Financially Savvy Women have the wealth they deserve

5 Myths about Women and Wealth

There are several myths about women and wealth that you might not be aware of. Below are the top five myths about women and money:

  1. Women are not good at math: Nature, not nurture, accounts for the gap in math skills. However, there is a growing movement to expose more women to learning and mentoring opportunities in the fields of math, engineering, finance, and science.
  2. Women are impulsive spenders: Money is an equal-opportunity, all purpose mood changer. Just as many men impulsively spend and overshop as women. One major difference is how society labels it. Women overshop; men collect, a term that gives the activity an intellectual cast. However the underlying impulse behavior is the same.
  3. Women are too emotional to invest wisely: Female investors outperform men in the long run. Men try to compete with the market and chase returns, leading to more frequent trading and high transaction costs. Women take a long time to make an initial investment decision; they are committed to the decision in the long run. Women are less reactive to short term changes in the market, trade less frequently than men, and realize better long-term investment performance as a result.
  4. Women would rather let men manage the family finances: Women are the chief financial officers of their households in 66 out of 100 homes (2010 Women and Affluence Study by Women & Co.). Women in the ultra high net worth market reported they play a high to moderate role in the management of the family’s assets. When it comes to retirement, 90 percent of women participate in decisions that affect their household’s retirement and investment accounts.
  5. Women are not interested in wealth management: The gender gap in finance is diminishing as women enter the field. Advising clients lends itself to a woman’s strengths in relationship building and communication, allowing female advisors to have the opportunity to outperform men. Organizations like Directions for Women and The Female Affect offer forums and networking opportunities to facilitate the advancement of women in financial services.

Kingsbury, How to Give Financial Advice to Women

Understanding these myths will help you overcome and fears that you may have had when it comes to managing your finances. Do you know of any other myths about women and their wealth? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

 

Woman reading stock quotes from WSJ.

Ways Women can become Engaged in their Financial Life

Some women handle their money brilliantly all the time- in a perfect world. It is crucial to be connected with your finances. However, most of us are in dark about our finances for reasons like misunderstanding terms or not being involved enough. Luckily, there is always time for you to become engaged. The tips below will help you become involved with your personal finances:

  • Do you let your husband or partner manage money without your involvement? Change happens all the time in relationships, don’t start learning about your finances while you are in shock.
  • Do not sign your joint income tax return without reading it. Make sure you understand and thoroughly read your income tax return. If you need to, consult a professional; but don’t rush into signing anything.
  • Do you use your husband’s financial advisor, even if you don’t really like him, know him, or can’t stand him? At your next meeting with your Advisor, ask yourself how much YOU were engaged in the conversation. If not, consult with your partner and try to find an Advisor both of you can be engaged with.
  • Ask for confusing terms to be explained. Don’t let uncertainty and being uncomfortable get in the way of understanding your finances.
  • Not taking enough risk. We women tend to be more against taking risks. Women live longer lives; we retire with two-thirds the retirement savings of men. This calls for greater risk taking to earn a higher return. Many women HAVE to push themselves to do this.
  • Not seeing your money as a means to express your values. Value is defined as a person’s principles or standards of behavior. Many women express their values through the products they buy, the way they spend their time, and the companies they work for. However, few women view their investments as a tool for expressing value. Today, the new industry can represent a way for women to have their money work at more than just earning a financial return.

It is time for you to become engaged and find success in your finances! Take control now! Did you find this email helpful? I’d love to hear from you, please post feedback to Financially Savvy Women Fanpage.

 

female working on her finances

The Female Brain

All human brains have reflective and reflexive thinking. However, the way the female brain is structured makes women tend to be more focused on care-giving, passing on money and life values to the next generation, and using wealth to better the community as a whole. The three areas of the brain that will be discussed are the Amygdala and Limbic System, Hippocampus, and Corpus callosum:

Amygdala and Limbic System: The Amygdala is the center for emotion, fear, and aggression. It is located in the Limbic System and is the part of the brain responsible for the fight or flight response. The female brain’s limbic system is typically larger than the male’s. Scientists hypothesize that the larger limbic system contributes to women being more compelled to care for others.

Hippocampus: This part of the brain is the center of emotion and memory formation. This section of the brain is larger in women than men and accounts for a woman’s ability to remember specific details. The larger hippocampus also could contribute to some women wanting their Financial Advisors to remember personal details about their life.

Corpus Callosum: This part of the brain transmits signals and connects the left and the right side of the brain. Women have more connections between the left and right hemispheres, making them excellent at multitasking and verbal communication.

Kingsbury, How to Give Financial Advice to Women

Do you have any past experiences that reflect the new information you just learned about your brain?

Retired couple gardening

Why Women are Less Decisive

Women worry more about their financial health but lag in decision-making and self-confidence:

This difference in self-confidence has an enormous impact on the financial planning industry. A LPL Financial “Women Invest White Paper” survey shows that 67% women want an equal role in financial decision making and only approximately 20% want their husbands to make all the decisions. Yet, data shows less than two-thirds of women actually attain an equal role in financial decision-making (note: financial decision-making here refers to “big ticket item decisions,” not grocery shopping level daily or weekly decisions).

An ideal advisor will listen to both women and men – regardless of the gender of the financial decision-maker – and will avoid being patronizing toward both women and men if they lack financial understanding. Women prefer to work with female advisors, when possible. Although women comprise more than half the financial planning/investment clients in this country, fewer than one-quarter of Certified Financial Planners® (or other credentialed advisors) are female.

