Broadminded hosted a Women and Money event with Fidelity International, at their London head office. Fidelity’s Investment Director, Maike Currie, lead the talk. Maike presented the findings from Fidelity’s Women & Money report, explained why you need to invest and how and why pensions are more important than we think.
Here are the main points we covered:
- “Investing is for men” – we need to challenge societies gender norms and our own habits to start investing.
- Stereotypes of female investors – we struggle with the concept of “the female bread-winner”, often assuming this something negative e.g. due to a failed relationship, but in reality 1/4 of women in heterosexual partnerships in the US are breadwinners.
- Barriers to female investment – we suffer from personal, profession and policy barriers. This includes too often discussed gender pay gap as well as gender pension gap, motherhood penalty, fertility penalty and care of the elderly. Because of these barriers, women not only earn less than men but are also more likely to see their money as needed for others – children, partners, parents – and generally being less inclined to take risks.
- Overcome the above barriers – by investing! Despite the fact that we have less money, we’re the bigger savers! So we have money to put to work. In order to close the gender pension gap (particularly with more women living to 100) we need to start investing. Finance is a feminist topic.
- Being risk-averse makes us better investors – Studies suggest that women make better investors because of our greater propensity to look to the long term, consider our investments more and then leave them. Men are more likely to do more short-term trading, which often eats at long term returns. Our propensity to be more risk-averse makes us good investors. Set and forget.
- Reasons to invest – to buy something (growth), to stop working (income), to not be a burden (capital preservation)
- How to invest – depends on your goals. Equity (higher risk), bonds (less risk), cash (low risk, but zero return) – if you’re young (under 40) go for the higher risk option to see growth. Invest in no more than 10 funds, set your goals (when you want to retire/when you want the money), Warren Buffet rule = don’t invest in anything you don’t fully understand.
- Pensions – are far more important and valuable than we often give credit. Employer + government contributions = free money! Find out how much you have, consolidate them into one account (if you have more that one), log in online and see if you can increase your contributions. Target = save 13% of your salary.
- Self Employed? Start a private pension – the younger you start, the better. You can still save even if you’re not working. Don’t rely on the state pension – you need to have 35 years of NI contributions to get the full state pension, and if you’re entitled to child benefit, fill in the form (even if you don’t need to claim) as it gives you NI credits towards your state pension.
- Remote work/sabbaticals – will have an impact on your earnings (like maternity leave). Minimise the long term impact by continuing contributions. With more people working remotely employee packages are getting more competitive, ask about pensions and flexible working options.
- Where to get advice – The Fidelity website is a great resource with many tools .e.g daily insights, visit the Fidelity Walk-In Investment centre (opposite Cannon Street Station), download the Fidelity app, listen to the Fidelity Women and Money Podcast, www.unbiased.co.uk for Financial Advisors (beware of high fees!)
- Ethical Investments – The old school of thought is that you sacrifice by investing in an ethical way. However, companies that are more sustainable in their approach are lasting longer and yielding better performance in the long term. There are lots of sustainable investment options that have delivered great returns.
- Fees – as a benchmark Fidelity has a 0.35% service fee, and then expect to pay for fund fees alongside. Watch out for performance fees which are added to management fees.
- Index funds – Index funds are available at very low fees, but be aware that by nature they simply track the market. Active funds charge higher fees, due to the teams of experts selecting investments and managing the fund.
- Gold – more women are investing in gold. It retains its value but has specific, costly requirements e.g. storage to maintain its value. There are also funds that do that via active management e.g. invest in gold mining companies. Gold can be a good source of diversification.
- Career advice – don’t allow your finances to rely solely on promotions and climbing the ladder. Alongside, you can take things into your hands by investing, and providing a new source of wealth for yourself. Contributing just £35/month (1% of the average salary) would close the gender pay gap. Investing is an investment in yourself.