SINGAPORE (6 Mar): The trading floor has historically been a man’s world, filled with a majority of male traders and fund managers. Due to a lack of gender diversity, not many realise investing strategies differ for men and women.
When it comes to personal finance, women are found to be earning less than their male colleagues, according to DBS Bank. And while the retirement age is the same, women, on average, enjoy a longer lifespan than men. Without considering the breaks taken to care for their families, the cumulative difference in savings is already significant.
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Yet, when it comes to growing their wealth to fund their longer lives, a study by Merrill Lynch and Age Wave found that only about 52% of women are “confident in managing investments”, in contrast to 68% of men.
This is a pity, considering female investors outperform their male counterparts by 1.2% annually, according to a survey conducted by the Warwick School of Business between 2012 and 2016.
Today, with easy access to information on the internet, there is no better time to start than now. Here’s how.
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1. Gain confidence
Taking the first step can be daunting. After all, we’ve all heard of horror stories of investors getting their fingers burnt during stock market crashes.
Yet this can be mitigated by doing your research. There are plenty of resources available today, including your financial advisor, robo-advisor, and seminars held by establishments such as the Singapore Exchange (SGX).
Once you know which strategies suit you best, you are good to go!
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2. Take stock of what’s in your closet or makeup pouch
Retail therapy is great, and at times, necessary. However, it’s not the best way of maximising your returns. While the general rule of thumb is to allocate 30% of your salary into luxuries, that number is flexible.
If you find that your closet is filled with unworn clothes, or if you have a vanity table that’s cluttered with heaps of makeup products, now would be a good time to take stock and add up all your purchases. You will then realise the money could have gone into a decent investment portfolio.
3. A balanced portfolio
There are six different asset classes for you to invest in, and you will need a combination of these to have what investors would consider a balanced portfolio.
The asset classes are:
- stocks or equities,
- fixed income or bonds
- cash
- real estate investment trusts or REITs
- commodities such as gold and silver (also the most volatile), and
- cryptocurrency.
4. Stick to one strategy
It is easy to be swayed by trends and market sentiments, especially if you are just starting out.
Keep your eyes on the bigger picture and stick to one strategy. Should you prefer long-term investments like dividend stocks, don’t deviate and seek out penny stocks hoping to make a quick buck in future. Always go back to the basics and read the company’s financial statements and track any news before investing in them.
See also: Learn how to conduct Fundamental and Technical analysis
5. Invest in something you are familiar with
Don’t follow business news frequently? Take it from Geraldine Weiss, one of the world’s most successful investors, who made her fortune in blue-chip stocks: “Know what you don’t know”.
This means you will need to understand the business well enough before putting your money in it.
6. Consider longer-term investments
For cautious and risk-aware investors, opt for blue-chip stocks that give you a good return on investment (or ROI) in the form of dividends. Making fewer trades will also help you save on brokerage fees in the long term.
7. Choose the right savings account
Opt for a savings account that maximises your savings with competitive interest rates. After all, a dollar saved is a dollar earned, right?
Like any beginner investor, you should always set aside 50% of your income for necessities, 30% on luxuries, and 20% on savings or investments. This isn’t fixed though. Should you need to spend more on necessities, you can always adjust accordingly. You should also have at least six months’ worth of savings to tide you through any potentially low periods.
See also: how to start investing in your 30s.
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