“An adage in the financial sector goes that women save and men invest – and this still rings true. It seems that even women who have money to put aside tend to squirrel it away rather than try to grow it”
Hilary Osborne, “Why women need to stop saving their cash – and start investing,” The Guardian, April 8, 2019
Every day in our financial planning practice, we see proof of how true this statement is.
We understand that many women like to have a cash cushion. After all, that’s good planning.
But the amount they keep in cash is far in excess of what they might ever need. While that big cash account makes them feel secure, in real life it undermines their security by preventing their money from growing.
Osborne says the gender investment gap is just as real as the gender pay gap. Even women who have money shy away from putting it to good use in the investment markets, meaning they often fail to grow their money over time.
If this sounds like you, follow Osborne’s pointers. Get a good advisor to put you on the right path. Start as soon as possible by putting aside some money every month, and committing to a long-term investment program. And don’t forget: women may be less likely to invest, but they’re no slouch at the investment game. Research shows women tend to be better and less emotional investors than men (sorry guys!).
The Takeaway: Take a look at how your money can grow – or not – over time.
Carol Cautious puts $50,000 into a bank savings account, and earns 1.5% each year in interest. Ignoring taxes and inflation, after 20 years, she’ll have $67,343 to help pay for her retirement.
Gretchen Growth puts that same $50,000 to work but invests in a mix of stocks and bond funds, earning 6.5% per year. After 20 years, she’s got $176,182 saved to first take her family on an amazing Alaskan cruise, help her daughter with college bills, and then jump start her retirement.
These numbers are hypothetical, but hopefully you get the point. You always want to invest sensibly, but a higher rate of return, stemming from a solid long-term investment strategy, can make the difference between just making ends meet or living the life you’ve always dreamed of.
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