As it turns out, when it comes to personal finance, most women still don’t get it. A recent survey by OCBC found that only about 60 per cent of women have investments. Men, on the other hand, are better prepared – with 75 per cent of male respondents saying that they have investments.
By now, we are all well aware that having investment plans is key to growing our wealth and saving for retirement because it helps us to beat inflation. But according to insights from the OCBC 2020 Financial Wellness Index, 25 per cent of women don’t know what are the best ways to grow their wealth. On top of that, 38 per cent of women equate investing to gambling. More shockingly, the survey also found that 71 per cent of women don’t seek advice from qualified professionals when they are making investment decisions.
Only 60% of women have investments
38% of women equate investing to gambling
71% of women don’t seek advice from qualified professionals when making investment decisionsOCBC 2020 Financial Wellness Index
But here’s the good news: the survey also found that when women do their research, have the confidence and sought the advice of experts, their investments actually earn a 0.2 per cent higher rate of return, compared to men.
And here’s some even better news: you can get started on your investing journey with small, baby steps – even if you lack the financial know-how (for now!) and your risk appetite is low.
“You don’t need a lot of money to start investing,” says Vasu Menon, executive director of investment strategy at OCBC Bank. “A regular investment plan where you squirrel away small amounts each month into pre-selected investments is one fuss-free way to start building a portfolio.”
Tan Siew Lee, Singapore’s head of wealth management at OCBC Bank, echoes the same sentiment.
“There are monthly investment plans that start at reasonably low amounts that can help accumulate financial assets gradually over time, making investments less daunting and more palatable for people with a tighter budget,” she explains.
But before you start investing, here are some things you need to do first:
- Save at least six months of your monthly expenditures, in case of emergency
The general rule of thumb is to have six months’ worth of emergency savings in case of an unexpected event, like a job loss or serious illness. If you want to be more prudent, Siew Lee’s advice is to have 12 months’ worth of savings set aside.
- Ensure that you have adequate insurance coverage
Siew Lee cautions that healthcare costs can easily deplete your savings, so it’s important to ensure that you have adequate health, hospitalisation, and critical illness coverage. And don’t worry, you don’t necessarily have to get them all at once if your cash flow doesn’t allow for it. “The key here is to start and grow your coverage with time,” she shares.
- Save at least 10 per cent of your disposable income
While there isn’t a standard for how much of your income you should be investing, both experts recommend saving at least 10 per cent of your disposable income.
- Be clear about your liquidity needs before you invest surplus funds
That includes mortgage payments, insurance payments, school fees, etc. Then, make sure that you have sufficient liquidity buffers in place. “This is so that you don’t have to liquidate your investments prematurely, or at a loss, in order to access liquidity,” says Siew Lee.
If you fall into the category of investors with a low-risk appetite, take heart. You can still grow your wealth by going for long-term investment plans.
“It’s not about how much risk you take and how you time the markets, but rather, how much time you spend staying invested in the markets,” says Vasu.
“The earlier you start, the more time your money will have to grow. That will benefit you in later years and ensure the value of your monies do not erode over time,” he elaborates.
Ready to kickstart your investment journey? Here are some options that are recommended for investment newbies:
Brought to you by OCBC