Women's Investment Strategy: Prioritizing Financial Security
12/15/2023In the financial world, the tide is turning.
The GOBankingRates survey revealed a fascinating trend. Women are less likely to have lower balances in their stock portfolios than men. Specifically, only 37% of women investors have less than $15,000 in their portfolios, versus 45% of men.
You know what's even more intriguing? Women are more likely to boast high balances — 35% have over $35,000 compared to 30% of men.
So, what's driving this shift towards greater financial security among women investors?
Understanding the Shift Toward Financial Security
Kelly Gallimore, a wealth manager at Merit Financial Advisors, sheds light on this trend.
The key factor? A robust desire for financial security.
Women are increasingly taking charge of household finances. In 2020, McKinsey & Company conducted a study. The study found that over five years, there was a 30% increase in married women taking over financial decisions.
Wealth is transferring to women, projected to reach $30 trillion by 2030. Women are learning about finances and educating the next generation. More women are becoming wealth managers, attracting others who previously avoided financial advice.
Why Are Women Less Likely to Have Low Balances?
Financial security is a primary driver, but there's more to it.
Women typically show a strong interest in financial well-being. This is particularly true during major life changes such as widowhood or divorce. They often enter financial planning with a crucial question: "Will I be OK?"
Additionally, despite shrinking, the wage gap and professional limitations remain pertinent issues. On average, women earn 15.5% less than men do. Additionally, women are more likely to leave their jobs for family responsibilities. Factors like longer life expectancy and early financial experiences also play a role.
Growing Your Stock Portfolio: Tips for Women Investors
- Know Your Financial Behaviors and Biases. Tools like DNA Discovery can help you understand your innate approach to finances, identify strengths and blind spots.
- Consider Your Financial Situation. Don’t rush to invest in a windfall such as a bonus or inheritance. Address pressing needs like debt repayment or emergency funds first.
- Align Investments With Goals. Differentiate between long-term (e.g., retirement) and short-term (e.g., education savings) goals. Your investment strategy should reflect the time frame and associated risk.
- Stay the Course During Market Volatility. Avoid the temptation to liquidate investments during downturns. Patience can yield better long-term results.
- Be Cognizant of Hidden Costs. Trading fees and mutual fund expense ratios can eat into your returns. Keep an eye on these costs.
- Maximize Employer Benefits. Contribute to employer-sponsored retirement plans and don’t miss out on potential matches. Explore all available benefits like health and life insurance to free up more investment funds.
- Get Professional Advice. If unsure, consult a financial advisor. Ensure they are fee-based and act as a fiduciary, prioritizing your best interests.
The Takeaway
