Ageand income are usually the biggest factors in determining one鈥檚 investment strategy, but some personal finance experts believe it鈥檚 time for gender to become a larger part ofthe decision-making process.
Women are more likely than men to experience a wide range of life and career events, making a gendered approach to investing key for young women looking to build a comfortable retirement fund, said Zena Amundsen, a certified financial planner at Astra Financial with a largely female clientele.
鈥淚t鈥檚 generally women who are expected to take time off from work for child care, or to care for an elderly parent,鈥� said Amundsen.聽
鈥淲ith that comes an earlier career plateau and the gender pay gap, and with that pay gap comes lower (Canadian Pension Plan) contributions, as well as a lower likelihood of being able to max it out and have as much in our pockets during retirement.鈥�
This is exacerbated by women鈥檚 longer average lifespan, she added, which is likely to extend five years beyond the average man鈥檚. Thus, a less robust retirement fund can have even more dire consequences.
As a result, Kristine Beese, the founder and CEO of Untangle Money, says women need to 鈥済et their money working harder鈥� for them sooner rather than later. Untangle Money offers financial planning programs and services specifically to middle-income women.
鈥淪tudies show that women are really good at saving, especially when compared to men,鈥� said Beese, 鈥渂ut it鈥檚 really important to start investing as soon as possible in a way that prevents that money from deflating over time, but also still allows them to sleep at night.鈥�
Ayesha Ofori, founder and CEO of female-focused investment platform Propelle and former Goldman Sachs wealth advisor, said women should be mindful of the fact that lower risk investments will generally lead to lower returns, which is not necessarily something they can afford as easily as men.
She recommended women look to capital appreciation investments earlier on (which focus on the increase of an investment鈥檚 value over time), as well as income-yielding investments to support them in their retirement years (which can come with regular dividends and interest income payments).
鈥淗owever, women should be considering alternative investments 鈥� for example, real estate and private equity, which tend to yield higher returns than more traditional investments,鈥� added Ofori.
To find the right balance between return and potential loss, Beese recommends women stick with high-quality investments on the major stock indexes.
鈥淥bviously, no one should go after speculative investments,鈥� she said.
"But it鈥檚 important to keep in mind that over a 10-year horizon, we don鈥檛 see a ton of loss in the S&P 500 鈥� so sticking with 鈥榝inancial flower bouquets鈥� like exchange-traded funds that contain assets from a bunch of these companies shouldn鈥檛 be a major source of concern.鈥�
However, return on investment is not something women have historically struggled with, as their returns averaged 0.4 per cent higher than men鈥檚, according to a survey conducted by Fidelity Investments in 2021. Instead, greater risk-aversion and lower confidence tend to be greater hindrances for women when it comes to investing and building their financial literacy.
鈥淚f there鈥檚 one piece of advice I could give the younger generation to get over that confidence hump, it would be to push themselves to put their hands up sooner and ask the (finance) questions they need to ask in order to get started 鈥� no matter how scared or embarrassed they might be when asking them,鈥� said Amundsen.
Beese echoed this sentiment, noting the importance of finding a team of financial planners and mentors who can guide women towards their financial goals.
鈥淔rom the literature and my time as a stock broker, I know that women aren鈥檛 always as goal-oriented about their money at the outset as men are because of the way we鈥檙e socialized to talk about money, and normally ask two questions: what can I afford, and will I be OK?鈥澛�
鈥淔inding a financial adviser or mentor who can meet women where they鈥檙e at is really important, because it鈥檚 often through having more nuanced conversations that we can encourage young women to set the financial goals that, statistically, are likely to be really important for their future well-being,鈥� like putting retirement savings first, said Beese.
Particularly important to Ofori is the idea that investing need not be a solitary task.聽
鈥淭alking about money and investing is often seen as taboo (for women) 鈥� it can leave us feeling isolated and alone in our financial decision making,鈥� she said.
鈥淚nvesting doesn't have to be lonely or boring. Find your cheerleaders and get them to hold you accountable to trying to meet your financial goals.鈥�
This report by The Canadian Press was first published Oct. 24, 2023.
Pascale Malenfant, The Canadian Press
