Traditionally as women, we tend to leave many of the major financial decisions to the men in our lives and this can certainly have repercussions, particularly in the case of divorce.
However, we really must sit up and take note when it comes to our finances and investing. Research from The WealthiHer Network Report 2019 predicts that by 2025 over 60% of UK wealth will be in the hands of women, yet it also shows that 70% of women are not engaging with finance.
The gender pay gap is well publicised but there are also other areas to consider. The ‘Motherhood Penalty’ shows that working mothers earn 20% less than fathers ten years after the birth of their first child (Social Market Foundation Research) and very few new parents opt to take shared parental leave. This leads onto the ‘Childcare Penalty’ with the ONS showing that in couples, 65% of mothers are in work compared with 93% of fathers. It is little wonder that many parents don’t choose to work part-time with the absorbent cost of childcare, but it is disappointing that it is the women that tend to put their career second. And if that wasn’t enough, there is also the ‘Good Daughter Penalty’ with many of the informal caring roles taken on in families being done by women.
Women tend to be more cautious when it comes to investing and less willing to take risks with their finances. This coupled with women often earning a lower salary means we often end up with less in the pot! If we then sit on this pot and keep it in cash, it isn’t working as hard as it should be or needs to be. Given that women overall tend to live longer, this is particularly important to grow our assets when it comes to pensions, that is if you don’t want to have to survive retirement on the state pension of £179.60 per week. That certainly won’t keep you in Jimmy Choo’s!
I am aware that so far this blog has sounded somewhat negative but there is a way out of this which is to start taking control of your finances. This can be achieved by doing your own research and increasing your financial knowledge, therefore improving your financial wellbeing, or alternatively work with a financial adviser and/or investment manager.
A financial adviser can help you put strategies in place and come up with a financial plan that will be beneficial in the long-term and help you make the most of the assets you have. This might be particularly important at times such as divorce when you have to rethink where you are and what you have financially. An adviser will also work with you on an ongoing basis because, as we know, life doesn’t stand still and we need to be flexible in responding to unexpected events. The recent pandemic has certainly highlighted this.
Once you have a plan in place, we can then think about investing and how this might help you. If you do receive a lump sum, it is very important to consider what to do with this, particularly in terms of what it is needed for and the timeframes involved. With interest rates at historically low levels, it might not be prudent to deposit a lump sum of cash because it might not keep pace with inflation, so in real terms the value of your money will fall. By way of an example, if you have £100 and leave it in a low interest bank account for ten years, the rate of inflation will likely outpace that of your account’s interest, resulting in you not being able to buy as much in ten years’ time with that money as you could have done today.
An investment manager can help you work out how best to approach investing your money and together we can come up with a mandate that suits your circumstances, time frame and potential income needs. This will ease the pressure of having to make your own decisions and allow you to get on with the next stage of your life.
Exploring the key ingredients for successful investing and how we can help you on your investment journey.
The value of your investments and the income from them can fall and you may not recover what you invested.
