It's never easy to talk about unexpected truths because we all have different expectations and ideas about what is true. For example, you may not be surprised to learn that women's portfolios often outperform men's. Or, in one survey, almost half of women said they didn't know how to invest.
Sadly, one of the all-too-expected truths about women and money is that we have less money. We can thank the gender pay gap and career interruptions for that. Let's take a look at the truth about women and investing and what you can do about it.
1. Women get better results when they invest.
The study by Fidelity looked at the results of more than 5 million customers over a 10-year period. They found that women's portfolios outperformed men's by 0.4 percentage points. Several other studies have shown the same thing.
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More good news? More and more women are saving for their retirement. A Fidelity survey found that 68% of women are saving money for their 2023 retirement. This is up from her 66% in 2019.
what this means to you
It's certainly encouraging to see that there are more female investors and that they are doing well. Still, you're not alone in feeling anxious about investing. You don't need a finance degree to invest. In fact, it may be easier than you imagine. Look for podcasts and books that speak to you. There are more and more things like this in the world. Also check out this beginner's guide to investing.
I knew I needed to be able to analyze stocks and understand charting tools before I started investing. I was wrong. If you don't have the time (or inclination) to learn how to value stocks, you can buy exchange-traded funds (ETFs) or index funds instead. For example, an S&P 500 index fund gives you exposure to the top 500 companies in the United States. This is a relatively low-risk way to build a diversified portfolio.
2. Women have less money to invest.
On average, women earn less over their lifetime than men. This makes it difficult to save money in a savings account and hinders your ability to invest for the future. According to data from the Bureau of Labor Statistics, women earn about $0.83 for every dollar earned by men.
In addition to this, women are more likely to devote time to childcare. In fact, 44% of women told Fidelity that they were caregivers in some way. An Urban Institute study estimated that the average cost of providing unpaid care to children, parents, and others is $295,000 over a lifetime.
what this means to you
We can promote greater pay transparency and equal pay. Unfortunately, none of us can change the gender pay gap alone.One way you can make the most of your money. do Investing is through tax-advantaged accounts. Gender inequality won't go away, but you might get a little more money back into your bank account later in life.
Find out if your company has a 401(k) plan. Talk to your human resources department to find out how it works and how you can contribute. A 401(k) can be a double benefit. Not only do they offer tax benefits, but many companies also give you more bang for your buck.
It's also important to understand how individual retirement accounts (IRAs) work and which accounts make sense for you. Some can help you save on taxes now, while others can be withdrawn tax-free in retirement. Most top stockbrokers offer different types of IRAs.
3. Women live longer on average
The Centers for Disease Control and Prevention estimates life expectancy for women at 79.3 years and for men at 73.5 years. You might think that living longer is a good thing. that's right. The challenge is how to do so comfortably, especially when you need to cover medical and long-term care costs.
Simply put, many women have less money to spend in retirement and need to stretch the money they do have over a longer period of time. Nearly half of women ages 55 to 66 have no personal retirement savings, according to Census data. If you live close to 80 years old or beyond, it may be difficult to survive financially if you don't save money.
what this means to you
Regardless of your age, the sooner you start planning for retirement, the better. Think about the kind of life you want to lead and calculate the necessary expenses. Check out this retirement planning guide to learn more. Finances aside, a healthy diet and regular exercise will go a long way in reducing health problems in the future.
If your retirement savings aren't where you expected them to be, you may feel like you're at the bottom of a steep mountain. Don't be discouraged by that. Take a hard look at your budget and see if you can save even a small portion of your income. Some financial advisors suggest putting 10% to 15% toward retirement savings. If you don't think that's possible, you can also start with 1% and build from there.
Important points
Women are at a financial disadvantage, especially when it comes to retirement. We are likely to earn less, spend more time caring for others, and possibly live longer. It's easy to get discouraged and end up doing nothing. Instead, focus on the next step. teeth You can take it. Set achievable goals and celebrate when you achieve them.
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