2012年5月9日 星期三
2012年1月2日 星期一
Professional Women and a Secure Retirement
For millions of aging Americans, it starts by examining the 401(k) statement. Their retirement savings plan has gone nowhere for more than a decade. Their mood darkens when they think about their debts (too many) and their savings (too little). The harsh recession has taken a toll on households headed by people aged 55 to 64, who have seen their wealth—net equity in homes and financial assets combined—fall 13.7 percent, to an average $222,300, since the recession hit. “We’re in a mess when it comes to retirement,” says Steven Sass, program director of the Financial Security Project at the Center for Retirement Research at Boston College.
His comment seems especially true for women. They earned less than men throughout their work lives, and they were more likely to take a break to raise children. The wage penalty shows up in an average retirement income for women 65 and older in 2009 that was 57 percent less than for men of the same age group—$21,519 vs. $37,509, according to the MetLife Study of Women, Retirement, & the Extra-Long Life. Women face the prospect of paying bills much longer than men, since those reaching age 60 have an average remaining life expectancy of 23.8 years vs. 20.6 years for men. Millions of women have labored in low-wage service jobs without pensions. In 2010, three out of five women expressed “a lot” or “a fair amount” of worry about not having enough to live on in retirement, according to a survey by the Institute for Women’s Policy Research.
Nevertheless, it’s underappreciated how much better one large cohort of aging boomers should do financially during the traditional retirement years: The college-educated stalwarts of the feminist movement. A generation of well-educated career women is nearing retirement for the first time. It’s the group that marked the revolutionary shift from earning money because they and their families needed it to embracing working because it defined “one’s fundamental identity and societal worth,” said Claudia Goldin, economic historian at Harvard University, in her 2006 Richard T. Ely lecture at the American Economics Assn. annual meeting. “It involved a change from ‘jobs’ to ‘careers.’” They’re poised to flourish in their elder years, at least compared with most everyone else.
It’s an accomplished generation with plenty of financial and human capital. Although the earnings gap between college-educated men and their female counterparts remains, it has narrowed. Since 1979, earnings for women with college degrees rose 33 percent, while those of their male peers increased 22 percent. Women make up 51.5 percent of all management, professional, and related positions, somewhat higher than women’s share of total employment, which is 47 percent. Among full-time, full-year workers, a higher percentage of women than men have participated in employer-sponsored retirement plans since 2001, according to the Employee Benefits Research Institute. In 2010, it was 55.5 percent for women and 53.8 percent for men. For women earning $75,000 or more, 72.5 percent were in a retirement plan (69.8 percent for men), and for those with a paycheck between $50,000 and $75,000, it was 70 percent (64.1 percent for men).
Financial stereotypes about women and money are remarkably durable. All one needs to do is peruse the personal finance section of a bookstore, and you’ll see a number of patronizing titles, such as Shoo, Jimmy Choo!: The Modern Girl’s Guide to Spending Less and Saving More and Does This Make My Assets Look Fat?: A Woman’s Guide to Finding Financial Empowerment and Success. The research suggests otherwise, however. For example, a University of Michigan Retirement Research Center study found that men trade 56 percent more than their female counterparts in 401(k) plans, and the more men traded, the worse they did.
2011年5月11日 星期三
Rules for Investing- How To Build a Portfolio of Safe, Secure Investments
Developing an Investment Plan:
In order to invest wisely, you need to have a suitable investment plan that will ensure the appropriate amount of growth for you. Your investments will also need to be safe and easy to manage.
The first step in developing an investment plan is to identify what type of an investor you are. Investor types are often determined by their stages in life. Here is a guide:
- Single person under 40 years old. Focus: Long-term investments, medium to high risk. Emphasis: capital gain, compound growth.
- Two-income married couple, no children, aged 20 to 40 years. Focus: Long-term investments, medium to high risk. Emphasis: capital gain, compound growth.
- One-income family, young children, aged 20 to 40 years. Focus: Long-term investments, low to medium risk. Emphasis: compound growth.
- Single person, aged 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- Married couple with adolescent or independent children, aged 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- All investors, aged 60 and over. Focus: Short to medium-term investments, low risk. Emphasis: Income.
The following are examples of investment portfolio mixes for the various types of investors.
Low Risk Investments:
Low risk investments are predominately cash, fixed interest and superannuation. This has the lowest risk of all investments but has also the lowest return - in today's market, approximately 3% to 6% per annum. Fixed interest includes cash, cash management trusts and bonds. They return approximately 5% to 10% per annum, sometimes as high as 15% if you invest in global bonds in good markets.
Superannuation returns and risk profiles vary from institution to institution, however the best and safest usually return on average 10% per annum.
Medium Risk Investments:
Medium risk investments include property and non-speculative shares. Diversified funds, which invest in a range of asset groups, are also considered to have medium risk profiles. Average returns from these types of investments will range from 8% to 15% per annum.
I also like to include the broad spectrum of mutual funds, to be discussed later, in the range of medium risk investments. Some can return up to 25% and more depending on the fund type and managers.
