Women and Wealth

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When it comes to money, women rule. Literally.

Think about it: A woman holds the top job at the Federal Reserve, the Securities and Exchange Commission, the Office of Management and Budget, and the Social Security Administration.

At the International Monetary Fund, Christine Lagarde is the managing director.

These women run large, complex organizations that decide how money is invested, budgeted, saved and spent. They shape the rules that govern the global economy.

But over on Wall Street and in Silicon Valley, men still do more risk-taking.

Why is that?

And while U.S. women’s earnings are catching up — now at 81 cents for every dollar a man makes — many say they lack confidence about investing.

Why is that?

The above is from NPR’s interesting and intelligent series called  The Changing Lives of Women. The series includes stories and conversations, currently focused on the economic lives of women in this country and overseas.  Among the topics they will be covering: Women’s Role in the Global Economy, Women and Personal Investing, Women and Wall Street, Women and Negotiating, Women and Business School and more.  Check out this smart must read and listen here.


A New Way of Thinking


Happiness.  What is it and where does one find it?  According to Byron Katie, one path to happiness is through something she calls The Work, a way of thinking that can help you change your outlook and your life.  

Katie’s countless fans and followers include Oprah and Tony Robbins.  So what exactly does she do?  As The Huffington Post said, “Byron Katie is leading a revolution of the mind. What she’s offering is a method of self-inquiry that allows us to free ourselves from the anger and negativity we feel when we accept our thoughts, unquestioned, as true.”

Our goal, as always, is a more positive outlook so of course we were intrigued.  To read more about Byron Katie, check out this Huffington Post article here or her website here.


Dialing it Back

1Does over working hold women back?  A recent article in Forbes thinks so.  Is it because women are taking on more than their share? Or because they have difficulty saying no?  “The answer is probably both,” says Dr. Peggy Drexler, an author, Forbes contributor and an assistant professor of psychology in psychiatry, Weill Medical College, Cornell University, who writes about gender, work and the modern family.

What we know: a historically high number of women are now the primary breadwinners; thirty-seven percent of wives out earn their husbands.  Yet at the same time that women have taken on these financial responsibilities, their domestic responsibilities have not gone down.  Add a disparity in pay –– women are still paid just 81% of what a man makes –– and you’ve got women who are working longer hours to earn just as much as a man and wives as primary breadwinners who do far too much housework.

And as the article says, “women keep saying yes to work, to family, to most everything.”  Interesting and eye opening.  Read the full article here.

Mars and Venus

mars, venusInteresting article in The New York Times about the very different approach to investing by men and women, aptly titled Mars, Venus and the Handling of Money.  At the core of the article?  As The Times puts it, “the data-driven approach of traditional firms is alienating many women. And the way that women prefer to deal with money — holistically, emotionally — can be baffling to the guys on Wall Street.”  They go on to say, “scores of recent studies show that we’re in the midst of a tectonic gender shift around money: It’s big, slow-moving and ultimately a game-changer. Women have money now, real money: They earn a combined $29 trillion worldwide, according to the Boston Consulting Group, about $3 trillion of that in the United States. And while men still earn more, women control nearly three-quarters of all purchasing decisions. Judging by other economic indicators, those numbers will only grow.”

We couldn’t agree more.  For the complete article, go here.


Women Can Do Anything


“Women can do anything.”  So said Christine Lagarde, the head of the International Monetary Fund, when asked recently to comment on the significance of  Janet Yellen’s appointment to head the Federal Reserve.  Of course, we wholeheartedly agree.  These two women now sit at the top of the international financial world and usher in a new era for women in finance.  A step in the right direction, we think.

A few facts about Janet Yellen, along with some thoughts from two former colleagues, a professor and a congressman:

• Yellen became interested in economics as a way of thinking logically about how to help people.

• “She makes an argument on the merits and she sticks with it,” said Alan Blinder, a Princeton economics professor about Yellen. “And she’s good at articulating an argument in a way that doesn’t leave people on the other side hopping mad at her.”

• Kevin Hassett, a staff economist at the Fed when Ms. Yellen arrived in 1994, recalled that she started to eat lunch regularly in the staff cafeteria to subvert the hierarchical system that limited communication between Fed governors and the vast army of research economists. Other governors had tried to change the rules but Ms. Yellen, he said, found a way around them. “It showed a kind of grace and wisdom that is very unusual in Washington,” said Mr. Hassett.

