We all know that men and women think differently, like different things and even react differently to the same event, so it’s not a big surprise to find that they take a different approach when it comes to investing. While men are way ahead in many respects, investing more and building more diverse portfolios, they have a tendency to take more risks which can result in bigger losses.
Woman on the other hand have an aversion to risk which many argue is due to the fundamental roles they play in society. Women have a family nurturing role: protecting the next generation is crucial to the survival of the species, so it would be understandable for women to be more risk-averse. Clearly, women could take some cues from men when it comes to investing, however, sometimes having less appetite for risk can be a blessing.
Investing your money is important. It can give you financial security and independence, as well as prepare you for important life events such as your children's education, your retirement or unforeseen financial emergencies. Although this may sound overwhelming at first, there are a few basic investment guidelines that you can use to enrich your future:
1. Educate yourself. The investment world can initially appear daunting as it has many different avenues that range from Open-ended Investment Companies (OEICs) and unit trusts to stocks and bonds. However, the first port of call when deciding to invest is to educate yourself on the various options available. The more you know, the better your chances of becoming a savvy investor.
2. Set clear financial goals. Decide what you need to do to make your future secure and enjoyable. This can include everything from starting a retirement fund to starting to put aside funds for college, medical expenses, vacations, real estate investments, as well as an emergency fund for any unforeseen events that may drain your savings.
3. Create an investment plan. Once you have set your goals, you need to create a solid investment plan. First, determine how much money you have to invest, and start thinking about how to make your money work for you to achieve your financial goals. Rather than a set of rules, an investment plan provides guidelines that can help you organise and direct your energies. Financial plans should have continuity and a solid foundation, but at the same time be adaptable to changes that invariably happen in life.
4. Seek professional advice. Consulting with an Independent Financial Adviser (IFA) can give you an edge in creating your investment portfolio. However, IFA’s can sometimes be fallible, which means you should always take an active role in your investments. Moneyspider.com not only allows you to monitor your own funds but allows you to buy stocks and shares ISAs, Unit Trusts and OEICs and switch underperforming funds 50% cheaper than dealing direct with a fund manager.
5. Diversify your portfolio. When setting up an investment portfolio, you should make sure to diversify your investments; that is, make sure the risk is spread out and not all focused in one place. By diversifying your financial portfolio, you create more security for yourself.
6. Set up an emergency fund. You should safeguard your finances by setting up an emergency fund to deal with potential problems that could drain your finances (such as unforeseen medical or legal problems).
7. Retain Pre-Retirement Income Most women will need to retain up to 85% of their pre-retirement income to remain comfortable through retirement. In order to do that, a growth and income strategy should be applied to a broad diversified investing plan over time. The earlier that growth and income strategy is developed, the more likely it is to generate healthy yields in the future.
8. Avoid high-risk investments. High-risk investments are like gambling on long shots. On the whole, you have to be prepared to lose your money. Even in the world of stocks and futures, some investments are much riskier than others.
9. Monitor investments on a regular basis. You are ultimately in charge of your finances, and because it's your money that is being invested, you are the one who stands to profit or lose. Always stay informed about what is going on in the different financial markets that hold your investments. One way you can monitor your own funds is by using Moneyspider.com. Moneyspider.com is an independent online fund valuation, performance monitoring and rating service for private investors, which allows you to monitor all your different Unit Trusts or OEICs (Open Ended Investment Companies) including all stocks and shares ISAs in one place.
10. Be open to new ideas. You should be adaptable and change your portfolio to reflect what is happening both in your life and in the world around you. Be aware of both financial and cultural trends. Keep up-to-date by reading business and financial journals, newsletters, magazines and websites.
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