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The 3 top ways women can start investing their money – expert

Most women in South Africa are now the heads of households and equipped with both the financial knowledge and educational literacy to not only manage their own finances, but to also invest successfully in the stock market, according to Faheema Adia, equity analyst at Momentum Securities.

Adia shares a few reasons why women need to be financially independent:

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Women live longer than men

A 2020 World Health Organisation’s Health Life Expectancy report shows that women live longer than men with the average male life expectancy is around 76 years while the average life expectancy of women is about 81 years.

This means that women need more retirement savings to take care of themselves.

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Achieve economic equality

Income discrimination in terms of a pay gap is a major factor in women achieving financial equality. According to the Global Gender Gap Report 2022, South Africa ranked 123rd out of 146 countries for wage equity for similar work.

Have control over future unpredictable situations

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A woman that has financial independence will be better off during tough times such as the death of a spouse, divorce, or an emergency. It is also useful for women to be able to contribute to household finances during times of price hikes and the rising cost of living.

Setting an example

Children are often influenced by their mothers, therefore achieving financial independence will help mothers set a good example for their kids.

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Where and how women can start investing

Adia shares three ways that women can start investing:

1. Open an online share account

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With an online share account, people buy and sell stocks using an online platform.

“In today’s world, trading on the stock exchange has never been simpler. Thanks to the development of technology, more than 1 000 000 South Africans buy stocks online,” Adia said.

2. Invest in a passive ETF tracking fund

According to Adia, there are various tracking funds available which track the broader stock market index.

“The benefit of investing in a tracker fund is that it is generally cheaper and provides exposure to the stock market returns as a whole. Note this is suitable for a long-term investment and the investor would need to consider her unique risk and return profile prior to investing,” Adia said.

“An example of ETF tracking fund is the Satrix JSE ALSI ETF which tracks the returns of the broader JSE all share index.”

3. Diversify

Consider diversifying your portfolio across different asset classes to protect your wealth. This may include equities such as stocks, bonds, property, and cash.

Adia said that equities are generally seen as a riskier investment and are more suitable for long-term investors that have the necessary risk tolerance.

“Over the long term, equity returns have outperformed that of other asset classes, therefore we would recommend you have at least some exposure to this in your portfolio, provided you have the risk tolerance,” Adia said.

“Constructing a well-diversified portfolio can be challenging without the necessary financial knowledge, in which case we would advise you to consult with your financial adviser.”

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