Women Can Win With Money
It’s no secret millions of Americans have not saved enough for retirement. That’s especially true of women, for unsurprising reasons: Women, in general, are paid less than men. The average woman spends 10 years out of the workforce, caring for others. Wives tend to be less involved than husbands in household investing and retirement planning. The divorce rate is high, and most married women outlive their husbands. Some twothirds of the elderly poor in America are women.
Even facing headwinds, though, women can succeed financially — in part because they tend to be good with money, often outperforming men. University of California researchers Brad Barber and Terrance Odean found that men are more likely than women to be overconfident and to trade frequently (which can be costly). Single men, for example, traded 67 percent more than single women, reaping lower returns. Their study found that “men trade 45 percent more than women and earn annual risk-adjusted net returns that are 1.4 percent less than those earned by women.”
A Vanguard study found that women were more likely to sign up for 401(k) plans and to sock away a greater percentage of their income than men.
Want to get started investing? Here are some guidelines for women — and men: Read up and learn before you start. Don’t jump into any investment without understanding it and being comfortable with it. Read John Bogle’s “The Little Book of Common Sense Investing” (Wiley, $25), LouAnn Lofton’s “Warren Buffett Invests Like a Girl: And Why You Should, Too” (HarperBusiness, $15) or “One Up on Wall Street” by Peter Lynch (Simon & Schuster, $17).
Don’t be afraid to take on some risk. Low-risk investments such as savings bonds, CDs or money market funds tend to grow slowly. As long as you’re investing your money for five to 10 or more years, you’ll likely do best in the stock market and can ride out short-term market downturns.
Share this article with anyone you know (male or female) who can use a pointer toward financial independence.