Age and income are usually the biggest factors in determining one's investment strategy, but some personal finance experts believe it's time for gender to become a larger part of the decision-making process.
Women are more likely than men to experience a wide range of life and career events, making a gendered approach to investing key for young women looking to build a comfortable retirement fund, said Zena Amundsen, a certified financial planner at Astra Financial with a largely female clientele.
"It's generally women who are expected to take time off from work for child care, or to care for an elderly parent," said Amundsen.
"With that comes an earlier career plateau and the gender pay gap, and with that pay gap comes lower (Canadian Pension Plan) contributions, as well as a lower likelihood of being able to max it out and have as much in our pockets during retirement."
This is exacerbated by women's longer average lifespan, she added, which is likely to extend five years beyond the average man's. Thus, a less robust retirement fund can have even more dire consequences.
As a result, Kristine Beese, the founder and CEO of Untangle Money, says women need to "get their money working harder" for them sooner rather than later. Untangle Money offers financial planning programs and services specifically to middle-income women.
"Studies show that women are really good at saving, especially when compared to men," said Beese, "but it's really important to start investing as soon as possible in a way that prevents that money from deflating over time, but also still allows them to sleep at night."
Ayesha Ofori, founder and CEO of female-focused investment platform Propelle and former Goldman Sachs wealth advisor, said women should be mindful of the fact that lower risk investments will generally lead to lower returns, which is not necessarily something they can afford as easily as men.
She recommended women look to capital appreciation investments earlier on (which focus on the increase of an investment's value over time), as well as income-yielding investments to support them in their retirement years (which can come with regular dividends and interest income payments).
"However, women should be considering alternative investments -- for example, real estate and private equity, which tend to yield higher returns than more traditional investments," added Ofori.
To find the right balance between return and potential loss, Beese recommends women stick with high-quality investments on the major stock indexes.
"Obviously, no one should go after speculative investments," she said.
"But it's important to keep in mind that over a 10-year horizon, we don't see a ton of loss in the S&P 500 -- so sticking with `financial flower bouquets' like exchange-traded funds that contain assets from a bunch of these companies shouldn't be a major source of concern."
However, return on investment is not something women have historically struggled with, as their returns averaged 0.4 per cent higher than men's, according to a survey conducted by Fidelity Investments in 2021. Instead, greater risk-aversion and lower confidence tend to be greater hindrances for women when it comes to investing and building their financial literacy.
"If there's one piece of advice I could give the younger generation to get over that confidence hump, it would be to push themselves to put their hands up sooner and ask the (finance) questions they need to ask in order to get started -- no matter how scared or embarrassed they might be when asking them," said Amundsen.
Beese echoed this sentiment, noting the importance of finding a team of financial planners and mentors who can guide women towards their financial goals.
"From the literature and my time as a stock broker, I know that women aren't always as goal-oriented about their money at the outset as men are because of the way we're socialized to talk about money, and normally ask two questions: what can I afford, and will I be OK?"
"Finding a financial adviser or mentor who can meet women where they're at is really important, because it's often through having more nuanced conversations that we can encourage young women to set the financial goals that, statistically, are likely to be really important for their future well-being," like putting retirement savings first, said Beese.
Particularly important to Ofori is the idea that investing need not be a solitary task.
"Talking about money and investing is often seen as taboo (for women) -- it can leave us feeling isolated and alone in our financial decision making," she said.
"Investing doesn't have to be lonely or boring. Find your cheerleaders and get them to hold you accountable to trying to meet your financial goals."
This report by The Canadian Press was first published Oct. 24, 2023.
