Thursday, November 30, 2023

The Five D’s Of Investing: What Women Need To Know Before They Invest Their $$$

In partnership with FMA

It’s World Investment Week and Capsule wanted to talk about women and investing, but in a way that we (Capsule!) could actually understand. So, we sent our least-financially-savvy member (Emma) to interview Gillian Boyes from the Financial Markets Authority to talk about ‘The Five D’s of Investing’ and why women need to do our homework before we invest our money. 

More women in New Zealand have started investing using the new apps and online investing platforms launched over the past few years – and most of them are now a lot more positive about investing since using them, according to the FMA’s research. But when it comes to women and investing, there can be an immediate disconnect between what women want and what the world of investing offers. “Many women want to be excited by something in an investment and what they’re often excited by is something that aligns with their values or that they’re interested in,” says Gillian Boyes, Investor Capability Manager at the Financial Markets Authority (FMA). “They’re a bit more holistic in their thinking than men are, they tend to look for opportunities that align with their wider values and their wider wellness.”

If you’re surprised to see the words “excited,” “holistic” and “wellness” used when it comes to investing – a world that tends to conjure up pictures of spreadsheets and stressed men in suits yelling “Sell, sell, sell” – well, you’re not alone. 

“There are some interesting studies I’ve seen about how the language of investing is quite male; it talks about ‘beating the market’, ‘a level playing field,’ ‘building a portfolio,’” Gillian says. “It’s all quite dry and dusty and frankly unappealing to a lot of people, but particularly women.” 

This can make women feel like the world of investing isn’t for them whereas, in reality, women make very good investors because they’re used to juggling, they’re careful and they don’t tend to muck around with their investments as male investors do. But because the language around all of this can be off-putting to women, they can quite often miss opportunities to find out more about the investments they’re making – and this can come with a certain level of ‘buyer’s remorse’ when it comes to rushing into investments due to FOMO! 

So if you’re keen to dip your toe into the world of buying and selling, here are the Five D’s of Investing you should keep in mind: 

1. Do Your Due Diligence

“What we see with women is they tend to use their surrounding sources of information, like their family, their friends, what they’re reading online, what they’re reading on social channels; because that’s how women make sense of the world, we all talk to each other,” says Gillian. “We tend to make our decisions based on what we see other people doing.”

However this can sometimes lead to that FOMO investing, which we want to avoid. Doing some research can give you a wider context of an investment opportunity and future-proof your time a bit more, Gillian says. “Have a look at what a company has done in the past; what’s their promise to investors in the company, if you’re looking at a company. If it’s a fund, are they experienced fund managers?” 

It’s not about being cynical, it’s about testing the waters before you jump. “Women are naturally pretty good at doing their homework,” Gillian says – once they’re pointed in the right direction of where to start. 

2. Drip Feed Your Investments

One of the biggest mental blocks to investing can be people thinking they have to have a big chunk of money to get started, but by drip feeding your money out in smaller amounts, you can get started earlier and accumulate as you go. Setting up an automated amount of money after every pay day is a great way to do this – it’s what Gillian herself does! “I literally have it going out after pay day so I don’t even see it in the first place,” she says. “What you see you don’t miss and it’s great in the long term, because the longer you’re invested, the more you’re going to build over time due to compound interest. So get started as early as you possibly can.”

3. Diversify

There’s no rule at Capsule that we love more than ‘don’t put all your eggs in one basket’ and boy, does it apply when it comes to investing. “This is one of the areas where there’s lots of jargon involved because people talk about asset allocation and then diversification within the assets, blah, blah, blah,” Gillian says. 

“Basically, if you’ve seen the light and you want to go investing, don’t throw everything at shares, because shares can be quite high risk and even if you have a mix of shares, as an asset class they can still all go down at once.”

So you might have some shares, if you own a house you already own property, and if you’ve got KiwiSaver, you’ve potentially got a mix of shares in property bonds and cash in there. And also consider that if you’re getting into shares, have a mix of shares in different sectors and different countries, so you’re not at the whim of one sole market.

4. Don’t Freak Out If The Markets Go Down

“This one’s really about holding your nerve!” says Gillian, citing the temperamental nature of KiwiSaver balances last year during Covid-19 as a perfect example. “A lot of people – and particularly young people – actually switched their KiwiSaver fund from a growth one to a conservative one, because they got a fright.”

KiwiSaver is an investment and investments do go up and down – but as Gillian says, you can understand that on a psychological level and still get a shock when it actually happens to your own balance. 

5. In Doubt? Talk to a Financial Adviser

“It’s so important to find someone who gets your vibe,” Gillian says. “Not everyone wants to go in and bare their soul to an adviser or admit that they’re shocking with money, but there is huge value in talking to someone professional about your money.” 

A financial adviser can not only demystify the process but they can help you set goals and keep you on track to achieve those goals. “It takes away the fear – it’s a bit like when you go to the doctor and they can explain what’s going on. Try and find an adviser who fits your vibe because there’s no point having a conversation with someone who makes you feel guilty, or afraid to ask questions.” 

DIY Home Décor: How Small Changes (& Small $$!) Can Make a Big Difference – Renters and First Home Buyers, This Is For You!

Renting - or not being flush with cash to afford massive house renos - does NOT mean you can't inject your personality into your...

Who Books a Travel Tour?! Women Just Like You, That’s Who! We Look at this Growing Trend, the Misconceptions of Tours – Plus Where...

In partnership with Trafalgar If you’ve turned your nose up at the idea of travelling on a tour in the past, we’re here to tell...

Getting to the Guts of Good Health: What Is YOUR Gut Trying to Tell You?! How to Unlock Better Health This Season

This story is proudly brought to you in partnership with Gutsi Us humans have always put a great deal of faith in our guts. How...

Money, Honey: Inside the Life and Budget of an Auckland Recruitment Consultant on $75,000 a Year

How much are we all earning? How does your profession add up? How are women your age spending their money? Is everyone in debt?...