• She studied at Yale under the Nobel laureate James Tobin, who said that Yellen had “a genius for expressing complicated arguments simply and clearly.”

• During a recent marathon appearance before the House Financial Services Committee, a congressman told Yellen she was “smart, steady and not very exciting,” to which Yellen replied,  “Thank you. I appreciate that.”

Read more on Yellen’s appointment in Forbes here, and in The Week here.

*above quotes from The New York Times and Forbes.  

The Basics

chapter one

We’re big fans of The Investment Answer by Daniel C. Goldie and Gordon S. Murray and thought it would be helpful to highlight some of their fantastic guidance chapter by chapter.  So here goes, chapter one: The Do-It-Yourself Decision.

According to The Investment Answer, Do-It-Yourself (DIY), is best done with a professional by your side.  As they wisely point out, most people would never make serious medical decisions without consulting a doctor and they think financial health should be treated the same way — with the appropriate professionals by your side.  A quick rundown of the chapter:

• the average stock fund investor barely beats inflation and the average bond investor barely grows their money at all

• the emotional cycle of investing undermines our best intentions (see our post from October 22 for more on emotional investing)

• many financial institutions still take far too big of a cut as you move your money from one hyped investment to another

• avoid retail brokers whose first duty is to their firm, not you, and every trade or stock top offered to you generates commissions for them

• independent, fee-only advisors are the best option; they are not on commission or compensated for moving your money back and forth between investments; rather, their fee is calculated as a percentage of the money they are managing for you

• an independent, fee-only advisor should use a third-party custodian (like Charles Schwab or Fidelity) to serve as the safe keepers of your investments

Questions?  Please email us.  For more about the book, go here.  And stay tuned for chapter two.


Deadline: December 31


The end of the year means some crucial financial deadlines are fast approaching.  Check out this quick and easy checklist from Forbes magazine — from IRA contributions to 529 college savings plans to charitable donations and more — all with a deadline of December 31.  Definitely worth a look here.

A Season of Giving

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In this season of giving, we thought we’d highlight some very worthwhile causes that are all about empowering girls and women –– something we feel strongly about.  A quick rundown:

Half the Sky Movement: a passionate call to arms against our era’s most pervasive human rights violation: the oppression of women and girls in the developing world. Based on the bestselling book by New York Times columnist Nick Kristof, it’s a must read.

The Girl Effect: 250 million adolescent girls live in poverty. By investing in their economic potential through education, the cycle of poverty can be broken.  A girl’s success is the world’s success.

Kiva: micro-finance projects that for as little as $25 can change the course of a woman’s life.

Read about their good work on the links provided above, spread the word, get involved.

Wishing you a warm and happy holiday season!


Today’s Stock Market: Proceed with Caution

quoteHedge-fund manager Carl Icahn says he is “very cautious” on U.S. stocks, which “could easily have a big drop” from their new record highs. Ben Inker, a director at asset manager GMO, forecasts that overall, U.S. stocks will suffer losses of 2% annually, counting dividends and inflation, through 2020. Yet billionaire investor extraordinaire Warren Buffett says the U.S. stock market is valued “in a zone of reasonableness.”

So who is right?  Read more of this article from the Wall Street Journal’s Money Beat here.


Turning Daughters Into Investors

{The following is reprinted from a recent issue of the Wall Street Journal. An important conversation, we think.  Check out the  recommendations from female financial executives about how to overcome a lack of investing confidence, or how to help instill that confidence in your daughter.}

BF-AF955_12fami_G_20131011163305Women still trail men in investing confidence despite gains in pay relative to male co-workers and their own husbands, according to a slew of new research.

What makes the difference for those women who are willing to max out their 401(k) contributions, manage their individual retirement accounts or engage with their family’s financial adviser? Often, it is their parents—and their ability to see what the money they make by investing can do for the people they love.

First, some statistics: Two in five of the 600 women surveyed for Wells Fargo this past summer said they were “not at all” confident in their ability to invest, even though they had household investible assets of at least $250,000. That matters because investing confidence “seems to be the linchpin” of a number of behaviors that help women increase their savings, such has having a financial plan and a willingness to invest in stocks, in preparation for retirement, says Karen Wimbish, director of Wells Fargo’s retail retirement business.

