Tamryn Lamb, head of retail distribution at Allan Gray
There is still a significant gender gap when it comes to important issues like financial security. There are many reasons for this, some of which are complex and embedded in societal imbalances, and others which are simple and easier to solve. While generalisation, I have found that women tend not to talk freely about topics such as investing or financial planning. Of course, we all know that it is in connecting and sharing that we can learn the most. In that spirit, below I share a few lessons that I have learned along the way. I hope these are useful to others who – like me – are keen to take the financial reins and give themselves the best chance of achieving a comfortable retirement.
1. Take some risks
If you are in the early stages of your career, you likely have, at least, a 30- to 40-year accumulation period ahead of you, most of which will hopefully be in some form of gainful employment – self-directed or more formal. You can afford to take on some risks (aligned with your comfort levels) and make a few mistakes. It may be the right time for an appropriate level of “good debt”, for example, to get onto the property ladder. You probably don’t need to worry too much about market cycles: although they may hurt while you are experiencing them, most (not all) wash out over 30 years.
2. Work out early what your investing behavioural biases are
It is a good idea to identify your behavioural weaknesses. Does your stomach drop when you see a decline on your statement? Do you overestimate your ability to pick that great idea? Do you worry when your friends tell you about an idea, and you think you might be missing out? Work out what will hold you back from making the right decisions, and then try to put mechanisms in place to “protect you from yourself”.
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3. Don’t succumb to inertia or the excuse of “I don’t have time to sort out my admin”
Most people in their 30s are juggling a job, perhaps starting a family, managing their extended family and other broader responsibilities. There can be times when months go by and you realise you haven’t sorted out that tax-free investment for your child or upped your contribution rate. Don’t succumb to that excuse. Treat each important, non-urgent decision as if you were retiring in three months, not three decades.
4. Form professional and social networks, particularly with other women
We all struggle to put our hands up and admit we need help. Learning from other women can be a powerful tool. This can inspire you to take ownership of your own financial plan. Instead of seeing female-led groups as just social occasions (e.g., book clubs), you could also join or start a women-only investment or savings club. Contributing to ideas in this type of forum creates a safe and fun space to gain confidence through learning from other women’s investment mistakes or successes.
5. Think about what you would say to the next generation about money
I have had to think hard about what I want my daughters to understand about money, taking risks, the importance of savings and the beauty of compounding values over time. Admittedly the latter can be a somewhat dry subject and is harder to teach when you are competing with online games, friends and sports. I have tried to put decisions in their hands, rewarding them when they defer immediate consumption by doubling any value they choose to save, for example. We have also given them their own accounts, so they can see how the values can increase (and decrease) over time. These conversations have also been important for me as I often reflect on the lessons I wish I had learnt earlier.
After a few failed attempts, I was finally rewarded when my 13-year-old was given a birthday gift of R200. She looked at it solemnly for a while and then handed it to me and said: “Please can you take it to work tomorrow and make it grow!” So, if there is someone in your life, or your community, that you think can benefit from hearing about your financial journey, then consider paying it forward.