Financial independence entails being able to support oneself financially without the help of others. Using smart investment strategies to achieve financial independence is a valuable goal for people from all walks of life, but it is especially vital for women who face varying gender-specific challenges over their working life.
Financial freedom is a kind of personal empowerment, but many obstacles make it difficult for women to navigate and participate equally in the financial world.
Financial literacy and money management skills can provide women with a greater sense of confidence, making it simpler to save and invest for the future. Understanding the hurdles, and taking advantage of the guidance and resources available, can make the wealth management process smoother for female investors.
While positive initiatives advocate for gender equality, persistent social structures can be difficult to overcome.
Techniques for Achieving Financial Independence through Investment Decisions
The most effective way to establish and implement a financial strategy is to improve financial literacy.
Women are often more knowledgeable about money management than they think or give themselves credit for, and many women tend to make all or most of the household financial decisions for their family. Pair that financial intuition with education and knowledge, and you’re more than capable of taking those first steps towards financial security.
It’s critical to begin investing, budgeting, saving, and planning for retirement to achieve financial freedom, especially considering the additional gender differences and challenges women face including the gender pay gap, difficulty re-entering the workforce after children, and caring for aging parents, which often leads to an enormous difference in superannuation balances and savings in general.
But you can make the right investment decisions – especially with investment and retirement advice, from a specialist who understands and can help you plan around these challenges.
According to a recent survey, only 26% of women invest in the stock market, although nearly half of women think the market is a good investment.
However, investing can be complex, so it’s vital to be smart when considering how you can invest, it’s wise to consider some of the following:
- How you can create a diversified investment portfolio to reduce volatility and risk
- The vital role asset allocation can play in increasing your financial assets
- The past performance has no direct correlation on future results
- How you can tailor your investment products and investment decisions around your personal financial situation, needs and preferences.
Women tend to be aware of the general rules of investing but many are unsure of the full spectrum of available investment options or have reservations about their ability to invest wisely. Women can be just as effective as males when investing, and their portfolios are often even more successful.
5 Smart Investment and Wealth Creation Strategies Women Should Know
1. Gain Clarity On Your Financial Situation and How Much You want or have to Invest
Before investing, you need to ensure you have a good understanding of your current financial situation.
This includes gaining clarity on your:
- Personal and household expenses.
- Savings capacity
- emergency funds
- debts
- investment preferences and goals
All of these factors will help you gain more clarity surrounding your investment options and what your risk appetite for different types of investments are
2. Decide What Kind of Investor You Would Like to Be
The next smart step is to decide whether you want to be an active or passive investor.
Active investors are frequently involved in asset selection and purchases and sales and making investment account decisions based on the movement of the market sector and fluctuating market conditions.
Passive investing is more about “waiting and watching” with a long-term strategic investment plan. This option is often outsourced to financial advisors, wealth managers, or investment management specialists. Passive investing tends to reward patient investors.
You will also need to assess your short- and long-term investment objectives which will determine the best investment approach.
3. Determine your investment timeline
The next step in successful investment strategies is to decide how long you want to remain invested – this timeframe should be determined by your financial goals.
Short-term investments are intended to yield results in three years or less, whereas long-term investments should be viewed with a long-term approach but can bring financial benefits over many years.
There are many investment opportunities and asset class options for both short and long-term investment timelines. No matter your investment preferences, financial advice can help you feel confident about your investment journey.
4. Get clear on your risk appetite
The next step in perfecting an investment portfolio is to get clear on the level of volatility you feel comfortable accepting. This is a process a Financial Adviser can help you with, guiding you through an informative process to ensure the right combination of assets are chosen.
Portfolios might have a low or high-risk/volatility component.
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- An Aggressive portfolio comprises higher percentages of growth assets, that could result in higher levels of volatility, these portfolios generally provide higher returns over the longer term.
- Defensive portfolios carry less risk and are less volatile, but generally produce lower returns.
- Investors need to consider the Trade-off, higher volatility and higher returns, versus lower volatility and lower returns.
5. Implement Retirement and Investment Strategies
According to the World Health Organisation,
women live 6 to 8 years longer than males.
Additionally, women usually run out of money because they accumulate less than males over their working life.
By implementing a financial and investment plan early to address these financial differences, women can live stress-free during their working life and lead a more enjoyable retirement.
Set in Motion Your Road to Financial Dependence
Female investors are becoming far more common with many women investors increasing their financial literacy and investment knowledge.
There is a huge potential for financial emancipation regarding women and money. Women confront financial hurdles, but wise retirement planning, investment, and asset protection can help you achieve financial independence despite obstacles.
If you’re unsure where to start, consider working with a female financial adviser. A financial adviser will guide you through an easy process, helping you create objectives and identify clear solutions to help you reach them.
Prominent Financial Services helps everyday Australians achieve financial success, contentment, and confidence through outstanding financial planning.
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