Women and Investing

How Women May Approach Investing Differently Than Men

BY STEVE DINNEN

It is true that women don’t invest as much as men. It is not true that they have poorer results. Financial services giant Fidelity, in a survey done in 2017, determined that women outperformed men by 40 basis points, a small but notable advantage given their perceived lack of interest in investing. In 2015, a down year for the Dow Jones Industrial Average, men lost 3.8% of their portfolio value, while women gave up 2.5%.

So women can invest, and wisely. But they tend not to, for a variety of reasons. Fear of losing money, or control. Fear of failure. Or marriage — once a woman marries she tends to let the husband handle investing. But trouble lurks due to the "3 D's": divorce, death and disability. Any of those events promotes a woman from passenger to driver and not necessarily on her timetable.

Bailey Davis (pictured) often encounters women as investors when one of these 3-D events spawns a meeting with her as an investment officer with BTC Financial Services, part of the Bankers Trust Co. One such meeting was with a woman who was joint owner of a successful business with her husband. Then they divorced.

“She had no idea about their net worth. She felt very lost and didn’t know how to proceed,” Davis said of the situation that the woman found herself in. So some education was in order, to acquaint the woman with the need to invest – how else are you going to earn money and stay ahead of the robbery known as inflation? – and various methods of getting there, including stocks, bonds, mutual funds, ETFs.

Davis also works to dispel fears that can surround investing. “They’re terrified of the market,” she said of the uncertainty that it brings. “They don’t understand that corrections are normal.”

She noted that one client was in touch with a financial manager who had worked for decades with her recently deceased husband and perhaps took it for granted that he would handle her affairs going forward, and without explanation. But she had questions about what was going to happen, and how, and so Davis prepped the woman with a list of questions to put to the adviser.

“He flat-out avoided her questions,” she said. That’s a sure sign for anyone, woman or man, to find someone who will provide answers.

Social Security Increase Tempered by Medicare Deduction

BY STEVE DINNEN

Good news first: Everyone receiving a Social Security check will get a nice raise in 2022. Bad news: It won’t make much of a difference.

The government is expected to announce a 6% bump in Social Security payouts as it calculates inflation with a cost of living adjustment. Since the average payout is $1,543, that works out to about $90 a month. Half a million people in Iowa receive retirement benefits, so in the aggregate that pumps a lot of extra dollars into the economy.

The payout is somewhat tempered by deductions for Medicare Part B, which most seniors participate in and which has its monthly premium deducted from their Social Security check. It is slated to rise 6.2%, to $157.70, from $148.50.

Between 2000 and 2020, Social Security payouts have risen on average 2.2% annually. Medicare Part B has gone up 5.9% annually.

Critics contend the government uses the wrong consumer price index (CPI-W, for shorthand) that understates the impact of inflation. The Senior Citizen League says that as a result, since 2000 Social Security payments have shed 30% of their purchasing power.

Social Security accounts for about one-third of the income for older people.

Some Minority Investors Look to Alternative Vehicles

BY MARTHA C. WRIGHT FOR THE NEW YORK TIMES

For a vast majority of working Americans who don’t have a defined-benefits pension, their 401(k) is the centerpiece of their retirement plan. But some young adults of color are putting their hopes — and their money — into alternatives like real estate, entrepreneurship or stock trading on their own. They see straying from the beaten path as offering them a better shot at financial security — even if that means figuring it out as they go, and taking big risks.

People who study systemic racism and barriers to access in the financial services industry say they aren’t surprised that many people have little faith in the Wall Street machine.

“Black customers have a lot more distrust — rightfully so — of financial institutions,” said Mehrsa Baradaran, a law professor at the University of California, Irvine School of Law, who studies financial inclusion and inequality. READ MORE.

How to Raise Financially Healthy Kids

BY MICHELLE FOX FOR CNBC.COM

You want your kids to have a healthy financial life, yet knowing how to help make that happen may leave you stumped.

It may be especially hard if you have your own money struggles. Yet teaching them as early as possible can make a difference.

“There’s a lot of misinformation out there that they will be exposed to later,” said Sheila Bar, former chair of the Federal Deposit Insurance Corp., an independent agency that insures U.S. banks.

Here’s how to help get your children on the right path, and what to watch out for. READ MORE.