Financial planning for women: Fundamentals of Investing

There’s no better time than now for women to take charge and make better choices in their financial life. Bernice Lee, ChFC®️/S, an active Insurance and Financial Practitioners Association of Singapore (IFPAS) member, shares how women (and men!) can build confidence in taking charge of their financial well-being based upon the fundamentals of investing.

The hard truth on taking charge of your financial well-being 

If you feel this financial stuff isn’t your cup of tea, I hope you reconsider this perspective. 

Why?

Because whether we would like to accept it or not, the hard truth is, you will at some point be the only money manager in your household either because you’re single, divorced or widowed.

So, yes, you can invest as well, and interestingly, investing isn’t just a man’s game, and the reason is because financial equality and independence are just as important for women. Although, investing priorities between men and women may differ.

Opportunity costs and prevailing concern

Investing is one of the best ways to build wealth. By keeping too much cash (which most women do), you are missing out on years of healthy returns that could have potentially benefited you in the long term.

However, the net effect of not staying invested or the opportunity costs, ladies, can be painful.

According to a study by Merrill Lynch and Age Wave, women are less confident in their ability to manage investments than men. 

Just over half of women (52%) told the researchers they had that confidence, while over two-thirds of men (68%) felt strongly about their investment abilities.

The study found this lack of confidence as part of the worry women have about their futures.

On a lighter note, according to OCBC’s survey of 2,000 working adults in Singapore, women who do take the plunge outperform men when it comes to investment returns.

Eight Fundamentals of Investing

Investing isn’t as complicated as what most of us would suppose. Though, we would need to ensure financial jargon don’t affect one’s confidence to invest.

Adding, from these studies and findings, it does help to relook at how investing is viewed and approached. 

With this at heart, here are some personal tips to help with:

1. Get interested and talking

It will help boost your confidence and overcome the fear of investing. 

Don’t be afraid to ask questions and expect to be spoken to in a language that you understand (demystify those jargons).

2. Get informed

Never invest in something you don’t understand. Being aware of who you are as an individual and what investing philosophy suits you is important. 

As long as you stick to doing things within your understanding and strengthening your competency in areas that matter, you tend to make better investing decision – and you will do just fine.

3. Get started early

As Paulo Coelho says, “Fortunate are those who take the first steps.” Stop sitting on the fence; there are no reasons for women to shy away from financial literacy and proficiency. 

It’s important for everyone to consider investing, the earlier you start, the more years you invest for, the greater the potential for your investments to grow. Time is the biggest factor when it comes to investing.

4. Diversification

Besides setting aside your emergency fund, you will have to balance the priorities of savings, investing for income and capital gain, manage the level of leverage in portfolios and focus on long-term goals.

Investment portfolios should be adequately diversified with uncorrelated asset classes (for example, gold versus risky assets), sufficient cash, avoid concentration risks (such as over-allocation into a single security which may underperform) and provide geographical and sector diversification.

5. Get into regularity and consistency

It’s great to get into the practice of regular investment contributions. That often proves to be far more effective in building your wealth compared to occasional lump sums.

This way, you don’t have to worry about timing your investments in the market.

6. Stay the course, stay steadfast

Always focus on the long term. Wealth building is a marathon and not a sprint. 

So if you can focus on investing for the long term and ignore the ups and downs, you are likely to be a successful investor.

7. Don’t panic, trust yourself

Remember that investments will go up and down and that the future is uncertain. In periods of high volatility, your investments can fluctuate a lot. But, remember you are in for the long run, don’t react to every market movement. 

Keep your emotions in check, and remember, women make good investors!

8. Be patient

It is said that patience is a virtue. And in investing, it may be one of the hardest learning points to digest. 

However, even though being patient isn’t as satisfying as instant gratification, when this attribute is cultivated, it has the potential to reap bigger rewards.

That being said, you got this! Let’s help one another build our confidence in taking charge of our financial well-being based upon these fundamentals of investing. 

Men, you are welcome too!

About the Author

Bernice Lee is a licensed financial practitioner and an active member of IFPAS. She holds the ChFC®️/S designation. 

This is an IFPAS x Money Playschool collaboration.

The article “Financial Planning for Women: Fundamentals of Investing” by Bernice Lee first appeared on Tuesday Times, an online publication by IFPAS.

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