Girls Just Wanna to Have Funds
Guys - try to keep up.
Warren Buffett invests like a girl. After studying women’s investment habits, author of the book by the same name, LouAnn Lofton, found women tend to mirror Buffett’s asset-building strategies such as, investing in what you know, not trading as much, not risking as much or rushing in as much as men, and enjoy better outcomes.
Women make good educated investors because they know what they know and they know what they don’t know, say consultants. Women will ask for directions, after all. Fear, greed and over-confidence can be pitfalls and men are more likely to fall prey to those feelings.
Studies show that female consultants also outperform their counterparts. We asked some local consultants to give us their tips.
Kelly Luckhaus, First Southeast Investor Services
“For new college graduates, knowing where to start can be daunting. The key is to start developing good habits.
Develop short, medium and long-term goals. Short-term constitutes the emergency fund, long-term means retirement and medium is everything in-between.
Be less concerned with the amount you save and more with getting in the habit of saving. For that, you’ll need a budget. Establish a list of fixed monthly bills, including your savings account. Pay yourself first. Your future is as important as your electric bill.
Add to an emergency fund each month with the goal of three to six months of expenses so you don’t have to rely on the credit card for unexpected events. The less you put on your credit card now, the less mess to clean up later.
Retirement options include a 401k and a Roth IRA. If your employer matches money going into a company 401k plan, it allows you to save pre-tax money directly from your pay check. It may also help you buy your first home or pay for graduate school through a loan option. If your employer does not have a 401k or has ceased matching funds, consider the Roth IRA. It allows after-tax saving to go directly from your paycheck to the bank. It offers the option to take penalty-free withdrawals after five years to pay for a first home or qualified education expenses.”
Megan Kopka, Pathfinder Wealth Consulting
In seminars, Kopka talks about gender roles, investment strategies, what happens after divorce or widowhood and she offers these general tips.
“Women save. Men invest. Women want to be all things to other people—but make sure your money is serving you. You’ll save money on the dress or the groceries, but fail to invest. Get into a planning mentality. Women plan to have children, a house, a career. If you think, ‘I have to pay a co-pay to the doctor, so I won’t invest this month…Is that good? No. Stick to the plan.’
We work hard for our money and our money should serve us in life. Even though the glass ceiling has cracks, it still exists. Women no longer work for a second income; we create a presence in the workforce. About 42 percent of MBAs now go to women, yet we are likely to earn less than men and more likely to be in and out of the workforce to take care of children and aging parents. Coupled with the fact that women live longer, we should be investing more than men. If your husband is making $43,000 a year and you are making $40,000, but you are putting away $4,000 a year and he’s putting away $4,300, when you retire it makes a big difference. Women who are saving 10 percent should be saving 15 percent to make up the difference.
Overtrading causes trouble. Men are more likely to be overconfident; women are more likely to be methodical. Studies show this to be one reason women lose less money, so they have more continued growth. We are strong, resourceful women and we can find information to make informed investment decisions.”
Patricia Kusek, Kusek Financial Group
When a man new to Wilmington sought out a female financial consultant, Kusek asked him about it. “I trust them more than men,” he said. Kusek presents a pragmatic philosophy.
“It’s never too early or too late to begin. Think of it as paying yourself, adhere to a budget and when you have developed an emergency fund, educate yourself on investing.
Protect yourself. If you and your spouse have drastic differences in investment strategies, you can have separate accounts. And if you invest together, act as if you can rely only on your funds. You never know what will happen, so pay yourself first. If you are counting on social security—don’t. And if children move back home, don’t dip into your retirement funds to send them to graduate school.
‘Be fearful when others are greedy, and greedy when others are fearful,’ Warren Buffett said. Around-the-clock news stories alarm investors into thinking they must do something. When others are panicked, proceed with caution.
If you think the world will be here tomorrow, invest in the things you’ll need. You will turn on the electricity, brush your teeth and eat breakfast. Invest in quality products, not the flavor-of-the-month stock.”