A woman’s guide to investing
Equity Analyst at Momentum Securities Faheema Adia unpacks how women can take full advantage of the stock market
“We as women are more empowered today than we have ever been before and need to use this opportunity to the fullest.”
According to Momentum’s 2021 Science of Success findings, 56.1% of the households in South Africa had a female as the Financially Knowledgeable Person (FKP), and in 58.4% of these households, the woman was the head of the household. It was also found that more women than men attend tertiary institutions. Also, over 44% of the skilled and managerial positions were held by women in 2017 – 2019. These statistics show tremendous improvement from the past where women were not afforded the same opportunities and rights as men when it came to getting credit, participating in the workforce, and in turn achieving financial independence. We as women therefore need to recognise that we are more empowered today than we have ever been before. Most women in South Africa are now the heads of households and equipped with both the financial knowledge and educational literacy to not only manage their own finances, but to also invest successfully in the stock market.
Why is it important for women to be financially independent?
There are of course countless reasons for women to have financial independence. I’ve focused on some of the core ones below.
Women live longer than men
The 2020 World Health Organization’s Health Life Expectancy report states that women live longer than men everywhere in the world. The average male life expectancy is approximately 76 years, whereas women’s is about 81 years. This implies that retirement savings need to be even more robust for women.
Achieve economic equality
More women than ever are taking a seat at the investing table. Income discrimination in terms of a pay gap does however play a large role in achieving financial equality.
Control over future unexpected events
A woman with financial independence will be better off during difficult times such as the death of a spouse, divorce, or an emergency. It is also helpful for women to be able to contribute to household finances amidst rising costs of living.
Set an example for your children
Children are often influenced by their mothers and therefore financial independence will help set a good example.
Where to invest and how
Open an online share account – In today’s world, trading on the stock exchange has never been simpler. Thanks to the development of technology, more than 1 000 000 South Africans buy stocks online.
Invest in a passive ETF tracking fund – There are several tracking funds available which track the broader stock market index. An example of this is the Satrix JSE ALSI ETF which tracks the returns of the broader JSE all share index. The benefit of investing in a tracker fund is that it is generally cheaper and provides exposure to the stock market returns as a whole. Note this is suitable for a long term investment and the investor would need to consider her unique risk and return profile prior to investing.
Diversify and don’t put all your eggs in one basket – to protect your wealth, consider diversifying your portfolio across different asset classes; this may include equities, bonds, property, and cash. Equities are generally seen as a riskier investment and are more suitable for long term investors that have the necessary risk tolerance. Over the long term, equity returns have outperformed that of other asset classes, therefore we would recommend you have at least some exposure to this in your portfolio, provided you have the risk tolerance. Constructing a well-diversified portfolio can be challenging without the necessary financial knowledge, in which case we would advise you to consult with your financial advisor.
ENDS
