As a mother of three, I constantly think of my children’s futures — their education, opportunities, and financial security. But amidst the balancing act of juggling work and family, I remind myself: Who’s planning for mine?
Women often prioritize others—our kids, our families and careers – over our own financial futures. We save and budget but investing is a different story altogether, and this oversight can be a problem.
Savings alone can’t help us beat inflation or build a strong financial future. Investing will.
Why Investing is Crucial for Women
1. Savings Alone Are Not Enough
Many women rely on savings accounts as their main financial plan. But with inflation eating away at purchasing power, money sitting idly is actually losing value over time. Singapore’s inflation rate was 2.4% recently, and if you are not growing your money, you are effectively losing 2.4% every year.
While a high-yield savings account or a fixed deposit account provide a safe haven for your money, these typically preserve your capital rather than growing your wealth. The interest rates often barely keep pace with inflation and over time the purchasing power of your money declines.
Investing, on the other hand, provides an opportunity to grow wealth beyond inflation, ensuring your money works for you and helps to achieve your long-term financial goals.
2. Women Are Great Long-Term Investors
Research shows that women’s cautious approach towards risk can put them at an advantage towards long term investing.. Studies have shown that women trade less frequently as compared to men and tend to focus more on fundamentals and steady growth, which leads to better long-term returns.
This disciplined approach allows women to prioritize long-term goals over short-term gains, ultimately achieving more successful investment outcomes.
3. Dividend Investing Provides Passive Income
Dividend investing can be a compelling strategy for women looking for financial security. It provides steady income, even during career breaks or retirement. Dividend investing can help accumulate wealth without selling stocks, allowing money to grow over time.
Ultimately, it offers a powerful way to create a passive income stream towards financial independence.
Steps to Take for Financial Security
Step 1: Set Clear Financial Goals
Before investing, start with a financial roadmap. Short-term goals should include an emergency fund that covers at least six months of expenses and long-term goals may involve planning towards, your child’s education, or purchasing a home.
Women’s longer life expectancy and caregiving responsibilities makes planning for retirement even more important.
Career breaks, like the one I took when my children were young, can impact financial stability and having a financial safety net in place during these periods were vital. With financial stability, women can better navigate life transitions.
Step 2: Prioritize Investing Early
The best time to start investing was yesterday and the next best time is today. Even starting with a small amount each month can harness the power of compounding over time.
You can build up your portfolio beginning with some of Singapore’s best dividend-paying stocks. These include DBS Group (SGX: D05), a strong dividend-paying blue-chip bank; Singapore Technologies Engineering (SGX: S63), a steady dividend stock in the engineering sector; and VICOM (SGX: WJP), a resilient, high-dividend stock in vehicle inspection services.
For those looking at passive income through REITs, consider CapitaLand Integrated Commercial Trust (SGX: C38U), Mapletree Logistics Trust (SGX: M44U) and Frasers Centrepoint Trust (SGX: J69U).
These established players can offer a solid foundation for your investment journey.
Step 3: Build Multiple Income Streams
Relying on a sole source of income can be risky.
Women can mitigate this risk by diversifying their income streams. Investing in dividend stocks can provide regular payouts, while exploring side hustles or freelancing opportunities can generate extra income.
Utilising CPF and SRS (Supplementary Retirement Scheme) can offer tax savings and long-term investments.
CPF can be used to invest in stocks, bonds, and unit trusts under the CPF Investment Scheme, and can potentially offer higher returns than leaving funds in the CPF Ordinary Account. The SRS, on the other hand, offers tax benefits as contributions to the scheme are tax-deductible, reducing taxable income while allowing investments in a wide range of financial products.
By leveraging these schemes, women can build a stronger retirement fund while enjoying tax saving and enhancing financial security for retirement through higher returns over time with a greater peace of mind.
Step 4: Get Educated and Stay Informed
Taking the first step towards financial knowledge can be crucial and daunting. That’s where The Smart Investor comes in – with clear, actionable insights on long-term investing, dividend stocks, and financial security.
By staying informed and making educated financial decisions you can build a solid financial foundation for the future.
Myths That Hold Women Back
Fear of uncertainty can hold women back from investing. But the truth is, not investing can be the greater risk and by delaying, you miss out on valuable time to grow your wealth. The sooner you start, the more time you have for your money to multiply.
Another common misconception is that investing requires a large sum of money. This is not true. It is possible to start investing with as little as $1000. The key is to invest consistently and conscientiously.
Some women may assume their partner will take care of the finances but it is essential for every woman to have her own financial plan. Taking control of your own investments and financial decisions ensures independence and security regardless of the relationship status.
Get Smart: Building Financial Security for the Future
Financial security is not about luck—it is about taking action.
Women have all the qualities needed to be great investors: patience, discipline, and long-term vision.
By investing early, building passive income, and staying informed, women can take charge of their financial future and ensure long-term financial stability.
For those ready to take the first step, subscribe to The Smart Investor for expert insights on dividend investing, passive income strategies, and long-term financial growth for women.
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Disclosure: Joanna Sng owns shares of DBS Group, Mapletree Logistics Trust, Frasers Centrepoint Trust, CapitaLand Integrated Commercial Trust, ST Engineering and VICOM.
