More women should be investing for the future – Our Communities

Dear Money Lady:

I am a single mom and wondering how to get started investing. I have my savings in a high interest bank account and not sure how to get started.

Jan

Dear Jan,

I am pleased to get your question. More women should be looking at investing for the future but unfortunately the Canadian stats on women investing today are quite dismal. Because we still have a gender wage gap, it makes it all the more necessary for women to invest today.

Here are the stats — women on average earn 20 per cent less than men. It is estimated that, over an average woman’s working career, she will earn $450,000 less than the average white man will earn over his lifetime.

This reality makes it imperative, especially for single women, to invest sooner so they can use the benefit of time to grow their investments, (through dividends and compounding). Women tend to be much more conservative with their investment decisions than men and typically feel intimidated by a financial advisory community of mostly men. Ladies, you are smart and good with money; you just need to ensure you invest enough of your money to provide for the future you want.

People often pursue complicated investment strategies, believing the complexity will give them a better return. Some advisors will take it a step further, talking about the amount of time they must spend evaluating different companies for things like pricing, dividends and growth potential, to convince clients that their investment strategy is the best. However, after 35 years in the industry, I have found that there is no need for complexity — simple is still the best way to go. So, here is how you should get started. I want you to choose three or four ETF Index Funds (exchange traded funds). Index funds are a great way to get into the market because they’re professionally managed funds that follow a benchmark index. They provide superior diversification, lower risk and lower costs. You want to choose different asset types — U.S. and/or Canadian stock; Canadian bonds; international stock. Stay away from emerging markets for now and stick to funds that follow the NASDAQ and the S&P. Here are some funds you could check out:

• Fidelity ZERO Large Cap Index;

• BMO S&P 500 Index ETF;

• TD Active Global Dividend ETF;

• TD Active US Dividend ETF;

• RBC Canadian Index ETF;

• Vanguard S&P 500 ETF;

• Vanguard Total Stock Market ETF;

• Vanguard Conservative ETF;

• Vanguard Global Momentum ETF.

History has shown that, over the long term, index funds outperform actively managed funds, and they are considered to be the low-cost building blocks for a typical retirement portfolio. Saving money in a high-interest savings account is good for emergencies or short-term commitments but, to keep up with inflation, you will need to invest and get your money working for you. Women live longer than men and will most likely need more money to support their retirement. Don’t wait – get started now.

Christine Ibbotson
Ask the Money Lady

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

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