5 Ways to Achieve Financial Security for Women

 

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Finance | Tuesday, 01 Aug 2017

Women play a diverse role in society. Besides being mothers, they carve out careers for themselves, contribute to national and global economies, drive businesses and contribute towards the growth and development of society.

 

While women become increasingly active agents in the workforce, they are also more likely to take time off as a result of child-bearing and family obligations, thus affecting their overall salaries and finances. All of these factors can impact women’s savings, especially when it comes to retirement. Furthermore, as many as 9 out of 10 women will be solely responsible for their finances at some point in their lives, according to the National Centre for Women and Retirement Research.

 

This begs the question— how do women attain financial security in the midst of an ever-changing economic and social landscape? While investing might seem like daunting task, it is also an effective way for women to achieve financial security. However, confidence remains an underlying challenge for women with the interest to invest.

 

Therefore, it is important for women to have a solid understanding about how to manage their money and invest for the future. Here are five ways that may help you become more financially savvy.

 

Just Start

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First and foremost, the most important rule for women is to just begin. Take charge by reading up on various investment products, strategies and risks. Websites such as www.investopedia.com is a great starting point to help you get acquainted with difficult investment jargons, and global trends, which will help you to get the ball rolling.

 

Once you have an understanding of investment basics, you will feel more comfortable and confident to make financial decisions. Though it may feel a little awkward at first, discussing about financial matters with a trusted friend, family member, or mentor will make tackling financial goals less daunting. In the same way that “gym buddies” keep each other motivated, financial confidantes can help both parties make progress and hold each other accountable.

 

So, don’t wait. Just make things happen!

 

Diversify your investment portfolio

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A diversified investment portfolio will help you minimize the risk of potential losses so that you can achieve your long-term financial goals. Essentially, it aims to maximise returns by investing in different asset classes and instruments that would react differently to the same event.

 

Start off by investing with the safest long-term and low-cost route such as fixed deposits and unit trusts. Despite its relatively lower yield, these products are technically foolproof and require only a small investment upfront.

 

If you’re ready to explore higher risk options with potentially higher yields, consider alternative investments such as long and short-term bonds, hedge funds and credit range accruals. Although alternative assets may have high initial upfront investment fees, transaction costs are typically lower compared to conventional assets due to lower levels of turnover. Plus, alternative assets held over a long period of time may result in higher tax benefits. However, remember to draw out a succinct financial plan with your advisor or bank’s relationship managers before embarking on these investments.

 

Find an advisor you trust

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A financial advisor can be a valuable resource to turn to with questions and uncertainties. A good financial advisor will help you analyse your current situation, identify your priorities and risk factors. Then, they’ll work with you to develop a customised plan to help you go the distance with your savings and investments. Whether you’re saving for a new home, children’s education, retirement, or paying off a debt, putting a solid plan in place is one of the best ways to ensure that you’ll have the finances to achieve your financial goals.

 

When choosing someone to work with, look for an effective listener who communicates clearly about fees, professional designations, and investment advice. Take your time to meet a few advisors as many times as necessary to determine if they are right for you. To build trust, ensure that your potential advisor has the right certifications and is experienced and sincere in helping you achieve your goals.

 

If you still don’t feel comfortable, move along until you find the right fit.

 

Don’t autopilot

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Based on research by Brad M. Barber and Terrance Odean at the University of California-Berkeley, one of women's strengths as investors is that they are less tempted to buy and sell in the short term.

 

However, it is important to actively ensure that your asset allocation suits your future plans and needs. This means changing your asset allocation when it's required, as interest rates, dividends and risks may fluctuate due to downturns and volatilities in the financial market.

 

Hiring an investment advisor or engaging with an online investment platform to monitor economic trends could go a long way for you. Small adjustments to savings rates or investment plans can have a big long-term impact over time.

 

Consider insurance

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Insurance can often be used to create a rainy-day fund for women. You would want to insure yourself against unforeseen circumstances such as unexpected medical costs that may affect your income and future savings. To date, only 22% of Malaysians have medical or critical illness insurance. That leaves the remaining 78% at risk of bankruptcy, depleted retirement savings, and increased living expenses.

 

This is where critical illness insurance can help in being part of a sound and prudent financial strategy. It is designed to assist you with the rising and unexpected costs of getting sick. Critical Illness insurance provides a cash benefit if you’re diagnosed with an unforeseen illness as defined in your contract.

 

Allianz’s Lady Guard offers a broad safety net to protect women from illnesses that are not covered by most plans. This will empower you to cope with future uncertainties, financial concerns and medical costs. The coverage provides comprehensive protection against female-related cancers and illnesses such as breast cancer or cervix uteri. Lady Guard also provides coverage for pregnancy and infant congenital illnesses, and will help secure your finances for you and your family.

 

References

http://www.cnbc.com/2016/02/25/the-best-investment-moves-for-women-now.html

https://www.fidelity.com/viewpoints/personal-finance/special-report-women

http://money.usnews.com/investing/slideshows/11-great-investing-tips-for-women

 

 



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