By Cathy Lammas, 1 August 2014
Two years ago global payments technology company, Visa carried out one of the most comprehensive studies into women and money conducted in South Africa. The report surveyed 2000 women from all income groups across the country who have household financial decision-making responsibilities. The report was designed to highlight women's attitudes and behaviour toward money matters and identify areas of risk. According to this report, less than 2% of South African women are invested in direct equity and many of those who are, regard it as their worst investment decision ever. The same report noted that less than a third of South African women consult a professional broker or adviser regarding their finances. Could there be a link between these two facts? Let’s explore this possibility by way of illustrating two scenarios.
In the first scenario Alexia inherits a small sum of money in October 2007. Without any advice, she opts to invest R100 000 into four popular, well-known local balanced funds. During the market volatility of 2008 Alexia becomes concerned about the safety of her capital and opts to withdraw the full amount, seeking instead to place the full investment amount in the perceived safety of a money market account. By 2014 her original R100 000 capital amount has grown to R121 905.
In scenario two, Kelly also receives an amount of R100 000 in October 2007. She too invested the money into four popular, well-known local balanced funds. The difference between Kelly and Alexia, however, is that Kelly enlisted the services of a professional financial adviser and followed the sound recommendation to stay fully invested, even during the turbulence of 2008. By 2014, Kelly’s original R100 000 has survived one of the worst bear markets our country has seen and her original capital has grown to R207 850 … achieving a whopping 70% more than Alexia who thought she was better off in a safer investment.
Advice, or lack of it, may be one of many reasons why women are not investing in equities to the same degree as their male counterparts, but until they do, it’s very clear that they are indeed missing out on fabulous wealth.
Source used:VISA Womens Money Matters 2012
Stats on performance: Glacier Research