Investing for women: Connecting with your portfolio
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Investing for women: Connecting with your portfolio

The top three emotions associated with financial planning for men are self-confidence, excitement and happiness, while for women it’s self-confidence, stress and anxiety1. Women engage with their money less than men and generally have a more conservative approach to investing. This does not have to be the case, according to the newly published report, Woman to woman: Connecting with your portfolio.

Building wealth: Why it matters

Engaging with their money could not be more crucial for women, says Nannette Hechler-Fayd’herbe, Chief Investment Officer of International Wealth Management and Global Head of Economics & Research at Credit Suisse. Women’s average life expectancy is above 84 years in a range of Organisation for Economic Co-operation and Development (OECD) countries. In European countries within the OECD, women aged 65 and older receive pension payments that are 25% lower on average than that of men – a so-called “pension gap” – while singles represent up to 50% of households in many Western countries. Considering all these factors, growing their wealth to fund their financial independence and security is an imperative for women.

By following a lifecycle investing framework and finding a connection with their investments as they do with everything else in their lives, Hechler-Fayd'herbe says women can successfully build wealth.

Lifecycle lens

Connecting with your portfolio

There are several ways in which women can create a connection with their investment portfolio. The first is to understand and take an active role in shaping their overall investment plan, ensuring that it reflects their financial objectives. The second is to explore their interests as an investor: a woman may want to invest in particular sectors or direct their capital toward issues that are important to them, such as supporting measures to address climate change or making an impact in terms of social issues.

The starting point is always a well-diversified investment portfolio and an understanding that building wealth is an endeavor with a long-time horizon. There is room, however, for women to be creative, innovative and purposeful in shaping their investments. Women can think of their investment portfolio as their personal art gallery, where they have carefully chosen and placed each investment.

Building wealth: Where the returns are

In a zero-interest-rate world, putting cash into a savings account to build wealth no longer suffices. To illustrate, we have calculated possible wealth trajectories that women of different generations would have built if they had invested in a suitable equities/bond strategy versus if they had kept their money in a savings account. Each initial investment is followed by annual investments of CHF 5,000.

With more financial independence than ever before, women need to seize the opportunity to take a more active role in managing their wealth and finding an investment solution that suits their individual needs and preferences. By investing early and regularly (the principle of “time in the market”) – as illustrated above – women can benefit from the compound returns that can help them build their long-term wealth more effectively than through savings alone. But it is never too late to start investing, says Hechler-Fayd'herbe.