For the first time, the number of Aussie women investing their money is equal to men. See how they’re doing it, as experts warn it can come with risk you need to be prepared for.
Saxo Markets Australia CEO Adam Smith reflects on the rise of do-it-yourself investors and the part technology plays in providing financial advice. Mr Smith discussed the growing trend of brokers and advisors leaving the market. “The number of people coming into the industry now is at decade lows,” he told Sky News Australia. “Clearly it has become a less attractive employment opportunity for people but at a time when wealth creation is growing, more and more people are sitting on larger amounts of money and absolutely looking for advice.” In partnership with Saxo Capital Markets.
According to figures released by Australian robo adviser Stockspot, the last five years has seen the percentage of female investors jump from 38 per cent to 50 per cent.
Out of the company’s 12,500 clients, Millennials are also leading the charge with 51.6 per cent of its investors fitting into this age bracket, following by Gen X at 31.9 per cent.
By state the top suburbs where more women are investing cash in NSW include Bondi, Randwick, Clovelly, Darlinghurst and Surry Hills.
In Victoria, more women are growing their money in investment portfolios in St Kilda, Richmond, Glen Waverley and the Melbourne CBD.
In Queensland, Toowoomba, Camp Hill and West End have attracted more women keen to invest.
In South Australia, Adelaide, Northgate, Enfield and Rostrevor are the top investor areas for women.
In the Northern Territory, more female investors are coming from Rapid Creek/Nightcliff, Bayview and Zuccoli while women in Downer, Braddon and Harrison are also putting their money away in the ACT.
In WA, women living in Hammond Park, Canning Vale, Willetton and Harrisdale/Piara Waters were also keen to grow their wealth.
A spokesperson for Stockspot said women were more risk averse than men and were also more likely to choose sustainable investing.
Sustainable investing refers to ‘green’ portfolios that are made up of companies screened for environmental, social and governance (ESG) factors.
The data comes as the ASX’s recent investor study showed more than 51 per cent of Australians are investing outside super and the home since the beginning of the Covid-19 pandemic.
Half of those new investors are now women, and women also make up 50 per cent of those intending to invest.
South Australian Rosie Wilson from Bowden began investing at 31, depositing a few thousand dollars into a Stockspot diversified exchange traded fund (ETF) to growth her wealth.
Three years later, she has since deposited most of her savings.
She is among the 34 cper cent of investors aged 25-49 in the ASX report, who are investing for income.
“I never miss a week and it’s that consistency over time that is very important in terms of compounding interest and growth,” she said.
Ms Wilson’s primary goal is early retirement and being financially independent.
“It’s important for women to be able to achieve a sense of financial equality and independence,” she added.
“I want to retire as young as possible to live as freely as possible.”
Managing Director of MoneyHappy Rebecca Maher said women faced additional financial challenges given time spent out of the workforce to raise children which could affect their career, earning capacity, super balances and retirement incomes.
These challenges, coupled with housing affordability and higher cost of living, were driving more women to consider investing.
“Investing, whether outside super or through additional contributions to superannuation balances via salary sacrifice is an important part of building financial security and wealth,” Ms Maher said.
She also said that while robo advisors can provide investors with low-cost exposure to well diversified investment portfolios for a low fee, investments can fall in value over the short to medium term.
“This is why professional advice is typically that an investor have a time frame of between 5 – 7 years, to allow for their portfolio to recover from the likelihood of falls in value,” she said.
TIPS FOR FIRST TIME INVESTORS
While the concept of investing is appealing to many as an effective set-and-forget strategy for growing wealth, it doesn’t come without risks.
Here is a good checklist to help you get started:
•Pay off any debts before you consider investing your money. Have a solid understanding of your overall financial situation, including superannuation savings, ongoing expenses and other liabilities.
•Establish an emergency savings fund to cover three months’ worth of expenses, so if something goes wrong and you need cash quickly, your investments won’t be impacted.
•Develop an investment plan. Know how much you can afford to invest, how much you can afford to risk, and how long you can do it for. In other words, define your financial goals, risk tolerance and investment time frame.
•Do your research and/or seek professional advice. It’s important to properly understand the different asset classes before you commit. Understand the risks and returns – if you’re unsure, seek advice.