Money can be an overwhelming subject. For women particularly, regardless of education levels, personal or professional achievements, the opacity of the male-dominated finance industry can discourage women to engage with Finance and have less confidence when it comes to managing money, realizing financial abilities, and investing.
Compared to men, women are more hesitant about their abilities to invest effectively and tend to hold more cash in saving accounts, believing it is the least risky place. The gender income gap leaves women, who already earn less, feeling like they don’t have enough free money to invest, while the finance knowledge gap holds women back from getting started and making their financials a priority.
But the good news is that, as co-founder of ‘Sophia’ Tanya Rolfe discussed with Connecting Founders, there is a growing appetite among many women to put their money toward investment and better financial management, while taking a positive approach to educate and think differently about money — and here’s how:
Tanya Rolfe is a co-founder of Singapore-based ‘Sophia’ — a learning platform made for women with the mission to increase diversity and inclusion in early-stage investing.
Thrive with a tribe
It is a big challenge for women to undo the many decades of limiting beliefs around their abilities with money, said Tanya. In a lot of cultures, women are assigned to household purchasing but when it comes to managing the money, that relationship is non-existent for most women and men tend to take on the position of money manager.
Resonating with Tanya is a new study by Fidelity Investment showing that women tend to outperform men in generating a return on their investments, and women consistently saved a higher percentage of their pay cheques as every salary level. The fact that women tend to invest more conservatively should not be generalized as being risk averse. The careful research helps women decide on the appropriate risk tolerance and not make impulsive money moves triggered by short-term trends.
Being more than capable of money management, Tanya encouraged women to re-establish a healthier relationship with money and thriving with a tribe may just be what bridges the confidence gap: “money is rarely discussed among women whether friends or families. When really, women can learn from each other and explore with likeminded people who share similar mindsets about money and investment”.
Navigate the myriad of online financial guides
Education is key to understanding money, being confident in managing money, and investing. With the financial industry moving towards making investing more accessible, education drives a massive change that reduces entry barriers for beginners: from self-directed portfolios, zero fee services, investment apps, to the viral ‘FinFluencers’ — social media influencers casting about financial tips.
The multitude of these financial guides, however, are to be taken cautiously as misleading or sponsor-heavy content may lead novice investors astray.
While education brings women closer to Finance, Tanya’s suggestion on navigating the myriad of financial guides is to absorb as much information as possible, have open discussions with friends, seek advice, and find resources that speak the female voice. By sifting through the flood of information and capitalizing on educational platforms that resonate and communicate their financial appetite, women can make informed decisions and invest with confidence.
Work hard for your money, and have your money work hard for you
When asked if investment is a necessary way to manage money, bearing in mind its risks and volatilities, Tanya said it is 100% necessary.
She explains that the reality of keeping money in saving accounts alone, as some women have traditionally been doing, comes with its own risks — if not bigger. Money sitting still in banks earns such low returns that it can lose purchasing power over time due to inflation. Money put in the market, on the other hand, can beat inflation and substantially grow assets over time.
Starting out by taking small steps, women are encouraged to educate themselves with all the different investment asset classes to fully understand all their options and gauge their risk appetites.
The key takeaway from this discussion, Tanya said, would be “just start, full stop.” — Invest conservatively, take baby steps, understand risk tolerance, and get educated. It is time to celebrate women’s financial power and maximize it by getting more active in managing our money.