When it comes to wealth planning and asset allocation, unfortunately there is no cookie-cutter approach. There are many variables that one has to consider before making a choice or decision on what assets one would want/be able to invest their (sometimes) hard earned dollar in. To name some considerations – age, investable capital, risk appetite, knowledge, trust in the system/advisor, but also one’s goals! That’s quite a lot to juggle and figure out.

The ability to create a portfolio and invest in various asset classes – stocks, bonds, indexes, alternative investments, depends on the capital at hand. Each asset class comes with it’s pros and cons and the ideal condition would be to diversify your investment in a mix of equity, debt, and cash (but not everyone can necessarily access all instruments or products with their current investable capital). Asset allocation and diversification also depends on the individual’s risk appetite and capacity. 

Being comfortable with Risk

Risk (often associated with a negative connotation) many a time results in a positive outcome- return. Knowledge and assessment of the investment opportunity is when there is an understanding of the possible outcomes and comfort in the so-called risk. What many women want is clarity on the underlying risk. They want to have all the conditions and situations laid out so that they know what they are getting into. This process can also be overwhelming.

At the risk (pun intended) of generalizing the traits of men and women, men sometimes do not go into the same level of detail and hence end up taking more risks and investing in products that women might not. A report by AIA reiterates this as their research shows that in Singapore 23% of a woman’s monthly salary goes toward investment vs. 27% of the men’s, the primary reason being that women are more risk averse.

 

Advisors and Technology are here to help

Advisors have been able to help people assess their risk and recommend portfolios and are assisted with technology even more so these days. Many a time people do not know how to quantify what their risk tolerance is and find it easier to answer a series of multiple choice questions that help them define it for them. In addition, not many have a track of all the investments they make and have a centralized database or system to tell them. This is important as many people have more than one financial advisor and investments in different books. A consolidated view through aggregators will truly help them understand their investments and see how it is working for them.

Back to basics

Financial literacy is the first step to making women (again, not all, but a fair majority) more comfortable with terminology, the underlying products of their investments, and in turn encouraging them to invest . And when women do invest, they are less likely to continuously change their portfolio – they buy and hold, which leads to longer sustained gains.

 

Anisha Kundu

Anisha Kundu

AVP Marvelstone Capital

I’ll be representing Marvelstone Capital and leading a workshop for Miss Kaya, sharing some concepts one should consider when it comes to Wealth Planning and Portfolio Management. It’s also a great time to come meet like-minded people who also want to plan and take control of their finances in order to enjoy the fun things in life over snacks and drinks!

For more details click here

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