PETALING JAYA: Family life was a bliss for working mother Sarah Chan until her husband lost money in his business.
“Our life fell apart because he was basically in a bad shape, and I had nothing to fall back on even though I also have a full time job. We had to use up all our savings,” said the 39-year-old.
It was a wake up call for Chan who realised that she had to be more financially savvy, including taking financial planning lessons.
Many women have found themselves in this situation said Amelia Hong, vice-president of Success Concepts, a financial advisory service.
“Most women are fearful of taking risks with their savings. While men are aggressive in their investments, women are more cautious. It is in their nature, and they stick to safe investments like fixed deposit even though they know that it is better to invest in something that might have a better return. If they are married they tend to defer to their husband,” said Hong.
But now that women are living longer than men – women’s life expectancy rate is 77.2 years while men’s is 72.6 years – many are at risk of outliving their retirement savings and struggling to pay for healthcare costs when they get older if they do not try to earn more with their savings.
“Inflation will render your savings – including those in fixed deposit – worth less down the road. That is why women need to take more risks with their money so that they can grow their nest egg.
Mothers are especially at risk as they tend to put the needs of the family ahead of personal needs.
“Mothers will even ‘borrow’ from their retirement savings for their children. They should remember though that they can borrow for their children for their higher education, but they cannot borrow for their retirement.”
HSBC retail banking and wealth management head Lim Eng Seong agrees that women are not doing enough to grow their money.
“While women are disciplined budgeters, they lack confidence when it comes to investing. Typically, they shy away from uncertainty to avoid incurring huge losses resulting in falling below a target rate of return.”
HSBC research shows that many would retire with an average of 10 years of savings for 23 years of post-employment life.
While on average, Malaysian women save 2.2 months’ worth of household income, men save 30% more than women on a monthly basis and more men have a financial plan in place than women do.
Financial coach with Abacus For Money Carol Yip, however, refutes the notion that women are unadventurous in investment.
“It is up to the individual – there are some women who are high-risk takers and others who are big-time gamblers.
“It is fine if you are a conservative investor – if you are diligent in saving money, it will still be a safety net for you when you retire. We should not slam women for just leaving their money in their account because it will still grow, albeit at a slower pace.”
Hong, however, advised women to be money smarter and take more risks.
“They need to take charge of their financial life. If they don’t know how or are scared to invest, they should read up or find like minded people to talk about this, like our group that is helping women in their financial journey, called Financially Empowered Women club or FEW.”