Here are some tips on how to build wealth and make positive steps towards financial independence.
Creating passive income through property or shares
Having a passive income means earning money without actively participating in the generation of that income. It does not sound easy but with the right tools and advice, creating a passive income is a way to boost finances and prepare for later in life and retirement. Whether this is through property or investments (funds or shares), schooling up on what is going to work best for a particular budget, goal and appetite for risk, will mean women can begin taking steps to generate a passive income.
Planning for your future financial needs
Stats NZ 2017-2019 figures reveal that life expectancy for women is 83 years, while on average men live until they are 80. While an extra three years does not seem many, by that point most people have not worked for years and have no means of generating more income, making it an important issue to consider now.
The years spent out of full-time employment for primary carer duties mean women naturally save less for their retirement. Having a superannuation scheme is a good start when planning for retirement, but there are many factors to consider – contribution level, risk level and choosing a fund that is going to provide the sorts of returns required to sustain the lifestyle desired once retirement is reached.
Considering more investment risk
The level of risk individuals are willing to accept is different for each person and each investment, but research and experience teaches us that women are more likely to be more cautious and conservative investors and choose a more risk averse investment. Although it pays to have a more conservative investor profile in some situations and in some stages of life, choosing to take more risk and diversifying a portfolio could pay greater dividends long-term.
Research reveals that women often achieve greater returns than men on their investments due to their tendency to research, seek advice and practice patience when “waiting” for returns. A natural cautiousness is not a negative thing, as seeking advice before plunging in can ensure any nest egg worth investing is in good hands.
Insuring to secure the future
Having a back-up plan for the finances when things do not go to plan is not only good sense but allows people to have the confidence they need to make good life decisions without money worries holding them back. Whether that is income protection, mortgage cover, trauma cover or health insurance, having the right cover means that money is the least of anyone’s worries if sickness means a break in earning.
Changing the conversation and surrounding yourself with the right people
Something we can control is the conversation. Let’s ensure financial literacy is accessible to more women – share financial knowledge, experience and contacts with peers and friends and talk about it over coffee. By normalising ‘talking finances’ among women, it will encourage them to save, to invest and to ask for more.
Of course, confidence plays a huge part in money matters. With knowing more and continuously learning how to manage, grow and distribute wealth, confidence on all money matters will increase.
Whether research is completed online or face-to-face with an experienced financial adviser, it all starts with a conversation, asking questions and seizing financial independence with both hands.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs.