By Robyn Laubscher, Advice and Product Specialist, PSG Wealth
The way in which women relate to and think about managing their money has changed significantly over time. Arguably, today, women are more in control of their financial freedom than they have ever been, thanks in part to a greater focus on workplace and gender equality. While getting accurate data can be challenging, a 2018 Credit Suisse estimate put women’s share of total global wealth at 40%.
There are, however, still a number of systemic disparities that undermine this progress and stand in the way of women gaining more control as financial decision-makers. These include realities like the gender pay gap and the fact that women remain under-represented in South African boardrooms.
The gender dimension of money management and why it matters
Part of the solution lies in recognising the different needs and strengths women have when it comes to finance and wealth creation – and capitalising on these.
Research has highlighted that there are vast psychological and behavioural differences between men and women. Whether it’s saving for retirement, building an emergency fund or planning for our children’s education, women tend to prioritise stability and take a long-term view in their financial planning.
Research also shows that women approach risk with caution. This allows a focus on wealth preservation and means they tend to employ risk mitigation strategies that strike a balance between growth opportunities and the importance of maintaining financial stability. For example, research by Fidelity found that women trade less frequently than men, which helps them to avoid some of the behavioural pitfalls that often erode investor returns.
Furthermore, women typically have longer life expectancies than men, which means that retirement planning for women requires a different approach. Tailored financial advice can help women assess their retirement goals, make appropriate investment choices and establish sustainable income streams, accounting for longevity risks and potential healthcare expenses.
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A personalised financial plan is essential
In the journey towards financial independence and security, women deserve their own tailored financial plan that recognises their unique circumstances and aspirations. A personalised financial plan goes beyond just numbers and products. When put together in a way that is tailored to each individual’s needs, it can be a powerful tool to support financial wellness.
The best place to start is by speaking to a suitably qualified financial adviser, who can analyse your needs and goals holistically. While each investor’s needs are unique, a balanced financial plan may include, for example, products that help protect your family when your earning ability is jeopardised, like dread disease and disability cover, and investment products that help you build an investment portfolio. Importantly, a diversified investment portfolio can help ensure that different investment needs are balanced – for example, ensuring you continue to build a retirement nest-egg by saving in a retirement annuity, while also addressing your shorter-term savings goals by including flexible and accessible products like a tax-free savings account. Depending on your risk profile, you may even want to consider a direct investment in shares if you find the idea of owning your own share portfolio appealing.