There are 3 factors which determine value of an investment.
Time invested Amount invested Return received
Women are on the back foot with all three.
Women live longer. In the 1800’s women lived to age 33 and men to 31. Today women live to 83 years and men to 79 years. In general women outlive men by about 5%. So, woman need to plan their retirement funding more carefully. Living longer means that more provisions need to be made for those extra years.
Women earn less. Traditionally women have been left behind in the work place. Key positions have often been taken by males. I guess the reasoning has been that women take a break from employment when they have children.
Earning less translates into saving less. Until women are on the same financial footing as their male counter parts, their ability to invest more will always be a struggle.
Women are more cautious. Women tend to save for a shorter time as they focus on the day to day needs of the family.
This hinders the effect that compounding has on investing. Saving in a cash account will not yield the returns found in equities over time.
Times are changing. There is a strong movement underway where women are being recognised, certainly in the political world.
Teresa May, the UK’s new Prime Minister, has made the point by being more inclusive in appointing more women to her cabinet. It’s no longer a man’s world when you see women like Christine Lagarde heading the IMF, Teresa May Prime Minister of the UK, Angela Merkel leading Germany and Hillary Clinton a possible president of the USA.
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This article first appeared on 702 : Women on the back foot with financial planning