Building Wealth: Why It Matters
For women, dealing with money is crucial, says Nannette Hechler-Fayd’herbe, chief investment officer and head of global economics and research at Credit Suisse International Wealth Management. In a range of Organization for Economic Cooperation and Development (OECD) countries, the average life expectancy for women is more than 84 years. In OECD European countries, women aged 65 and older receive an average pension that is 25 percent lower than men’s – the so-called “pension gap” – and in many Western In many Western countries, single people make up as much as 50% of households. With all of these factors in mind, increasing wealth to fund their financial independence and security is a top priority for women.
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Hechler-Fayd’herbe says women can successfully build wealth by following a lifecycle investment framework and finding a connection to their investments just like everything else in their lives.
Connecting to your portfolio
Women can connect with their portfolios in a number of ways. The first is to understand and take an active role in developing an overall investment plan to ensure it reflects their financial goals. The second is to explore their interests as investors: women may want to invest in specific industries or use their money for issues that are important to them, such as supporting measures to combat climate change or making an impact on social issues.
The starting point is always a well-diversified portfolio and an understanding that building wealth is a long-term endeavor. However, there is still room for women to be creative, innovative and purposeful in shaping their investments. Women can think of their portfolios as their personal art galleries, in which they carefully select and place each investment.
Building Wealth: Where the Returns Are
In a world of zero interest rates, putting cash in a savings account to build wealth is no longer enough. To illustrate this point, we calculated the wealth trajectory that women of different generations might build if they invested in the right stock/bond strategy versus putting money into a savings account. Each initial investment is followed by an annual investment of CHF 5,000.
With more financial independence than ever before, women need to seize the opportunity to take a more active role in managing their wealth and finding investment solutions that suit their individual needs and preferences. By investing early and regularly (“time-to-market principles”) – as described above – women can benefit from compound returns, which can help them build more effectively than by saving alone long-term wealth. But it’s never too late to start investing, says Hechler-Fayd’herbe.
