Sunday, November 21, 2010

Investing Strategies For Women

Retirement is a funny thing. We plan our whole lives for something that seems so far away it will never arrive. We are told to start planning early so that we can enjoy the benefits of compounded growth, yet in our "early" years we are repaying loans, mortgages, getting started in our careers (meaning we do not have a whole bunch of disposable income to begin with) and so on. Indeed, in our youth we rarely consider the consequences of an under-funded retirement plan.

The idea that investing for retirement would be different for women than it would be for men may seem silly and even slightly insulting at first glance. The idea isn't meant to be sexist in any way, but there are a number of factors that tend to be different in lives of women that make this topic vitally important.

The first is the fact that women are paid less for the same job in the modern workforce. While this margin has been getting smaller and smaller over time, it's still significant. In a recent study by the United States Department of Labour, women were shown to earn 24 percent less than men for doing the exact same job. This can have serious implications when it comes to investing for retirement.

The same study by the Department of Labour also showed that women, on average, spend less time working than men. A gap of seven years was present in the study due to time that some women take off to have children, raise a family or care for elderly or sick parents. While the obvious impact to the amount of money earned in a lifetime is obvious, there is also the impact on any sort of savings plan through work, as well as less social security.

As if that wasn't bad enough, the last United States Census showed that women are living an average of seven years longer than men. So, not only are women earning less and in fewer years in the workforce, they also live longer which means they need to save more for retirement.

What does all this mean? It means that women might need to take a slightly more aggressive path toward investing for their retirement. It also means that women need to start even earlier than men to start saving and investing. Other good tips are to set different goals than your husband, since your set of circumstances are different.

You might also want to have even more diversification in your portfolio than most so that if some of your investments go sour, you won't be left with nothing. It's also a good idea to stay on top of your investments. Reviewing them on a regular basis lets you know where your doing well and where you might need to make changes.

While it's unfortunate that a woman may need a completely different investing plan for retirement than her husband, the fact remains that there are forces conspiring against women in the workplace. But with the right strategy and the proper goals, everyone can enjoy a healthy and prosperous retirement.

Where many investors err in this area is in being honest in how they feel about risk and re-evaluating their tolerance and time constraints on a regular basis. While all financial planners and advisors will provide this type of analysis, investors are urged to consider such things independently so that they are completely satisfied with the shape their investments will take as they ease toward that seemingly distant milestone known as retirement.

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