Financial wellness for women — taking charge of your wealth

As their wealth grows, more women today are keen to take care of their finances and achieve financial independence.

However, women have historically lacked the confidence in their ability to invest — even though, ironically, they often make better investors.

Endowus’ data suggests that our female clients generally have less of a trading mentality compared with male clients — they invest less frequently, and also redeem less often, even during periods of market volatility.

The wealth journeys of some women may also differ from those of men, due to factors such as career breaks, pay differences, a longer lifespan, and the greater need for flexible work arrangements for caregiving.

Against this backdrop, fund managers share their thoughts on how women can build their wealth, manage their own and their family’s money matters, and prepare for retirement.

<divider><divider>

Investing the fairer way

UOB Asset Management

“While investing is stereotypically perceived to be a testosterone-driven domain, studies have shown that women may in fact outperform men on returns when it comes to individual investments.”

“That said, fewer women invest than men, and women invest less compared to men in terms of the percentage of personal wealth. With the average female lifespan outpacing that of the average male, it is more important for them to plan their investment for retirement and to begin the process as early as possible.”

“For a lot of women, there is a tendency to focus on savings, particularly if they are supporting dependents such as parents and children. Instead of relying on bank cash or fixed deposits, there are better ways to grow their wealth through higher investment returns as cash depreciates in value because of inflation.”

“The misconception has always been that you need large amounts to do investments, you can start with as little as S$100 but more importantly on a consistent basis such as monthly. Over time, this not only adds up but evens out the costs when prices rise and fall.”

Read more: When should you dollar-cost average (DCA)?

<divider><divider>

The retirement crisis is a women’s crisis

BlackRock

“Women’s retirement balances are typically 30-40% lower than those of men. Pay disparity, career gaps, and the fallout from Covid-19 all affect how much women save, and how secure they’ll feel in retirement. This retirement readiness gap widens even further when you look along racial and socio-economic lines.”

“When it comes to retirement, 59% of women, compared to 78% of men, feel they are on track. That’s a pretty significant difference. There are a few reasons why women may feel less prepared. … We just touched on some of the reasons related to the pandemic, including gaps from the workplace, lack of pay equity, and missed contributions to retirement plans.”

“That’s compounded with the fact that women live longer on average, about five years, and retire earlier. That means they need to fund more years in retirement. … It’s easy to understand why women may be less confident when they’re asked to do more with less.”

Read more: Why women should look closer at CPF investing

<divider><divider>

Calm, cool and invested

PIMCO 

“Despite market volatility, women have made few reactionary changes to their portfolios or their investment philosophy.”

“Women today are now placing a greater emphasis on security. 28% list their top investment goal as financial stability.”

<divider><divider>

Women, investing and the pursuit of wealth-life balance

PIMCO

“Women approach investing with a strong commitment to purpose. When asked to choose their top financial goals, 42% of women included creating a financial plan that meets short-term and long-term life goals. High on the list of long-term goals is securing the financial future of their children, with nearly 60% reporting that they often think about how to accumulate and pass down wealth to their children.”

“While women are goal-oriented, they are not focused on beating the market. 76% say they would forgo better returns and assume less risk, even if it takes more time to meet their goals. Overall, they are more interested in improving the quality of their lives than beating the market.”

Read more: Here's how you can prioritise your financial goals

<divider><divider>

Be empowered: How women can guide their financial future

Capital Group

“For a variety of reasons, women often feel that they are underprepared or not empowered to manage their financial futures. The consequences of not being fully engaged in your financial future can be significant, particularly for women who find themselves ’suddenly single’.”

“Actionable steps that women can take to gain more control of their financial futures include building their own relationships with financial professionals and learning to ask the right questions.“

<divider><divider>

A guide to investing for women

JPMorgan Asset Management

“You don’t have to be an investment expert. Nearly two thirds of women who don’t invest said complexity was a key challenge to investing. But a diploma or degree in economics is entirely unessential. The important thing is to have a clear plan of your objectives and a firm idea of how long you have to achieve your financial goals (such as retirement or the down payment on a home).”

Read more: Goal-based investing and why it matters

<divider><divider>

Why women need to plan differently than men

Fidelity

“It can make a huge difference and improve our chances of success if we get involved in the financial planning process as early as possible.”

“On the other hand, the complications that can arise when women are not engaged early can be costly. One married couple, for instance, had a complicated estate plan that required a lot of attention to detail as to what would happen when one of them died. Unfortunately, the wife was not engaged during the estate planning process and did not understand how their plan was designed. Consequently, after her husband's death, she was not aware of the steps she needed to take, and now she's going through a lot to unwind the consequences.”

<divider><divider>

Similar themes in parenting and investing

UOB Asset Management

“There are actually a lot of similarities between parenting and investing for the long haul. For one, the outcomes are likely to be unpredictable at times in terms of both meeting expectations and timing. They can either fall short or exceed what is desired — either for the near or long term.”

“For instance, a child that does not do as well as hoped for in the PSLE or other stages may end up making the parents proud later in life. That is because like parenting, we often set investment horizons in terms of milestones — be it five years (six if you have a child in primary school), 10 years or more.”

“Ultimately, in both parenting and investing, it is about keeping our eyes on the larger goals; not losing sight of the key objectives and letting time work out the outcomes. On average, one should come out ahead if we do our part and recognise that it is done for long-term benefits. The rewards do compound over time if one stays the course.”

<divider><divider>

Risks to women's retirement savings and how to mitigate them

Fidelity

“Women are often expected to put family and other loved ones' needs first, even when it comes to money. This can include saving for a child's college ahead of retirement, caregiving, or letting a partner make the majority of investment decisions — more than one in five women say they have little or no involvement in decisions about retirement and other long-term financial planning. Collectively, this can leave women with less in retirement and other assets, particularly over the course of many years.”

“Remember that you have a high likelihood of longevity and being on your own financially, so earmarking enough for yourself is critical. You can always take out loans for a child's school (among other things), but you can't take out loans for retirement.”

<divider><divider>

To explore best-in-class funds from leading global fund managers, check out the Endowus Fund Smart platform.

<divider><divider>

Many women prefer investing their money in a way that’s aligned with their life goals and values. They also want to drive change and make a positive social impact with their investments. Research shows that the majority of women across age groups favour environmental, social, and governance (ESG) investing, and more women than men take into account sustainable considerations when investing.

Gender lens-investing, in particular, is of interest to female investors. We’ve compiled a list of commentaries by fund managers on this topic.

Everyone should have the opportunity to build their wealth. Endowus hopes to empower more women to take care of their own finances, in whichever life stage they may be at. To learn more, explore our curated section of investing articles dedicated to women. To get started with Endowus, click here.

Read more:

• Investing with a gender lens
• Goal-based investing and why it matters
• Breaking the bias on female investors

<divider><divider>

This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Endowus Singapore Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance.

Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.