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What Every Woman Should Know About Investing
 

What Every Woman Should Know About Investing

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What Every Woman Should Know About Investing

What Every Woman Should Know About Investing

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    What Every Woman Should Know About Investing What Every Woman Should Know About Investing Document Transcript

    • What Every Woman Should Know about Investing Facing Unique Financial Challenges Building on Unique Advantages Taking Action for Financial Success | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | Today, we're going to talk about investing in a presentation that was especially designed for you as a woman. In the next 15 minutes we will discuss: • The unique challenges women face with their money and investments • The unique advantages women enjoy when it comes to money and investing • And how you can take action that can help you secure your financial future. 1
    • Common Goals, Unique Challeng es Common Goals, Unique Challenges 2 Women and men share the same financial goals. But they face different financial challenges. Research shows that the genders also tend to approach investing in different ways. That’s why we tailored this presentation just for women. 2
    • Facing unique financial challenges lower % of what men receive Time Out of the pension Workforce Social Security Results in: income Sour ce: Social Secur ity Administr ation, 2004; U.S. Depar tment of Labor ; Institute for Women’s Policy Resear ch, 2005. 3 Women face some unique financial challenges, especially when it comes to their working lives. The average woman spends 15% of her career years out of the paid workforce, which translates into: • Lower pension coverage—women receive only about 1/2 of what men receive in pension income and about 2/3 of what men receive from Social Security. • Lower income—women earn only 76 cents for every dollar earned by a man. 3
    • Facing unique financial challenges Living Longer, More Savings Needed 50% chance of living to 25% chance of living to male 85 92 age 65 50% chance of living to 25% chance of living to female 88 94 age 65 at least one person has at least one person has a 50% chance of living to a 25% chance of living to couples 92 97 age 65 Sour ce: Annuity 2000 Mor tality Table, Society of Actuar ies. Figur es assume you ar e in good health. 4 The average woman is likely to need to save more money for retirement because she can expect to live longer than the average man. 4
    • Facing unique financial challenges Nine Out of Ten Women Will Be Solely Responsible for Their Own Finances Sour ces: National Center for Women and Retir ement Resear ch; U.S. Bur eau of the Census, 2005. 5 Women are more likely than men to live alone in retirement. • The average age of widowhood is 56. • The divorce rate for first marriages is 50%, for second marriages it is 60%. • At some point in their lives, nine out of 10 women will be solely responsible for their own finances. 5
    • Facing unique financial challenges Greater Healthcare costs and healthcare spending are rising faster than the annual rate of inflation Health Care 8.2% 4.3% Needs 2.8% annual healthcare healthcare inflation inflation spending Sour ce: U.S. Bur eau of Labor Statistics, 2005. 6 A woman’s healthcare needs are likely to be greater than a man’s since women live longer. With healthcare costs rising faster than the annual rate of inflation—and healthcare spending rising even faster—it puts an additional strain on a woman’s retirement savings. 6
    • Facing unique financial challenges knowledgeable about women men Women investing Trail Men on Investing long-term strategies Knowledge basic economic facts Sour ce: Matthew Gr eenwald & Associates Sur vey, July/August 2004. 7 Women: • Score lower than men on their knowledge of investing and how the financial markets work. • Are less familiar than men with long-term strategies, such as dollar cost averaging. • Are less likely to know basic economic facts, such as the historical rate of inflation. 7
    • Facing unique financial challenges Women Investment returns for major asset classes, 9/30/80-9/30/05 Invest More less risk, more risk, Conservatively lower returns higher returns 12.8% 9.6% Sour ce: Lipper , 2005. This infor mation is hypothetical and for illustr ative pur poses only. It does not r eflect any par ticular investment. Equity secur ities ar e mor e volatile than bonds 6.1% and subject to gr eater r isks. Bonds ar e subject to inter est r ate, pr ice and cr edit r isks. When inter est r ates r ise, bond pr ices gener ally fall. Tr easur y bill r etur n r epr esented by the Tr easur y Bill 1-Year Index. Tr easur y bills ar e guar anteed by Treasury bills Investment Common stocks the U.S. gover nment and, if held to matur ity, they offer a grade bonds fixed r ate of r etur n and fixed pr incipal value. Investment gr ade bond r etur n r epr esented by the Lehman Br other s Aggr egate Bond Index; stock r etur n r epr esented by the Standar d & Poor ’s 500 Index. It is not possible to invest 8 dir ectly in an index. According to the National Center for Women and Retirement Research, women tend to invest more conservatively than men. They tend to favor fixed income securities that are less likely to keep up with inflation over time. They tend to shy away from more aggressive investments that are more risky, but also have the potential for higher returns. 8
