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Smart Financial Moves for Women |
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Reprinted with permission of Investment Representative Celine Richardson of EdwardJones
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Friday, 14 March 2008 |
 All of us face challenges in
our efforts to achieve our long-term financial goals, such as a
comfortable retirement. But if you're a woman, the unfortunate truth
is that you may have more hurdles to overcome than a man. However,
knowledge is power, and as long as you are aware of what you are
up against, you can take steps to boost your chances for success.
What are the special issues facing
women? Here are a few to ponder:
- Longer life expectancies than men - No matter when you were
born, your life expectancy is going to be longer than that of
your male age-group peers. Obviously, these "extra" years of
life mean more expenses.
- Lower earnings than men - In 2006, women who worked full time
earned, on average, 81 percent of what their male counterparts
earned, according to the U.S. Bureau of Labor Statistics. In
the future, this gap may narrow, because the earnings of younger
women entering the work force today are very close to those
of men. But if you've been in the workforce for many years,
there's a pretty good chance that your earnings trail those
of your male peers.
- More time out of the workforce - To raise their families,
women spend far more time out of the workforce than men. During
those years away, women are not contributing to Social Security,
pension plans or 401(k) plans - which means they'll have less
retirement savings than men.
These figures may seem somewhat
depressing, but they don't have to lead to gloomy results. You can
actually do quite a bit to improve your financial fortunes. Consider
these suggestions:
- Take an active interest in your investments. Whether you
are single or married, make sure you are familiar with your
investment portfolio. Know what you own and why you own it.
Work with a financial advisor who understands your goals and
risk tolerance and who can help you make the right choices for
your individual situation.
- Contribute as much as you can to your retirement plans. Each
year, put in as much as you can afford to your 401(k) or other
employer-sponsored retirement plan. And when you get a raise,
increase your contributions. Also, if you don't have a Traditional
or Roth IRA, open one - and try to fully fund it each year.
- Invest for growth. Some evidence suggests that women may be
more conservative investors than men. Of course past performance
is not an indication of future results, but if you're going
to achieve your long-term objectives, you'll need to invest
for growth - and that means you'll need a certain amount of
your portfolio devoted to stocks, which have traditionally outperformed
all other asset classes. It's true, of course, that you can
lose some - or even all - of your principal in stocks. But if
you purchase a variety of quality stocks and hold them for the
long term, you can potentially reduce the effects of market
volatility and inflation and potentially earn a rate of return
that can help you make progress toward your objectives.
You may not be able to single-handedly
change the social and institutional forces that can create problems
for women striving to achieve their long-term goals. But by becoming
an informed, active investor, you can better improve your chances
to go a long way toward achieving the financial freedom you deserve.
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