High Risk Investments:
High risk investments include all speculative shares, futures and any other type of investment that is purely speculative by nature. Because with these types of investments we are betting on whether the price will go up, or sometimes down, I often classify this as a form of gambling. Accordingly, the returns are unlimited but so is the ability to lose the total money invested.
The basic rule for investing in highly speculative stock is to build in "sell-out" thresholds, three up and three down. For example, if you buy a stock at $20.00 per share, your sell-out thresholds might be:
Sell out threshold 3 $30.00
Sell out threshold 2 $25.00
Sell out threshold 1 $22.50
Buy $20.00
Sell out threshold -1 $17.50
Sell-out threshold -2 $15.00
Sell-out threshold -3 $10.00
Each time your stock reaches one of the threshold levels, you sell a third of your stock.
If the stock starts to rise, you sell a third at $22.50 and then another third at $25.00 and so forth. If the stock starts to fall, you also sell a third at $17.50, then another third at $15.00 and the final third at $10.00. In this way, you will never lose all your money, however you have also put a cap on the total profit you will make on the investment. This I have found to be the best and safest method for investing in speculative shares. In 1987, my husband and I were saved from the severe losses of the Wall Street crash because we were well and truly out of the market by taking our profits beforehand. Like all systems, this strategy will only work as long as you obey the rules and do not get too greedy.
Mutual Funds:
Mutual Funds are a selection of investments that are professionally managed by a financial institution or organization. These institutions have a wide range of specialists, researchers and advisor's who devote their time to ensuring that the fund invests in the best companies and assets.
As well as the advantage of having experts manage your investments, managed funds also give you the ability to invest in a wide range of shares, property or fixed interest markets, either locally or internationally, for as small an outlay as $1,000. In the latter case, they also require a 'savings plan' where you agree to deposit additional capital of a minimum $100.00 per month.
Because managed funds cover the whole spectrum of investment risk profiles, you can easily cover your preferred investment portfolio, as described above, by investing in several different funds.
Putting Together Your Investment Program:
After you have identified your investment type, you need to either seek a good financial advisor or devote your own time in researching investment options.
Shares have traditionally outperformed other asset groups over time. However, share markets can widely fluctuate in the short term, so any entry into the market should always be done with a long-term view of up to 10 years. Even the best managed share funds can fall if the stock market crashes or enters a severe downward cycle. As long as you ensure that you are with a reputable fund with good managers and are willing to ride the 'waves', your investment will do well in the long-term. If you are in the short-term, low risk category then your investments should be in the safer, more stable areas with lower returns.
Rules for Investing:
Investing may seem daunting for a lot of people. Maybe you have tried it once and failed, or maybe you are simply frightened of losing your money.
To avoid losing any capital, you simply need to be aware of the main pitfalls and always avoid them. The simple, reliable rules for investing are:
1. Have a plan. Always ensure that you or your financial advisor draws up an appropriate investment strategy for you that incorporates your risk profile, timeframes and financial goals. As foolish as it seems, many people plunge headfirst into investing without thoroughly working through these fundamental issues.
2. Don't put all your eggs in one basket. Obvious advice, but many people fail to follow it. Many people think that they are on the right financial track by paying off the mortgage on their family home and then buying another property for investment purposes. Think about it! You have put all of your financial eggs in one asset basket - property. What happens if the property market collapses? Despite common thinking that this is a safe way to invest, the outcome is very risky. You have invested all of your well-earned money into only one area.
3. Build in appropriate timeframes. There is an old saying, "When the tea lady starts to invest in the stock market, it's time to get out." What this means is, when the share market is so high that everyone starts to clamber on board, it has probably reached its peak. There are two ways of successful investment timing. The first is to always pick the low-end of the market to buy and the high-end of the market to sell. This is extremely hard to do. Even the best-informed experts have trouble. The second way is to choose good investments and stay with them over the long-term (say 10 years or more) and ride the waves of the market. For safe, easy investing, choose the second method. Do not buy into the top-end of the market and sell once it starts to fall. You will definitely lose money this way.
4. Avoid high-risk investments. These include risky business ventures, highly speculative stock, tax avoidance schemes or too-good-to-be-true propositions that promise unusually high returns.
5. Avoid borrowing for your investments. Although some financial advisors advocate "gearing your investments", this can be fraught with danger. Gearing means to borrow. If borrowing for investments takes you over your 40% fixed costs margin, you will be cutting it too fine, particularly if you lose your current income level.
6. Stay with the traditional and known. As described in this chapter, the best and surest investments are fixed interest, property and shares. Work out the optimum mix for your investment profile, have a safe plan to work with and you can't go wrong.
Ann Marosy is an accountant, consultant, and motivational speaker. She was formally the Financial Controller of an Aust subsidiary of the Fortune 500 Company, Jardine Matheson; Finalist of SA Executive Woman of the Year and is the author of 'The Money Program: How to Manage the 6 Stages of Wealth' and 'Money Rules: The 7 Simple Rules of Money Management'.
Visit her website at http://www.moneta.com.au