It is the 100th anniversary of the International Women’s Day today and I like to write a bit more about woman on this special Day.
I always feel that woman is a very special creature. My observation is that they are a very hardworking, determined and meticulous when we compare them to man. I also admire their spirit in going through the ordeal of child bearing and motherhood. In today’s society, they also carry the burden of bringing additional income for the betterment of the family.
In term of Financial Planning, woman tends to have some disadvantages compared to the men. I will like to share some of my observations with you.
Longer Life Expectancy and keep rising
Based on statistics, Singapore men are expected to call to the Lord at the age of 77 whereas women at 82. The life expectancy age is expected to increase further and 88 to 90 can be of no surprise in future. Taking Japan and Hong Kong as reference, it seems that the Life Expectancy of Men do not rise as fast as Women and hence the gap will gets wider. When L.E of women get to 88 one day, men’s L.E probably may probably remain at only 81. (5 years widens to 7 years)
Longer Period living without Spouse
Women also generally marries men who are older and hence they might be expected to live without their husband for probably as long as 5 to 10 years. These years can be their twilight years and they need to live by themselves. It is hence crucial that they have Hospitalisation and Long Term Care insurances as well as enough savings to last them through.
Slowing Corporate Ladder Climb during Career Peak
My experiences with many of my clients gave me the impression that income level of women are generally higher compared to men before having children but once the 2nd child arrived, their mentality changes slightly to lean towards the family. They slow down their career climb and spend more time with the children. Some, who couldn’t cope with work and family, will stop working for as long as 5 to 10 years, just to focus on coaching their children. It may be difficult for them to resume the employment after a long gap.
Divorces and Singlehoods
Women today are more independent and frequently have a stronger say in term of finances than the men. With such independence, they will also demand more from men towards the family. With more demands, it may result in a mismatch of requirements the women asked from men. This eventually causes more separations and divorces in an urbanised society like Singapore. Marriage failures are inevitably taken into consideration in woman’s financial planning. Under the Women Charter, they are most likely the custodian for the children on divorces and there is no guarantee they can get sufficient alimony to take care for the children. There are also more single women now compared to 10-20 years ago which means another set of financial planning requirements.
Woman are better investor?
Having said all the negative points on woman, I have a good one for you. According to a behavioral finance study conducted by Terrance Odean (professor at University of California), it concludes that men’s overconfidence and hyper active trading actually results in lower investment returns as compared to women. As a result, women turn over their portfolios an average of 53% a year; while men’s portfolios turnover at a rate of 77% a year. This excessive trading leads to lower performance. Here’s what Odean found: married women actually get better returns than men — 1.4 percentage points better, and single women did even better — 2.3 percentage points a year over single men.
To conclude, I just like to encourage woman to plan way ahead and be more disciplined and conscious towards financial planning than the men. You have a bigger reason to do it than men.
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