Maximize Your Wealth & Rest Easy
I specialize in working with busy professional and entrepreneurial women in Saskatchewan to maximize their wealth and minimize risk so they can rest easy knowing their family and business is protected. When you work with me, I will create a comprehensive financial plan for you where we will define your goals, evaluate your current financial situation and establish an investment strategy to reach those goals.
Being financially wise does not mean giving up the things you value most in your life today such as travel and leisure time. It means spending your money in alignment with what you truly value most in the long term.
How do female and male investors differ?
There is a perceived education gap between female and male investors. Due to this, women are far less confident that they will meet their overall financial goals in their lifetime, making them feel less prepared to confidently make large financial decisions — especially where to invest their money. In household investing, women are known to take more calculated risks and as a result, can be risk averse in the market. However, the more knowledge they have about the markets, the closer women score with men on their willingness to take on risk. I believe the largest differentiating factor is the presence to ask for financial advice throughout a woman’s lifetime. Also, women are twice as likely to seek to align their investments with their values, putting greater emphasis on the need for rate of return and positive social/environmental impact.
What are the 3 most important things every female investor needs to know?
1. Your whole financial picture. Every woman, especially those with families, should have a financial plan drawn up early in their investing years. Although your circumstances may change over your lifetime, there is value in seeing the potential of your investment plan long term. When you can see the value, you are more likely to stick to your goals to get you there.
2. Women have unique investment challenges that require more money to be saved over their lifetime, and here’s why:
· Women are living longer than men
· Women have potentially earned less over their lifetimes, considering more frequent employment gaps taken for maternity leave or caring for elderly parents. Women on average earn 76 per cent of what men earn, resulting in a lifetime earnings differential of $250,000. As a result, women have often saved less over their lifetimes and contributed less to RRSPs and company Pension Plans
· Women may be required to use their own savings to cover caretaking costs of their children, aging parents or even spouses
3. Start investing early and often! The advantages of compounding growth are best seen when a woman begins investing in the early stages of her career. Don’t worry if you can’t make large contributions on a monthly basis, even starting with saving 10 per cent of your paycheck can have a substantial effect on your long-term retirement savings. Consistency and discipline in investing on a regular basis will get you to where you want to be sooner.
How do I know if I’m with the right financial advisor? How do I know if my advisor has my best interests at heart?
Your money is important to you, so make sure you are important to your advisor. Being in the industry, the biggest piece of advice I can provide is to ensure you feel truly valued by your advisor and that you feel they listen intently and openly to your experiences and concerns. 70 per cent of female widows fire their financial advisor within one year because they are not attentive to their needs. Make sure you feel you have a voice in the investing conversation, and that any investment decision made is set with your goals clearly understood.
5 Financial Rules every woman should follow:
Investing is about more than monthly contributions and annual returns. It’s also about having a financial plan and being prepared throughout your lifetime. Here are five rules that can lead you to better financial health.
1. Pay your full credit card balance every month. Here’s a little tough love: if you can’t pay your full credit card every month, you probably shouldn’t use one. Credit cards are a great tool to build credit, but if you don’t pay the balance in full, the high interest rates can quickly spiral you into consumer debt. As women, we already pay more for many products we buy. Don’t compound this by racking up credit card interest on top of your purchases. Make sure the amount you put on your card fits within your budget, and always pay it in full.
2. Pay down your mortgage ASAP. One of the lesser known effects of the gender pay gap is that women also end up with lower credit ratings than men who earn more. And a lower credit rating means that you’ll end up paying higher interest rates on big expenses, like your mortgage. If you pay down your mortgage quickly, you’ll save a lot in interest over the long-term.
WHY IT MATTERS: On a $450k mortgage with a fixed 3 per cent interest rate, decreasing the amortization period from 25 years to 15 will save you $80k in interest payments ($190k in interest with a 25-year amortization versus $110k with a 15-year amortization).
3. Maximize employee contributions to your pension (especially if your employer contributes!) Our cost of living is increasing, and so are our life expectancies. In fact, Statistics Canada says that women outlive men by an average of four years, and spend more of those years in poor health. This means women need a larger nest egg to support a comfortable retirement. So the more you fully fund your pension now, the more you can rely on it to fund your retirement later. Plus, if your employer matches your contributions, your dollars turn an instant profit!
4. Pay yourself first. Your savings are an investment in your best asset — you! That’s why it’s important to save part of every paycheque before its swept toward groceries and bills. When you’re setting your budget, aim for the 50/30/20 rule: spend 50 per cent of your income on your needs, spend 30 per cent on your wants (because we all deserve a little fun), and save 20 per cent for your future.
5. Maximize your tax advantaged savings — RRSP, TFSA, RESP and RDSP. It’s not just how much you save that matters — it’s where you put that money. Low-interest-earning savings accounts are hardly better than that change jar in your laundry room. Choose a savings option that makes your money work as hard as you do — such as an RRSP or TFSA. Women generally feel more comfortable with TFSAs because they offer us the flexibility to cover our immediate financial needs. But we also need to focus on our long-term needs and take advantage of opportunities, like when our employer tops up RRSP and RESP savings. It’s free money!
These are just a few of the rules that can put you on the path to financial success. You can find the final five rules, along with other expert financial advice, at thrivewealth.ca/blog.
You can learn more about these five rules, along with other expert financial advice, by registering for our webinar here - https://info.thrivewealth.ca/10tips.
*This article is based on the 10 rules of financial success listed in The Index Card: Why Personal Finance Doesn’t Have to be Complicated by Helaine Olen and Harold Pollack, modified for Canada.