Which step to take next...
For some, the world of investing and finance can feel completely inaccessible. As a result, this can leave people feeling totally disconnected from their money and unsure which step to take next.
Our latest webinar series, Conversations that Matter, is part of our Women and Investment initiative. Hosted by Jo Fairley, co-founder of Green & Black’s Chocolate, it aims to help women become more knowledgeable about money and understand why having a financial plan is so important for them and their family.
Our first session discussed demystifying money, and why it is crucial women know the ins and outs of their household’s finances. Below is a summary of what was discussed, but those who would prefer to listen to it can do so on demand.
Demystifying the world of investment
The more we understand money, the more we feel connected to it. Unfortunately, the finance industry has generally done a poor job at helping people understand money and investment, often using jargon and complicated data to demonstrate a point.
Getting to grips with money and finance really begins with establishing an environment of openness. If you are working with someone on planning for your financial future, they should be comfortable asking personal questions, because those questions will help to establish your priorities and focus on your objectives.
According to our experts on the webinar, the best time to start thinking about managing family wealth is yesterday – it’s never too soon to start putting together a financial plan. To start, you should think about the position you are in now, and where you would like to be. A person’s financial planning goals are likely to change over time, however if that plan is something that is continuously worked upon, changes can be made to it to ensure objectives are met.
A core part of a financial plan is likely to be investing. However, people – particularly women – often fall into the trap of not investing because they consider it to be risky, or they don’t fully understand it.
There is good news here. First, if you have a pension, you’re already an investor, but if you’d like to invest away from that, there is no minimum amount required to get started. We’d encourage you to take that first step and get investing sooner rather than later to get your money working for you. With that said, and before you start investing, consider if you have any pressing debt, like high interest credit card debt, that should be paid off first. And be sure to keep a cash buffer separate from your investments in case of emergencies.
When it comes to investing, many women are interested in socially responsible investing, meaning allocating capital in a way that aligns with their ethics. There is a forest of options out there, and if you’re working with a financial professional, communicating your principles is important.
Putting women in the driving seat
On this week’s webinar we also talked about the importance of women being aware of what’s going on when with their family finances.
To demonstrate the point, Jo shared a personal story. A friend of hers was widowed. She knew her husband had been a wine investor, but she had no idea where he stored the wine he had bought, nor where he had bought it from. After contacting multiple wine distributors, and still unable to find her husband’s wine collection, she (by potluck) was told about a nearby warehouse that housed wine. Fortunately for her, all £58,000 of her husband’s collection was there.
Stories like this are why it’s so important women are aware of where the household’s money is. At Quilter Cheviot, we work with clients on a document that can then be shared with the executor of the estate, children, whomever has lasting power of attorney, and so on. This makes the process of locating assets much easier if a bereavement occurs.
Organisation is something that can really come in handy before meeting a financial professional for the first time. Ahead of a meeting, it’s useful to have a list of financial products you have, such as property and pensions and investments. A financial professional can then help you understand and simplify your financial position. By knowing where you are today, you can begin working towards where you want to be in the future.
The baseline a professional can offer is technical financial and investment knowledge, but the real value comes from offering reassurance and keeping someone on their financial plan.