Things aren’t looking up among women in their 20s, according to additional research sponsored by the bank. Despite their having better pay and fewer commitments outside of work to juggle, “the investing-confidence results are the same,” Ms. Wimbish says. “It’s like talking to their mothers and grandmothers.”

A June survey of 10,045 U.S. adults conducted for Ameriprise Financial found that only 47% of women contribute to a 401(k) account, compared with 55% of men. And while 46% of men say they feel on track for retirement, only 38% of women do. Also troubling: Only 45% of women said their accounts had recovered from prerecession levels, compared with 54% of men’s, raising questions about the ways in which women are allocating their savings.

Despite their rising status as primary breadwinner and “household CFO,” almost half of the 2,213 women surveyed for Allianz Life Insurance last year said that they still fear becoming a “bag lady.”

To overcome a lack of investing confidence, or to instill it in your daughter, here are some recommendations from female financial executives:

Find a mentor—or be one yourself.

Two-thirds of the so-called affluent women in the Wells Fargo survey who feel confident about investing said that someone made a point of teaching them about it. Ms. Wimbish speculates that in many cases, that teacher was the woman’s father.

Chelsea Castner, a 25-year-old personal-finance blogger in New York, says her father, a financial planner, helped her get off on the right foot, prodding her to put her babysitting money into a Roth IRA.

But when it came to saving and investing, “it wasn’t explained unless we asked,” she says. Ms. Castner wasn’t really interested, so she didn’t ask. Her brother did, and so her father spent more time teaching him about investing.

“Luckily, my dad still set me up well, but I never took it upon myself to ask why I was doing those things,” she says. “I think women feel like we don’t have to care, or want to care. But if we know it at an early age, down the road we’ll know how to take care of our money better and why.”

Emily Sanders, a managing director of United Capital Financial Advisers in Atlanta, agrees that “Dad is a huge factor in a woman’s financial independence.” Women encouraged by their fathers are much more likely to engage in financial planning, and with professionals like herself, as adults, rather than leaving those decisions up to their husbands, she says.

Connect investing to what it can accomplish.

“Women are much more keyed into what the money can do for the family. It’s much less of a scorecard for them,” Ms. Sanders says.

United Capital has developed an online tool at HonestConversations.comto help investors discover how their biases might affect their financial decisions, or what the firm refers to as “Your Money Mind.” Its advisers also have found it a useful way to get husbands and wives to start talking about money.

Getting wives, who often are mothers, to get involved in their families’ long-term financial planning, rather than delegating it to their husbands, is often the toughest part of her work, Ms. Sanders says.

“It’s not our job to scare people with gory statistics, but it is our job to help women take control of their lives,” she says. “Women often put themselves last, and when a crisis happens they’re left holding the bag.”

Ms. Sanders’s firm tries to entice female clients with tools, such as having a couple take the Your Money Mind quiz together, or setting up female-friendly events that make them more comfortable so they will ask questions later “in a more private environment,” she says.

Tap into remedial education online.

Ms. Castner, the blogger, says she has asked many friends in their 20s why they haven’t opted into their 401(k) plans.

“The answer is something like, ‘I’m too embarrassed to ask my dad what it means to me,’” she says.

What about parents of college graduates who are concerned that their daughters aren’t getting off on the right foot—but also anticipate that they might not listen to them? They could direct their kids to the bevy of personal-finance websites that have sprung up with both worksheets and educational components, Ms. Castner says, such as MintHelloWallet andPersonal Capital.

Another good resource: The website for the 401(k) plan the new worker finds so intimidating. Many workplace plans are adding tools to help employees see how their savings eventually translate into retirement paychecks.

Separately, the U.S. Department of Labor has posted its own calculator

Consider: A 27-year-old investor with a $1,000 account who contributes just $5,000 a year for 40 years would wind up with a monthly income in retirement of $3,084 a month, based on a 7% annual return and 3% inflation rate.

But if that same 27-year-old maxed out her 401(k) and IRA, she would end up with a total account balance of $2.34 million—and a retirement paycheck of $14,085 a month.