More Women Should Invest in Their Future – Our Community

Dear Money Lady:

I’m a single mom and I’m wondering how to start investing. I have money saved up in a high interest bank account but I don’t know how to get started.

Yang

Dear Jean,

I’m glad you asked the question. More women should be looking to invest for the future, but unfortunately, the statistics on women’s investments in Canada are currently very dire. There is still a gender pay gap, which makes it even more necessary for women to invest today.

Statistics show that, on average, women earn 20 percent less than men. It’s estimated that the average woman will earn $450,000 less over her working life than the average white man will earn in his lifetime.

This reality makes it imperative, especially for single women, to invest sooner so they can take advantage of time to grow their investments (through dividends and compound interest). Women tend to be much more conservative in their investment decisions than men and tend to feel intimidated by the predominantly male community of financial advisors. Ladies, you are smart and good with money. Make sure you invest enough money for the future you want.

People often pursue complex investment strategies because they believe that complexity will bring better returns. Some advisors go a step further and talk about the time they spend evaluating different companies on price, dividends, growth potential, etc. to convince their clients that their investment strategy is the best. However, after 35 years in the industry, I have realized that complexity is not necessary. Simplicity is still the best way to go. So, here is how to get started. Pick three or four ETF index funds (exchange-traded funds). Index funds are a great way to get into the market because they are professionally managed funds that follow a benchmark index. They offer good diversification, low risk, and low costs. You should choose a variety of asset types, such as US and/or Canadian stocks, Canadian bonds, and international stocks. Avoid emerging markets for now and stick to funds that follow the NASDAQ and S&P. Here are some funds you can check out:

• Fidelity ZERO Large Cap Index

• BMO S&P 500 Index ETF;

• TD Active Global Dividend ETF

• TD Active US Dividend ETF

• RBC Canada Index ETF

• Vanguard S&P 500 ETF;

• Vanguard Total Stock Market ETF

• Vanguard Conservative ETFs

• Vanguard Global Momentum ETF.

Historically, index funds have outperformed actively managed funds over the long term and are considered a low-cost component of a typical retirement portfolio. Saving money in a high-yield savings account can be a good idea for emergencies or short-term investments, but to keep up with inflation, you need to invest and put your money to work for you. Women live longer than men, so they’re more likely to need more money to support themselves in retirement. Don’t wait, get started today!

Christine Ibbotson
Ask the Money Lady

Christine Ibbotson is an author, financial writer and national radio host currently appearing on CTV Morning Live and CTV News@6. Send your money questions to her website at askthemoneylady.ca.

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