NZSA Disclaimer
I’ve just finished watching the latest True Detective series where the constant refrain from the hard-bitten Alaskan cop played by Jodie Foster was: “Ask the question. Nope, wrong question” until she got to the heart of the matter.
It came to mind when I was recently asked to speak to women about investing at a series of events this month.
One of the key questions I was asked to consider was “why don’t more women invest”?
To channel Jodie Foster, I’d say “wrong question”. The question really should be “how do we get more women to invest”.
The last thing women need is another lecture on the merits of investing. We know investing is good for us – just like using sunscreen, eating lots of vegetables and getting regular exercise.
A Blackrock study recently found that just 18% of women across Europe were investing in financial markets. Yet, 60% of women said they had no objection to investing.
Multiple studies have found that women find investing jargon intimidating. They also find the topic of investing and finance boring.
And while men invest to get better long term returns on their money, women are focused on investing to achieve their lifestyle goals – financial security in later life.
That’s sensible because 80% of women will end their lives alone – because of divorce, choosing to be single or outliving their partners.
Rather than asking constantly why women aren’t investing – and giving us one more thing to feel bad about – let’s change the conversation. Let’s start talking about how we can help more women to get started on investing and stick with it.
“I know I should be doing this, but how do I get started?”
In broad terms, there’s a couple of options.
You can be a “do it yourself” (DIY) investor, perhaps signing up to one of the excellent online share trading apps or websites.
Or, you can find someone to “do it for you”, a licensed financial adviser who will help you develop a financial plan and do all the legwork of trading for you.
Regardless of what you choose, the best way is to start small, investing only small amounts, until you learn more and your confidence grows.
Make sure you invest only what you can afford and understand that you are doing this for the long haul.
The best approach is to “Save. Invest. Wait.” Save some money and ensure you have a comfortable amount of savings you can draw on when you need it. Once you have that financial buffer in place, you can start committing a small amount regularly to building a portfolio of investments you will hold onto for the long term – 10 years or more.
“I’m worried I will lose all my money”
We all fear losing money and there is risk in any financial investment. But there are some things you can do to manage that risk.
It’s time in the market that matters. Investment values will go up and down – that’s how markets work – but you haven’t actually lost money unless you sell your investments for less than you paid for them. Stressing about how much your portfolio is worth each day is pointless if you plan to hold those investments for 10 years or more.
Save (some). Invest (some). Then wait. Hopefully, you can afford to wait out any downturns and give the market time to recover any losses if you have some savings behind you.
Spread your investments widely – across a range of different companies, industries and countries. Then, if one industry is facing challenges, or a country’s economy is struggling, you have other investments that are hopefully doing better. (There are a large number of Exchange Traded Funds (ETFs) available where the fund manager has done the work of choosing a basket of diversified investments.)
You should also consider investing in other types of securities such as fixed interest/bonds which will give some certainty on earnings over a set time.
Keep investing. Ideally, you would drip-feed a small amount every week or month into investing. Some days those shares might be bought for, say, $1.00 each and other times for .75 cents. Over time, you can average the cost you bought those shares for. A market downturn is often a good time to buy shares more cheaply!
Trust no-one
The internet is full of investing experts, pontificating about the best companies to invest in, the next big thing to make us all rich. The only truth is that nobody knows for sure what will happen to markets day-to-day.
But we do know that sharemarkets have outperformed every type of financial investment over the long term. And there’s more than 90 years’ of data to back this up.
Investing in financial markets is the best way to build your wealth over time. If you want to get started, come along to one of the NZ Shareholders Association’s investing events this month where you can talk to other women who are investing and want to help you get started.
We won’t tell you why, we’ll show you how.
Louise Nicholson
(Director, NZSA)
The NZ Shareholders Association, in collaboration with NZME’s Cooking the Books host Frances Cook is holding a series of events for women about investing around New Zealand in March. Follow this link for more information and to book your place!