What comes to your mind when you imagine an investor? A man in a suit, most likely. According to a survey by Fidelity International, women in Singapore on average hold S$76,500 in investments as compared to S$93,200 for Singaporean men. According to the study, 59% of women made an active investment and savings decisions, compared to 72% of men. Despite having a longer life expectancy, the average woman's retirement wealth is much lower than that of the average man.
Our society usually stereotypes women as nervous investors with little financial knowledge. This is unfortunate because women are generally better savers than men. However, they tend to invest less of their funds and keep a higher proportion of their assets in cash or low-interest deposit accounts. They take more time to thoroughly analyze their investment choices and don't chase profits or make dangerous trades on a whim. As a result, they may miss out on opportunities with high potential returns.

In addition to professional obligations, modern women are also expected to be devoted partners or mothers, which makes life extremely challenging for them. It might be pretty overwhelming to invest time in planning personal finances while juggling work and family. Making wise financial decisions is crucial for both men and women to maintain a desired standard of living. In this article, we discuss the salient points you need to know about planning your finances as an independent strong woman so that you may never have to face any financial crisis.

Track your expenses and savings

It is a common misconception that big sums of money are required to begin investing. Every person has a unique lifestyle and attitude toward life, so plan accordingly. Having said that, it is critical to know how much to invest. Anything you answer will always be less.

So, to identify the best investment amount, you should track your expenses and maintain a healthy expense-to-savings ratio. Let us identify the expenses based on "needs" and "wants". "Needs" include non-negotiable items such as loan repayments, groceries, energy bills, transportation costs, medical charges, and insurance.  "Wants" are extra expenses that you can control, such as shopping, gym fees, entertainment costs, and eating out. The optimal ratio would be to allocate 50% of your income to "needs," 25% to "wants," 10% to "emergency reserves," and the remaining 15% to investing. An amount equal to six months' worth of living costs should suffice as emergency money. Once that is accumulated, the 10% can be invested until the emergency savings are depleted. You will be able to set aside a good amount for long-term investment this way.

Improve your financial knowledge

Most women avoid investing because they lack investing knowledge and prefer to rely on their male relatives to make financial decisions for them. You can become self-sufficient and confident in your investment decisions by improving your financial knowledge. There are so many investment options on the market that it might be overwhelming for a greenhorn. As a result, it is critical to comprehend the products available, conduct your research, strategize a plan that meets your needs, and most importantly stick to it.

Insure yourself and your family

It should be emphasized that all of your financial preparation and efforts may be for naught if your loved ones are not safeguarded from unforeseen events. Your temporary or permanent disability or critical illness can have an impact on your family and drain all of your savings if an unforeseen incident or hospitalization occurs. Medisave and Medishield Life are affordable and dependable choices offered by the Singapore government and managed by the Central Provident Fund. You can also choose alternative private insurance options for better coverage, with some insurance plans offering cash payments if you are hospitalized or unable to work for an extended length of time.

Keep Emergency Funds

As mentioned earlier it is important to maintain emergency funds equivalent to 6 months of living costs. This money should be kept aside in low-risk and easily redeemable options as outlined below - 

• Regular Savings Account

• High-yielding savings account

• Singapore Savings Bills (SSB)

• Singapore Government Treasury Bills (T-Bills)

• Money Market funds

Plan your investment strategy

Having planned the correct investment amount from your income, it is essential to have proper investment planning as per your needs. Most women tend to be more conservative and invest a higher proportion of their money in money markets or low-yielding savings accounts. Low-risk investment options usually have low returns and are good for the short to medium term. But, with an average inflation rate of 2.50% from 1962 to 2021, the real value of your money will erode over time if you invest only in low returns schemes. Below are some low-risk investment options -

• Central Provident Fund (CPF) - Ordinary Accounts and Special Accounts

• Annuity schemes like CPF Life

• Singapore Government Treasury Bills (T-bills)

• Singapore Savings Bonds

• Fixed Deposits (FDs)

• Higher interest savings account 

On the other hand, with high-risk investments, you can achieve higher returns over a longer time frame. Below are some high-risk high rewards investment options available -

• Investment funds (ETFs, unit trusts) 

• Real Estate Investment Trusts (REITs)

• Individual stocks and shares

The best option is to build an investment portfolio having diversified funds into high-risk high-reward options and low-risk safer options. If you are starting at a young age then the proportion going towards high-risk funds can be more. Based on the age bracket below can be an ideal proportion :

• Age 20-35 - 70% High-risk long-term plans and 30% low-risk funds

• Age 35-45 - 40% High-risk long-term plans and 60% low-risk funds

• Age 45 and above - 20% long-term plans and 80% low-risk funds

Consult a financial advisor

If you find financial research daunting and time-consuming, you can consult a financial advisor licensed by the Monetary Authority of Singapore (MAS). They can help build you a suitable portfolio as per your needs in return for some fees.

Conclusion

Being a woman is hard. One has to don several hats each day, work incessantly and never have the luxury of catching a break. But, don’t let that affect your finances. After all, saving and investing for your future is of paramount importance and should never take a backseat among the myriad responsibilities that you are expected to fulfill each day. If you need any guidance in planning your finances, feel free to book a free consultation with us anytime.