Women’s Conservative Investing Style Costs Them Money
June 19, 2008
Common Mistake #10 Being Too Conservative With Your Investments
“Fortune favors the bold.”
Virgil
Roman epic poet (70 BC – 19 BC)
Historically speaking women have a track record of being conservative with their investments.
According to a survey by SmartMoney magazine., husbands are more willing to take financial risk when investing than their wives (62 percent for men versus 19 percent for women).This is bad for wealthy women for a number of reasons.
1) Women Outlive Men
Since women outlive men by 7-15 years depending on whose stats you use, women, more than men, must have an investing style that is more aggressive in order to insure that the growth of their portfolio will be sufficient for their retirement.
2) Women May Outlive Their Money
Women can expect to be single for the last two decades of their life, either due to being widowed or divorced. Not a pleasant thought, but then running out of money before you die is pretty damn terrifying as well.
3) Women Need To Learn About Investing Now!
In a recent study by Oppenheimer Funds, they found that with regards to investing, women:
76% wish they had learned more about investing growing up
62% do not understand how a mutual fund works
Only 35% say they’re more knowledgeable about investing than they were five years ago
4) Woman Shouldn’t Make Investing Decisions With Their Heart
Yet when it comes to the heart, women are more prone to being scammed by their “lover.”
Here are a few current stories on women being bilked out of hundreds of thousands of dollars by scum bags that lead them on:
Authorities: Homeless man scammed women on dating site
The Romance Scam
Looking for love? Keep an eye on your wallet
I encourage you to familiarize yourself with these types of romance scams by going to a great site called Romance Scams
The moral of this story is for all wealthy woman that want to remain wealthy and women that aspire to become wealthy, you MUST start taking an active interest in learning about investments and investing while staying away from romantic scammers and the low life “I’ll double your money in 90 days” con men.
“What about the risk?” you might protest. “I feel more secure putting my money in a CD or Money Market account.” You stand to lose much more by being conservative than if you have a well diversified portfolio. How can this be? It’s called purchasing power risk
The risk of loss in the value of cash due to inflation. Basically what this means is that while you’re money is sitting in a CD or other similar vehicle, the amount of things your money can buy slowly erodes day by day.As of May 12, 2008 a first class stamp will cost you 42¢. Twenty years ago, a first class stamp cost 25¢. In twenty years the cost of a first class stamp almost doubled in price! We could do the same with milk, eggs and other common items in daily living. I won’t even get into the absurd explosion in the price of a gallon of gas.
How Much Money Will I Need To Retire On?
With that price jump of a first class stamp still fresh in our memory, let’s talk about how much you want to retire on.
Let’s say hypothetically that you’re magic retirement number is $150,000 per year. Keep in mind that in twenty years assuming a standard rate of inflation of 3%-4% per year, your $150,000 in today’s dollars will only buy you about $75,000 worth of things in twenty years.
Think long and hard about how much you’re going to need in order to retain your desired lifestyle once you retire AND more importantly, how much purchasing power you may lose during your twenty plus years of retirement.
Now do you still think earning 3.8%* in a CD is still the way to go?
*Highest CD rate for one year listed on Bankoholic
