By Kevin FitzGerald
In last week’s Irish Echo, I was interested to see that the Irish Business Organization was hosting its fourth annual trade show, this year honoring the accomplishments of Irish women. This got me wondering if there was any information available on women investors?
— O.O., Hoboken
More women than ever are investing. There are many reasons behind this gravity, including women’s expanded roles in the workplace, their increased desire for financial independence, and the widespread recognition that government and corporations cannot fully guarantee an individual’s secure financial future.
Today, 42 percent of all U.S. investors are women and women continue to play an increasingly significant role in investment decisions, according to the Index of Investor Optimism, a, quarterly poll of investor attitudes conducted by the Gallup Organization for PaineWebber. However, women generally have lower-risk portfolios, with a higher percentage of their assets invested in bonds than stocks and mutual funds. Women are also more likely to seek professional investment advice.
"Our research shows that women have many of the characteristics that make for exceptional investors," said Mary C. Farrell, a PaineWebber senior investment strategist. "But because they live longer than men and have lower incomes given that they are in and out of the workforce more frequently, women need to invest more aggressively and set specific targets if they want to reach their financial goals."
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Baby boomer women (34-52) face the largest financial responsibilities. Their obligations include saving for retirement and their children’s college tuition. Furthermore, some 30-60 percent of Americans between the ages of 60-65 will need long-term healthcare, another potential financial burden on women, who continue to be responsible for the care of aging parents. By the year 2001, the combined bill for one year of private college and one year in a nursing home will be $68,500.
Despite these serious concerns, Index findings show that almost three out of four women — 72 percent — do not have an investment target for the next five years. Instead, they are just trying to do the best they can, measuring the performance of their investments against last year’s returns rather than against a goal they have established to meet their needs. "But financial security requires advance planning. As their monetary needs increase, women must take responsibility for broadening their financial knowledge," Farrell said. This means women investors should:
€ Seek education. Attend seminars, read financial books and periodicals. Ask questions.
€ Find an advisor. Seek a professional whom you can trust and are comfortable collaborating with in investment decision-making.
€ Prepare a plan. Most women plan all their lives — when they are going to pursue a career, get married, buy a home, have children. Retirement is a phase of life that may seem far away, but can’t be overlooked. Work with an advisor to come up with a goal for your retirement fund and stick with it.
€ Invest and save now. If you haven’t started saving and investing, begin at once. If you have invested only for safety, reexamine your objectives.
Very few people — men and women — can afford to take no risk in preparing for their financial futures. In the words of English writer Sheila Bishop, "Money is dull, except when you haven’t got any, and then it’s terrifying." For further information, or to order PaineWebber’s Index of Investor Optimism Special Report on "Women and Investing," please call me.
The information contained herein has been obtained from sources believed to be reliable, but we cannot guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
Kevin FitzGerald is first vice president-Investments at PaineWebber. He focuses on the areas of professional money management, asset allocation and retirement planning. He can be reached at 1 (800) 654-6162, ext. 448.