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Investing in Malaysia – How Women Earn Higher Returns

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“Do some research and trust your instincts. When it comes to investing, it’s clear that women are doing something right.” — Marguerita Cheng, CEO of Blue Ocean Global Wealth

Did you know that studies have found that women are better investors than men?

A 2017 study by Fidelity Investment found that women earn higher returns on their investments than their male counterparts by about 0.4%.

A similar study done by Warwick Business School in 2018 found that women tend to outperform men at investing by 1.8%.

There are many other studies that consistently draw similar conclusions over many years. So for the women out there, what does this tell you? Here are five reasons why it is crucial for women to think about how to start investing:

1. Retire in Style

Many women are aware of their longevity – women tend to live longer than men. This can be either good or bad news. Women can agree that the most important thing is to enjoy life and be happy – it’s all that matters. And women want this to last till the end of their lives.

That may mean having a beautiful home with family around. It may mean having access and choice to either simple or extravagant luxuries. Whatever your retirement dreams look like, one thing is for sure: it definitely requires money!

However, it’s understood that later in life, the biggest issue is health and its associated costs. Thus, it’s crucial to ensure your retirement funds are sufficient to support all these factors.

There’s a serious consideration every woman needs to make – to either work hard throughout the years or being smart by making your accumulated money work for you, even when you’re sleeping at night. 

The choice is up to you!

2. Fulfilling Life Priorities

As women, we may have a lot of things going on in our mind. We think about the many people around us, especially those that we love the most.

For mothers, we tend to feel anxious about our kids –  whether they’re doing fine or if they can survive if we’re no longer around. We wish for them to get the best education possible and prepare them for this.

Such behaviour results in many women taking charge and adopting a more long-term perspective rather than only focusing on the here and now.

If you’ve made these goals clear and have an action plan, the chances of sticking to it is higher. It means that you eliminate the emotional part and focus on the result. This is indeed the recipe for successful investors. Investing may no longer sound like gambling, but a requirement.

So the question now is, are you willing to take charge or just leave the future to circumstance?

3. Stop Making Losses Everyday – Start Investing!

Yes, that’s exactly what happens when you decide to save your money without investing it. You’re probably aware that in investing, there’s a chance to make a profit, but there’s a possibility of losses too.

However, what really happens when you choose just to save instead of invest is that inflation will erode the purchasing power of your money. For example, your RM3,000 monthly spending today will be equivalent to RM6,200 monthly in 15 years of time with an inflation rate of 5%.   

Can we women address this just by working hard and saving alone?

Can you ensure your salary will double every 15 years just to maintain your lifestyle?

What would happen if your monthly needs also increase due to additional discretionary and non-discretionary expenses at that future time?

A survey conducted by UOB Malaysia in 2017 found that credit card spending amongst Malaysian women grew 129% in 5 years from 2011 to 2016, which is much higher compared to men at 71%.

Savings are needed for emergencies, but saving and investing can complement one another by supporting your overall financial standing, which is key!

4. Power of Compounding

If you can understand what the effect of inflation does to the true value of money, it’s much easier to understand the effect of compounding when you invest.

Here’s an example – say you can consistently start investing RM3,000 yearly (RM250 monthly) for 15 years.

At an annualised return of 5% per year, this would add up to a total of approximately RM65,000 as compared to pure savings of only RM45,000.

The additional RM20,000 you made here is the investment return as a result of compounding. 

Here’s another important fact – if you keep investing this amount for a longer period of 30 years for your retirement, what would you expect this to accumulate to? The answer is close to RM200,000 instead of just RM90,000!

5. Invest Confidently, Live Confidently

Life is always full of surprises, good and bad. While there are things that are out of our control, we should focus on what we can do to take charge before it happens.

Thus, the amount of time that you’re willing to spend upskilling yourself on the subject of investment could turn out to be life-saving.

To start investing may not be as complicated as you think once you begin to understand how to do it. When you have a better grasp of it, you will have greater confidence, especially when you start to see your money grow.

Conclusion

There needs to be a paradigm shift on the mentality / mindset about financial literacy in general, as well as investing. With the improved socio-economic status among women, they should expand their horizon beyond family, fashion and profession and get more involved in their financial wellbeing through investment as it can be extremely rewarding.

If you’re worried about the risk and exposure, allocate small amounts of money first but be consistent. There are plenty of low-risk investments that offer good returns.

This could lead to a better lifestyle and prepare you better to face any uncertainty that may come!

About the author

Helwa Sofni Md Isa (IFP) is a Licensed Financial Planner. Her expertise is in holistic financial planning and embracing women empowerment. Helwa truly believes that women are beyond capable in gaining total financial confidence with the right mindset and sound knowledge. She can be contacted at helwa@wealthvantage.com.my

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