says. Maybe your investments do incredibly well for years – or terribly – and it’s time to change contribution amounts or investments. Or maybe you decide travelling just isn’t as important to you after all and you’ll need less to retire on.
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