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:
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.
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.
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.
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.
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.
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:
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.
Do Your Homework: One of the worst negotiating mistakes women make is picking a number out of the air that’s way too low.
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.
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.
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)
As you age, you may find your parents struggling with illness as they age as well. As their daughter, you may be responsible for their care. The emotional and financial strain can be exhausting and the commitment may compromise your career. It can be difficult know where to start when helping your aging parents. Here are some questions to ask yourself to get started:
What institutions hold your assets?
Ask your parents for a list of their bank, brokerage, and retirement accounts, including account numbers and online usernames and passwords, if applicable.
You should also know where to find their insurance policies (life, home, auto, disability, long-term care), Social Security cards, titles to their house and vehicles, outstanding loan documents, and past tax returns. If your parents have a safe-deposit box or home safe, make sure you can access the key or combination.
Do they currently work with any financial, legal, or tax advisors? If so, get a list of names with contact information.
Do they have a durable power of attorney? A durable power of attorney is a legal document that allows a named individual (such as an adult child) to manage all aspects of a parent’s financial life if he or she becomes disabled or incompetent.
Do they have a will? If so, find out where it’s located and who is named as executor. If it’s more than five years old, your parents may want to review it to make sure their current wishes are represented. Ask if they have any specific personal property disposition requests that they want to discuss now.
Are their beneficiary designations up-to-date? Designated beneficiaries on insurance policies, pensions, IRAs, and investments trump any instructions in your parents’ wills.
Do they have an overall estate plan? A trust? A living trust can help manage an estate while your parents are still living.
(Questions from 360 degrees of financial literacy)
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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.
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.
Here are the explanations for investing tips 4 – 6.
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.
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.