    • Building on unique advantages Advantage: more likely to women men have a Women financial strategy make impulsive decisions find it hard to admit mistakes Sour ce: Matthew Gr eenwald & Associates Sur vey, 2004. 9 However, women exhibit behavior that can be advantageous in achieving investment success. • Women are more likely to have a formal financial strategy. • They are less likely to make impulsive decisions that turn out poorly. • And when they do make a mistake, they find it easier to let go. 9
    • Building on unique advantages Women More women involved in investment decisions Gaining 2004 56% Ground 1996 21% % of women as co-decision maker Sour ce: Investment Company Institute, Profile of M utual Fund Shareholders, 1996 and 2004. 10 Women have also made great strides in their role as investment decision maker. • Take a look at this bar chart. It shows that the percentage of households in which women share responsibility for investment decision making has more than doubled over the past nine years—from 21% in 1996 to 56% in 2004. • The data is based on an annual survey of U.S. households that own mutual funds. 10
    • Taking action for financial success Five Steps Toward Financial Success 1 Establish good credit 2 Join employer tax-deferred retirement plan 3 Invest regularly 4 Create a financial strategy 5 Work with a financial professional 11 What can you do to put these unique advantages to work to secure your financial future? Here are five steps you can take now. 11
    • Taking action for financial success Establish Good Credit in Your Own Name • Credit card in your name • Checking or savings account in your name only 12 Step number one. Whether you are single or married, working in or out of the home, it’s essential to establish credit in your own name and maintain good credit. You can do this by having at least one credit card in your name and paying your balance on time. It’s also a good idea to maintain a checking or savings account in your name. 12
    • Taking action for financial success Join Your Employer’s Retirement Plan • Tax-deferral • Matching funds Sour ce: Thomson Financial, calculated by BlackRock, 2005. This infor mation is hypothetical and for illustr ative pur poses only. It does not r eflect any par ticular investment. Gener ally, mutual funds do not offer a fixed r ate of r etur n. An investor ’s pr incipal is not guar anteed or pr otected fr om decline. The gr owth of your assets will be based on an actual r ate of r etur n pr ovided by the investment you choose. 13 Even if you are just out of college, you will need to begin to save now for retirement. Many employers offer to match the money you set aside. The most common match is 50 cents for every dollar you contribute, up to 6% of your pay. Don’t pass it by. In your employer’s plan, retirement savings compound more quickly because they can grow tax-deferred. Contributions you make may also reduce current income tax. 13
    • Taking action for financial success Invest Regularly; Start Today Sour ce: Thomson Financial, 2005. A fund’s shar e pr ice, yield and r etur n will fluctuate and you may have a gain or loss when you sell your shar es. This infor mation is hypothetical and for illustr ative pur poses only. It does not r eflect any par ticular investment. 14 If you begin investing a regular amount in your employer’s tax-deferred retirement plan or in an IRA, and your money grows tax-deferred at an annual rate of 7%, you can build a substantial nest egg over the next 10 to 20 years, as this chart shows. You can accumulate more than $102,000 for retirement by investing just $200 a month, if your investments earn 7% annually. With a higher amount of savings you could accumulate substantially more for retirement. 14
    • Taking action for financial success Create a Financial Strategy • Save regularly • Allocate your assets • Choose your investments • Monitor and rebalance your portfolio 15 It’s a lot easier to reach your goals if you have a strategy that includes: • Regular savings • Asset allocation that shows how to divide your investments among different types of funds • Specific investments • Monitoring and rebalancing your portfolio to keep it on track 15
    • Indices used in this seminar Indices used in this seminar The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index composed of more than 5,000 investment-grade taxable bonds. The Standard & Poor’s 500® Index is composed of selected common stocks, most of which are listed on the New York Stock Exchange, and is focused on the large cap segment of the market, with over 80% coverage of U.S. equities. Treasury Bill 1-Year Index includes one-year instruments. The index is derived from secondary market interest rates as published by the Federal Reserve Bank in release H.15 (519). 16 16
    • Taking action for financial success Work with a Financial Professional to Take Charge of your Financial Future… and can help 800-882-0052 | www.blackrock.com You should consider the investment objectives, risks, charges and expenses of the fund(s) carefully before investing. For complete information about any of the BlackRock funds, including objectives, risks, charges and expenses, you may obtain a prospectus from BlackRock Distributors, Inc., 760 Moore Road, King of Prussia, PA 19406. 800-882-0052. Please read the prospectus carefully before you invest or send money. BlackRock Distr ibutor s, Inc. is the distr ibutor of 50 mutual funds. Print Seminar and Speaker Notes | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | 17 With so much riding on financial strategy, most investors choose to work with a financial professional. In fact, one reason that women are reported to be more likely to have a financial strategy is that they are more likely to have a primary financial advisor. When you work with an advisor, you gain access to professional knowledge, expertise and advice. Your advisor can help you take action—and take charge of your financial future. 17