Kaplan, Women and Money: Why They Avoid Risk and Lack Confidence when Making

Don’t feel patronized or left out of your financial future. Whether you’re single, married, divorced, or widowed, let’s talk about how I encourage women to take on a greater role in the decision making process. Contact me today.

Getting Paid What You Deserve

Financially Savvy Women get the money they deserve
Financially Savvy Women make sure they know what they are worth, and get it!

Do you think that you deserve more money than you are earning? Here are 5 tips for developing your self-worth which in turn develops your net worth:

 

  1. Think Big, Then Think Even Bigger: The idea is to think in terms of what you are worth, not just what you assume the market will bear.
  2. Do Your Homework: One of the worst negotiating mistakes women make is picking a number out of the air that’s way too low.
  3. Take the Initiative: Have tangible evidence of what you bring to the table. Every time you accept more responsibility, successfully complete a challenge or create positive changes, document it.
  4. Daily Affirmations: Affirmations are positive statements expressed as if they’ve already happened. When you act as if you’re worth a lot, you’ll eventually convince yourself as well as others.
  5. Challenge yourself in other areas: A stretch in any area of life has a ripple effect in other areas as well. Anything that puts you out of your comfort zone builds confidence and self-worth.

 

By implementing these tips, you’ll begin to notice a shift in how you feel about yourself. Making more money is not something that you should do, but it is something you have to do, because you know you are worth it.

 

(Barbara Stanny, 5 Tips for Getting Paid What You Really Deserve)

Woman facing Divorce

Facing Divorce

 

The independence that comes with divorce can be overwhelming, especially when dealing with your finances. You are in a strong position if you are familiar with all aspects of your family’s finances and have played a strong role in the financial decision making. If you are not familiar with your finances, this is the time to be prepared. Be involved as a partner, not a supporter, when discussing your finances. Take the lead! The advice of a financial professional can also be helpful.

(Morris, A Woman’s Guide to Personal Finance)

Investing Tips and Explanations Continued, Again

Investing and Asset Allocation

Below are tips 7-10 of the investing tips and explanations series.

7. Inflation may be the biggest threat to your long-term investments.

While a stock market crash can knock the stuffing out of your stock investments, so far — knock wood — the market has always bounced back and eventually gone on to new heights.

8. U.S. Treasury bonds are as close to a sure thing as an investor can get.

The interest rate of Treasury’s is considered a risk-free rate, and the yield of every other kind of fixed-income investment is higher in proportion to how much riskier that investment is perceived to be.

9. A diversified portfolio is less risky than a portfolio that is concentrated in one or a few investments.

Diversifying lessens your risk because even if some of your holdings go down, others may go up. However, a diversified portfolio is unlikely to outperform the market by a big margin.

10. Index mutual funds often outperform actively managed funds.

In an index fund, the manager sets up his portfolio to mirror a market index, rather than actively picking which stocks to purchase. Index funds often beat the majority of competitors among actively managed funds.

(CNN Money, Investing Your Money Basics)

Investing Tips and Explanations Continued

Here are the explanations for investing tips 4 – 6.

women investing their money
Women investing their money in a bull market

4. The biggest single determiner of stock prices is earnings.

Over the short term, stock prices waver based on everything from interest rates to investor sentiment. But over the long term, earnings are what matters.

5. A bad year for bonds looks like a day at the beach for stocks.

In 1994, intermediate-term Treasury securities fell just 1.8%, and the following year they bounced back 14.4%. By comparison, in the 1973-74 crash, the Dow Jones industrial average fell 44%. It didn’t return to its old highs for more than three years or push significantly above the old highs for more than 10 years.

6. Rising interest rates are bad for bonds.

When interest rates go up, bond prices fall. Fixed interest on a new bond will pay more because rates in general go up.

(CNN Money, Investing Your Money Basics)

Investing Tips

Woman reading stock quotes from WSJ.
Women have a great ability for Financial planning, some just need more encouragement than others.

Are you new to investing? Here are ten tips that will help you make smarter choices in your finances.

 

1. Over the long-term, stocks have historically outperformed all other investments.

2. Over the short-term, stocks can be hazardous to your financial health.

3. Risky investments generally pay more than safe ones (except when they fail).

4. The biggest single determiner of stock prices is earnings.

5. Rising interest rates are bad for bonds.

6. Inflation may be the biggest threat to your long-term investments.

7. U.S. Treasury bonds are as close to a sure thing as an investor can get.

8. A diversified portfolio is less risky than a portfolio that is concentrated in one or a few investments.

10. Index mutual funds often outperform actively managed funds.

 

(CNN Money, Investing Your Money Basics)

Investing Tips and Explanations

women investing and planing
Investing research

Had trouble with any definitions from the list of investing tips? Here are some explanations!

1. Over the long term, stocks have historically outperformed all other investments.

Stocks have always provided the highest returns of any asset class, close to 10% over the long term. The next best performing asset class is bonds.

2. Over the short term, stocks can be hazardous to your financial health.

On Dec. 12, 1914, stocks experienced the worst one-day drop in stock market history — 24.4% . Oct. 19, 1987, the stock market lost 22.6%. More recently, the shocks have been prolonged and painful: If you had invested in a Nasdaq index fund around the time of the market’s peak in March 2000 you would have lost three-fourths of your money over the next three years. And in 2009, stocks overall lost a whopping 37%.

3. Risky investments generally pay more than safe ones (except when they fail).

Investors demand a higher rate of return for taking greater risks. The longer investors have to wait for their final payoff on the bond, the greater the chance that something will intervene to erode the investment’s value.

(CNN Money, Investing Your Money Basics)