By Rachael Bursell - Financial Adviser and advocate for female financial empowerment
As women, our life expectancy is higher than that of a man, meaning that we are faced with having to make do for longer, with less. So how do we turn that around?
We will retire with, on average, half the superannuation balance of men (ASU study ‘Not so Super For Women’ 2017) and Australian women over 55 are our fastest growing demographic of homeless (ABS 2016).
Ask any investor and they will tell you that the higher the risk, generally the higher the return. Over the long term, shares outperform fixed interest, and fixed interest outperforms cash stashed in envelopes hidden in the linen cupboard. So as women, what is our predominate investment style?
Women are generally more conservative investors. We tend to take less risks. Theoretically, that means our investments should underperform that of our male counterparts. Yet studies of gender differences in investment behaviour have shown that in the long term, female investors consistently outperform men according to study undertaken by Terrence Odean and Brad Barber at the University of California (the paper was titled “Boys will be Boys”). This is especially noticeable when markets are performing badly. So why do women fare better in a falling market than men? They generally took less risk, worried more about losses and traded less. This is a strategy referred to as a “buy and hold”. Women tend to invest in companies that they have researched and understand, and hold those shares for the longer-term, regardless of the short-term movements of the share market.
Yet studies of gender differences in investment behaviour have shown that in the long term, female investors consistently outperform men.
There is no doubt – investing in the share market for the first time can be an intimidating process. Take time to educate yourself. Start small. Invest in companies that you are comfortable with and that also interest you. Don’t be sucked in by the latest investment ‘fad’ (bitcoin anybody?). Read articles about the management of the company, and check recent news releases. Look at the company’s financials.
If investment in managed funds or direct shares is something that interests you, yet you don’t feel that you have the time (or inclination) to do the research, then a qualified financial adviser can put together a portfolio that aligns with your Risk Profile and any ethical requirements.
I always say to my clients “knowledge is power”. Now more than ever, it’s so important that we educate ourselves and take control of our financial future.
Rachael Bursell is a Financial Adviser who is passionate about improving equality and ensuring that both men and women have the same financial opportunities, confidence about money and realistic plans for their future. When she isn’t with clients, Rachael is a wife to Torsten and mum to Lily and Elijah and has a love for travel, an addiction to coffee and a weak spot for good gin. Her website is www.financeyourfuture.com.au and can be found Instagram and Facebook.
Rachael Bursell is an Authorised Representative of RI Advice Group Pty Ltd, AFSL 238429, ABN: 23 001 774 125. The information provided is general advice only. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI’s position and are not to be attributed to RI. They cannot be reproduced in any form without the express written consent of the author.
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