The session was a conversation with Shiyan Koh, Managing Partner, Hustlefund, an avid investor and prolific figure in finance - and we received an overwhelming response as she engaged us in witty and interesting discussions on the 101 of personal finance.
Here are a few takeaways from the very empowering session:
Why is it important for women to understand personal finance & investing?
1. The biggest cause of marital discord is financial issues.
2. Finance is pretty poorly covered in traditional education, so a lot of people can graduate from university but don’t understand a word about personal finance, even though we all make money and use money every day. To add to it, there’s a lot of noise in the market, so many terms and products that can intimidate anyone.
3. Women live longer than men (by life expectancy - WHO), so they need to be able to save and invest to pay for that.
4. There's a gender pay gap globally. Also, women who earn less than men are also more likely to take time out of the workforce, whether it's for childbearing, or for senior care, and that impacts their savings
5. Several studies across the globe show that despite the fact that women tend to handle household budgets and proven studies revealing women fund managers have better returns than men fund managers, they are less confident about investing than men.
What can women do? (This is NOT investment advice - simply opinions shared on our conversation)
1. Simply put - don't be intimidated. We always think of finance as a quantitative concept but research shows that personal finance decisions are extremely emotional. People have a relationship with money that is not rational. It’s determined by our upbringing, our experiences, and our learnings. An important part of personal finance is managing yourself.
2. Learn the art of compounding. It is the eighth wonder of the world. So this is the value of starting early.
3. Give yourself some time to learn. This is important as you must protect yourself from yourself. There's a lot of behavioural psychology about why we are rational. For women, the most common bias is loss aversion. This is why people sit with huge cash balances because they're always worried about losing all they’ve earned. We don't really think about the fact that inflation is actually eating away at our cash when we don't do anything.
4. Understand that good investment can be boring and that’s good! People love trade tips. However, it is important to realize that, life-changing money, is actually in investing long term. Basically, just invest and forget about it.
5. Set short, medium, and long-term financial goals. Key short-term goals include setting a budget, reducing debt, and starting an emergency fund. Medium-term goals should include key insurance policies, while long-term goals need to be focused on retirement.
6. Automate your savings as much as possible, so you don't need to summon the willpower to do it each time.
7. Women discuss shopping, fashion trends, and personal issues. However, they never discuss personal finance. For us to learn, it is important to encourage conversations about finance and investments.
8. And lastly, just take small steps, small consistent forward steps towards learning, understanding, and finally investing in the right options.