Millennial women are becoming more empowered than before. The resident labour force participation rate for women aged 20-39 years old is an average of 81 percent, a 5 percent increase from 2009.
More of us are also pursuing higher education and in fact, there is a 10 percent more women in higher education in Singapore than men.
However, there is still one large gap which has not been filled – The Investment Gap.
When it comes to managing our personal finances, Millennial women in Singapore are far behind, with just 58 percent of millennial women owning investments! This puts us far behind millennial women from other countries, with 84 percent and 74 percent of women in Hong Kong investing, according to a 2019 survey by BlackRock.
Besides lagging behind in investing, we also fare poorly in financial literacy. 1 in 2 women surveyed did not hit the threshold for being financially literate, based on a basic test of numeracy, risk diversification, inflation and compound interest.
While we tend to take care of the daily bills and budget, 73 percent of millennial women still defer investing and long term financial planning to their partners.
Many factors were cited for why women tend to defer to men in long term financial planning and investing. Some believe that their partner knew more about the topic and were even actively discouraged by their partners to take an interest.
However, is it really wise to let your achievement in life be limited by someone else’s insecurities or underestimation of your potential?
In my view, this is a missed opportunity for many of us! I myself have benefited a lot from investing and this has helped me achieve $100,000 in savings before 30 years old.
If you are a millennial woman who has not gotten started, here are some good reasons to:
1. Don’t let our hard earned money depreciate
Singapore millennials have among the worst retirement prospects of any generation. Only eight percent of people surveyed felt that our generation is well placed for a comfortable retirement.
There are two ways we can earn more money.
One is through working and increasing your take-home salary. However, this method is hardly scalable because you will be trading money for time.
If not complemented with investing, the money we earn depreciates over time. Think about how the chicken macaroni in our canteen used to be $0.50 when we were in primary school, today, it is probably $2-3 for the same bowl.
Of course, there are many high interest savings accounts but they grow at most 2-3% per annum. How do you get better returns above that?
The answer is through investing in vehicles such as stocks, bonds, commodities and cryptocurrency.
2. It is risky to rely on someone else
Despite having the same educational opportunities, many millennial women are still told by their parents to marry a financially stable man so that they have someone to take care of them.
Men are told that they should be the main provider as well and this leads to stress or even mental illness and suicide when they feel they are unable to live up to their ‘masculine’ roles of providing for their families.
This sexist view harms both genders and puts women at risk.
Imagine being 40 years old and having two children to take care of. Your husband suddenly has a mistress or punches you during an argument, and you refuse to forgive him.
With a huge investment portfolio under your name, you can make a decision to leave, buy your own house and support your two children.
However, with only savings that do not grow as fast as investments, you’re likely to have to ‘suck thumb’ and put up with this unfavourable situation. With the pressures of supporting your children and dealing with this horrible guy, you may develop depression; drink or smoke excessively or attempt suicide.
Which woman do you want to be? I am sure many of us do not wish to be the latter.
To simply put – How can you rely on someone else to manage your finances for you? What if he leaves you for another woman? What if the relationship turns abusive?
Say, even if you end up marrying a super respectful and loyal man…What if he can no longer work suddenly due to mental or physical illness, accidents or being laid off by his company? Men after all have a higher risk of accidents and to be retrenched in their 40s.
How are you going to take care of him and shower him with the same love he has given you? How are you going to provide for him?
No one can predict the future. However, we can empower ourselves so that we can step up to help when the time calls for it. We can plan ahead so that we can walk away from situations that are hurting or not serving us – whether that’s a bad job, bad boss, bad situation or bad relationship. 🙂
3. We could potentially be better than men in investing
Other than cultural reasons, one of the reasons why women tend to not invest is because 82 percent of women believe that men knew more about investing and financial planning.
However, studies have shown that when we invest, we tend to outperform men.
The Warwick Business School surveyed 2,456 investors, 450 of which were female, between April 2012 and July 2016. The group of women outperformed males in the study by about 1.2% per year.
He believes they tend to be more vulnerable to impulsive behavior such as buying more in good times to capture more gains, or sell more in tough times to prevent future losses.
A separate study by Hargreaves Lansdown, the UK’s biggest consumer investment platform, also found that women investors earned an average 0.81 percent more than men over a three-year period. He points out that if this pattern were to continue for 30 years, the average woman would end up with a portfolio worth 25 percent more than the average man.
While many few that finance is all about math and difficult to learn, that is hardly true. Anyone can learn. The SG Budget Babe, The Woke Salaryman and I all studied arts and social science at university but can now confidently blog and discuss finance.
I regularly receive emails and DMs on Instagram asking me about how to get started. If you’re interested, here are three steps you can take as a beginner
1. Educate yourself – Start reading, attending events & courses
There are many free basic courses out there which I found useful.
If you’re keen to learn to invest, my friends Jonathan and Kelvin have some free resources for you. If you wish to understand more about the different asset classes like bond, stocks and ETFs, please sign up for the free webinar here. If you are interested to learn how to analyze companies, you can sign up for the other free webinar here.
Once you get familiarised with the basics and would like to upskill, you can consider taking courses.
A popular training institute in Singapore is Dr. Wealth. Their courses were taken by many millennial financial bloggers such as Sg Budget Babe, The Woke Salaryman and myself. Check out the list of investing courses available as well as reviews here.
In addition to courses, I recommend you complement them with building of knowledge and following inspirational individuals.
I am personally a huge fan of CNBC’s Make-it. This was launched by CNBC to target younger, business minded people who are coming to CNBC to help them climb the career ladder and ultimately get ahead.
2. Beginners can start with a Roboadvisor
If you have yet to learn about how to pick stocks – which would take some time – why not start with Roboadvisers?
If you’re keen to invest your CPF money, you can also check out Endowus.
Many of these digital platforms are easy to use, have much lower risk than purchasing individual stocks and have low fees.
I personally use them as well. Every month when my pay cheque comes in, I transfer some of my money to my expenses account and another portion goes automatically into my Roboadviser.
If you are unsure on which one to use, please refer to the reviews here.
3. Keep track of everything and review it on a weekly or monthly basis
If you are trying to achieve a goal, the more often that you monitor your progress, the greater the likelihood that you will succeed.
Once you start investing your money in digital platforms; buying growth stocks and commodities, it becomes harder to keep track of them all.
This is what I was facing when I was trying to build my portfolio to be similar to that of Ray Dalio’s all-weather portfolio.
To help others like myself, I have created a free and super useful excel template to help you to track your personal finances in one platform and single source of truth. This template is specifically designed for a Millennial in Singapore.
I personally use it as well to monitor where all my money is, how it is growing overtime and to make sure I am on track.
If you take care of your money, your money will take care of you as well.