Long-term interest rates are very low.
Consequently, cash savings do not generate any income and young investors can't benefit from compound interest. Trends such as the aging population and underfunded pension systems make it essential for women to start building capital when they are young.
Invest gradually (3–4 times per year) to avoid exposing your investment to one particular entry moment and stay invested rather than repeatedly making investments and then withdrawing your capital from your core investments.
No time to lose: build retirement capital
45 - 60
30 - 45
20 - 30
Time to think about how to take care of yourself and the next generation.
Seize opportunities to diversify and be more strategic in your investments.
It's time to reconsider your risk tolerance.
There's no time to lose! Start investing now to build retirement capital.
Plan beyond work
Reconsider your risk tolerance
This is when real investment activity can begin. Thanks to a long investment horizon, women can accept quite a high level of risk in this phase, i.e. they should have sufficient exposure to equities, but they may have different requirements for the annual payouts of their investments depending on their income situation.
Avoid maternity wealth setbacks with payout strategies
Women who take a maternity break may want to look at how to generate regular income from their investments by tilting towards payout strategies, i.e. investments that pay a predictable income every year, while still keeping sufficent exposure to equities. This may require rethinking your risk tolerance, as in financial markets, returns are the direct result of taking risk.
Grow capital at low cost
For women who continue earning at this stage, the focus will be on growing their capital at low cost. The most effective way of doing this is opting for funds.
Diversify and be more strategic
At this stage, the combination of new financial needs and obligations and an evolving outlook on life typically coincides with women becoming more sophisticated investors.
This is the time when women reach full maturity as investors – it is now that their investment portfolios can become more diverse, and more strategic, and may therefore allow them to incorporate some leverage.
Depending on experience, it might be time to explore the benefits of structured products and vehicles that offer protection around equity investments.
Taking care of yourself and the next generation
Consider whether your priority is to have more free time in this lifecycle stage or a larger pension and use this to steer your investment strategy at this stage.
You may also consider downsizing, as the capital released from the sale of your home could be used to supplement your retirement savings.
Shift to a more income-oriented investment strategy that emphasizes predictable cash payments to generate a steady income during retirement.
Content sourced from 'Woman to woman: lifecycle investing for women'.
Author Nannette Hechler-Fayd'herbe, published by Credit Suisse AG October 2020.